The argument for investing in diamonds is clear: they are difficult and extremely costly to discover, mine and market. Mining sources are diminishing and new ones take at least a decade to develop due to the regulatory and vast development work needed. Add to that the fact that new discoveries are relatively small, and demand from major emerging markets, as well as traditional ones, is continuously boosting the price of the product.
How does this look from the viewpoint of an investor who has seen, in recent years, volatile stock markets, governments dragged out of office, and the threat of a return to recession? Is this a classic investment opportunity?
Tiroche Diamonds' gems provide an excellent diamond investment opportunity since the company deals in the type of diamonds that have always risen in price. Even during downturns in the market, there have been very few price declines. That is because there are always clients for top-make white diamonds of high color and clarity as well as top-class fancy color fine make diamonds.
Diamonds, despite their well-known portability were not really considered a feasible investment opportunity due to the vast range of diamonds – some 5,000 according to De Beers' classification list.
However, there has been a change in the mind-set of some investors in recent years. Investing in diamonds is increasingly being seen as following in the footsteps of gold as providing a worthy investment opportunity and providing a safe haven for nervous cash.
“The financial markets are often difficult and people are looking for alternatives,” said Amir Tiroche. “In that kind of environment, diamond prices are going to do very well.” global demand could outstrip supply by at least 75 million carats by 2025, as producers struggle to find commercial deposits of rough, while demand continues to increase in Asia.
Diamonds are going to track exponential growth of wealth in developing markets. Chinese demand for diamonds is simply fantastic, so is Indian.
Many other groups are being established to provide investors, worried about the state of global markets, with a different investment option as well as benefitting from increasing demand and prices for the stones. Despite the decline in prices in 2015, analysts believe that investor interest in diamonds will continue to grow due to the supply shortfall that is expected to be felt in the coming years.
Analysts believe that in general terms the long-term trend for diamond prices is to go higher. In general, industry experts believe that investing in diamonds, particularly given the current dip in prices, could be a good opportunity for investors to get into the gemstone market. "In the same way that some more aggressive investors see falls in stock prices as a good time to invest, the same case could possibly be made now for getting into diamond funds. Diamond prices have dropped very sharply in recent months. Is this a good time to invest in diamonds? It depends on your investment appetite," said Tiroche.
Although the concept of investing in diamonds has been raised over the past decade, it has not been taken further due to the perceived difficulties of investing in gems. Since diamonds are so heterogeneous, with prices for similar stones differing from Belgium to New York to Israel and India, it has been regarded as difficult to persuade investors to put their money into diamonds.
Diamond investment vehicles can be rather risky, since prices are linked to the state of the global economy, as well as the danger of sharp falls after periods of speculation, as happened from late 2011 onwards following 18 months of robust price rises.
With China having taken over as the second-largest market for polished diamonds, and strong demand from India, and even the U.S. diamond market rebounding, rising consumer demand and investor interest is seen further boosting diamond prices. Diamond demand has jumped sharply in China and India in recent years while even the still slow U.S. economy is creating rising demand.