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Diamonds Dazzle As An Investment Option
The diamond market is stable and the demand for diamonds is perpetually increasing compared to its supply. In this scenario of increasing demand, the value of diamonds is surging northwards. This is also resulting in rise of popularity of diamonds as an investment option. Priyanka Desai talks to the global industry czars and finds out more about this worldwide diamond industry phenomenon.
By: Diamond World News Service
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Oct 22 2012 4:33PM
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Reference: 7349  

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It is hard to forget the global economic meltdown in 2008, but it since then the term; ‘investment diamonds’ is doing the rounds more than ever before. Investment diamonds are more heard of in the alternative investment market. Wikipedia defines alternative investment as "an investment product other than the traditional investments of stocks, bonds, cash, or property. The term is a relatively loose one and includes tangible assets such as art, wine, antiques, coins, or stamps…" and, yes, also diamonds.

About 99 per cent of all polished diamonds are ultimately set in jewellery and that jewellery is sold, accompanied with the age-old message of eternal love, to adorn a woman. Those who bought the diamond jewellery for a loved one, do so because they want to invest in the relationship as they believe that it will enhance the bond that they share with the person. However, there is another aspect that remains unsaid is that the diamond jewellery will retain its intrinsic value. Therefore, whether the choice of buying diamonds is emotional or rational, the underlying decision is one based on the value of diamond and the diamond jewellery purchased.

In some cultures, jewellery is bought because of lack of trust in the banking system. In some countries, more than 10 per cent of the public wealth is invested in ‘portable’ assets like jewellery. For example extensive ownership of gold and diamonds enabled many ethnic Chinese to escape from Indonesia during riots there in 1997. Historically, women have often viewed their jewels as security.

Is it therefore surprising that investors are starting to view diamonds as a new and attractive alternative investment and as a low maintenance investment that can be traded all over the world? After all, investors are seeking hard assets in the face of the ongoing market turmoil. With gold climbing to record highs in the past year, many investors have been looking to diamonds as another viable alternative. Fact is that investment diamonds gained 20 percent in 2010 and on a risk-adjusted basis, investment diamonds outperformed the commodities market.

We asked Ya'akov Almor, an Israel-based industry consultant and strategist, what does he think about diamonds becoming an item of interest to investors? "Let's look at the performance of polished diamonds in the past decades," said Ya'akov, adding, "Those long enough in the industry will want to remind readers of the infamous crash in diamond prices in the 1980s. This crash, however, was the result of speculation that occurred within the diamond trade itself, and the hard lessons that have been learned since have changed the face of the diamond industry."

It is hard to forget the global economic meltdown in 2008, but it since then the term; ‘investment diamonds’ is doing the rounds more than ever before. Investment diamonds are more heard of in the alternative investment market. Wikipedia defines alternative investment as "an investment product other than the traditional investments of stocks, bonds, cash, or property. The term is a relatively loose one and includes tangible assets such as art, wine, antiques, coins, or stamps…" and, yes, also diamonds.

About 99 per cent of all polished diamonds are ultimately set in jewellery and that jewellery is sold, accompanied with the age-old message of eternal love, to adorn a woman. Those who bought the diamond jewellery for a loved one, do so because they want to invest in the relationship as they believe that it will enhance the bond that they share with the person. However, there is another aspect that remains unsaid is that the diamond jewellery will retain its intrinsic value. Therefore, whether the choice of buying diamonds is emotional or rational, the underlying decision is one based on the value of diamond and the diamond jewellery purchased.

In some cultures, jewellery is bought because of lack of trust in the banking system. In some countries, more than 10 per cent of the public wealth is invested in ‘portable’ assets like jewellery. For example extensive ownership of gold and diamonds enabled many ethnic Chinese to escape from Indonesia during riots there in 1997. Historically, women have often viewed their jewels as security.

Is it therefore surprising that investors are starting to view diamonds as a new and attractive alternative investment and as a low maintenance investment that can be traded all over the world? After all, investors are seeking hard assets in the face of the ongoing market turmoil. With gold climbing to record highs in the past year, many investors have been looking to diamonds as another viable alternative. Fact is that investment diamonds gained 20 percent in 2010 and on a risk-adjusted basis, investment diamonds outperformed the commodities market.

We asked Ya'akov Almor, an Israel-based industry consultant and strategist, what does he think about diamonds becoming an item of interest to investors? "Let's look at the performance of polished diamonds in the past decades," said Ya'akov, adding, "Those long enough in the industry will want to remind readers of the infamous crash in diamond prices in the 1980s. This crash, however, was the result of speculation that occurred within the diamond trade itself, and the hard lessons that have been learned since have changed the face of the diamond industry."

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