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Are Diamonds A New Form Of Investment?

Investors are looking for new forms of investment, the behavior of the main Central Banks, the slowdown in Australia, the fall in metals, the sharp rise in stock markets, all of these are just reasons for investors to look for other investment alternatives For this reason I want to start the year by exposing about the growing diamond market and how a common person can access this type of market.

To begin with, we must know that diamond is an allotrope of carbon, that is, it is a variation of carbon with a different molecular structure. Argyle Diamond Investments has the highest hardness and thermal conductivity of all materials known to man. Most natural diamonds are formed under extreme pressure and temperature conditions, existing at depths of 140 km to 190 km in the earth's mantle. Diamonds are brought close to the Earth's surface through deep volcanic eruptions by magma.

Diamonds are valued according to 4 characteristics, which are called the 4C:

1- CUT (cut)

The beauty of a cut diamond lies in its behavior with light. Those with fine proportions and good symmetry, enhance its interaction with light and provide it with greater brightness and sparkle.

2- CARAT (weight)

The weight of a diamond is expressed in “carats”, or in English “carat”. One carat (ct) of diamond equals 0.2 grams of weight. Normally, diamonds of more than 0.5ct start to have a significant value, below 0.5 the market value of diamonds is not very high.

3- CLARITY (purity)

The purity is determined according to the type and number of internal defects (inclusions) that the diamonds present, observing them with a 10x magnifying glass.

4- COLOR (color)

The color of a diamond is very important, in recent years the diamonds that have appreciated the most are colored ones, such as pink for example, because the main diamond mine of this color in Australia it will close its facilities in 2020.

What are the current uses of diamond?

1- Gem: Unlike precious metals, such as gold or platinum, gem diamonds are not traded as a commodity. Contrary to popular belief, there is a well established market for the resale of polished diamonds and brilliant cut diamonds.

2- Industry: Industrial diamonds are valued mostly for their hardness and thermal conductivity. The dominant industrial use of diamonds is cutting, drilling, sanding and polishing. Even in the future it is already considering using diamonds as a portable hard drive.

3- Investment: Diamonds as an investment show several advantages at the moment. One of them is the gains in value without taxes, the increasing liquidity, the solidity of the price over the years, the fact that it is not a speculative good and this makes it less affected to the world economic situation.

Usually luxury goods lose their value for the most part, diamonds do not. Also, a very important point, in recent years the average production of precious stones has fallen. Why? Mining and excavation must be done in deeper areas, which increases operating costs. This leads to a lower supply of diamonds, and in the future a lower supply will continue to increase the price of the diamond.

Here I show you a graph of the nominal evolution of the price of a diamond per carat:

Remember that to value a diamond the 4Cs are important, each diamond is a unique element, its value will depend on its cut, weight, purity and color, as it is not a homogeneous element, its valuation must be done in the hands of a certifying company, these companies they also help you when you want to sell the diamond, getting you an interested buyer.

Can a comparison be made between Gold and Diamond as investment instruments?

The valuation of these two resources is completely different. Each diamond is a unique piece, with its own characteristics, therefore, the valuation is carried out in a totally different way than with gold, which is a homogeneous element.


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