The sentiment for diamond has been growing even during the COVID pandemic, according to the Diamond Insight Report (2020). Yet, the fact is that diamonds are not considered an investment.
Why are people not investing in diamonds?
1.The lack of a uniform pricing system similar to that for gold is the main reason why investors have stayed away from diamonds. For long, the price of solitaire diamonds has been set by an independent agency Rapaport. However, that is not recognised globally.
2.Diamonds have different prices at different places due to the lack of a uniform price. This difference in price has kept investors away from diamonds.
3.Ignorance about diamonds also causes investors to stay away from them. When it comes to gold, the common person can just look at 916 hallmark and buy the precious metal. In diamonds, however, the four ‘C's' — the weight (carat), the cut, the colour and the clarity determine the price and quality. The consumer who buys diamonds as jewellery does not have to be aware of this, but investors cannot afford to buy it without knowing the details as that may not be good for their pockets. Also, there aren’t many avenues through which this knowledge can be gained.
4.Another hurdle is the sale of diamonds. Consumers can expect a fair price only when they sell it to the trader from whom they bought it.
5.Another problem are the myths surrounding diamonds. There are even stories on Google that say diamond depreciates in value.
Investment strategy
Diamond is only suitable for long-term investors. At present, diamonds cannot be considered as a substitute for gold, but experts say that the coming years would belong to diamonds.
For investors looking to create wealth, diamond will be a great option for long-term investment. But before investing, one should learn as much as possible about diamonds and other related gems. This is not easy due to the lack of experts.
Checklist for buying
1.Buying a diamond is something that needs to be done very carefully. Most diamond traders will take back at market price only those diamonds that are bought from them. Even when this is the case, many will pay only 90 per cent or 80 per cent of the market price. Very few companies like Tata Tanishq take back diamonds at 100 per cent of the market price. A decision on where to buy diamonds from should be taken only after thoroughly studying the buyback policy of the traders.
2.Due to the lack of a uniform price, many traders will charge different prices. Make sure that the price charged for diamonds is reasonable.
3.Unlike with buying gold, when purchasing diamonds, one should insist on the quality documents. Make sure the documents are genuine.
4.It is essential that the quality of the diamond is certified by an independent laboratory. Ensure that the diamond is certified by a laboratory that performs transparent certifications such as GIA, AGSL, EGL, IGL, and HRD.
5.As the diamond market is not very well established in India, it will be safer to buy from companies that have expertise in the field and good brand reputation.
