Diamonds are eternally fascinating. They can also be a good investment if you know how to cut the right deal, says jewellery expert Lewis Malka.
Have you ever wondered why there is no way to buy diamonds on the stock market? You can buy almost anything else - sugar, gold, orange juice, part of a football club - but you can’t buy diamonds anywhere.
There is a reason. If you are thinking of buying a diamond, you have to examine it carefully. The first thing you’re assessing is The Four Cs: cut, carat, clarity and colour. Each of these is vital. Take clarity, for example. The diamond’s internal characteristics include features such as clouds, cavities, graining, laser lines and much else. These are often known as ’inclusions’. Which inclusions a diamond has, and where, makes a big difference to the price. You also have to consider the symmetry, fluorescence, proportions and much else. An impossible task without carefully viewing it in person.
People increasingly ask me about purchasing diamonds as an investment. Their first question is usually, "Will I get a better return than I do on cash in the bank?" The short answer is no. If you buy a significant diamond ring from any high street jeweller, it will probably take you 25-30 years to make your money back on it.
The only sensible way to purchase diamonds as an investment is to go to a reputable diamond trader, who might sell you a diamond at the wholesale price. We all know about the dangers of using past performance as a guide to the future, but the wholesale price of diamonds has increased by between 5% and 15% every year since records began in the 1970s. My advice is that it’s probably better to spend your budget on one larger stone than two or three smaller ones. The larger a diamond, the rarer it is. As with most things, rarity makes for a better investment.
Coloured diamonds are rarer still, and we have seen yellows, browns, greens and reds coming onto the market recently. These will command an even higher price and should make a profit more quickly. Our records show that these have gone up in recent times by as much as 30% year on year.
24.78ct natural pink diamond. Amazing!!
Pink diamonds are the rarest of all. In November 2010, Laurence Graff bought a 24.78 carat rectangular pink diamond at auction for £29million. You probably won’t be surprised to hear that this was the most amount of money ever paid for a diamond. When he was asked why he paid so much, Mr Graff replied: "To reduce my tax bill this year." Diamonds can be almost magically beautiful, but investing in them remains a hard-headed decision.
