What Makes a Good Investment Diamond?
Diamonds have always been regarded as a highly portable, extremely liquid form of wealth. As true centuries ago as it is today, diamonds remain one of the most common forms of intergenerational wealth transfer, with their small size making transportation and storage easy.
Those qualities continue to be recognised by modern investors, especially in the case of pink diamonds. An asset
class exhibiting consistent growth through both strong and weak markets, pink diamonds are regarded by some investors as a valuable addition to their portfolios, with many taking out both short-term and long-term positions on individual stones.
If you’re considering adding pink diamonds to your own portfolio, ensure you’re making an informed choice. While demand for diamonds is as high as it has ever been, not every stone is worth your attention as an investor. Join APDX as we describe a few of the qualities to look for in a stone worth your investment.
Colour is always a factor in the value of a stone but is of paramount importance in pink diamonds. While colour is seen as a detriment and an impurity in a white diamond, the opposite is true for so-called ‘fancy coloured diamonds’. A broad category containing stones of uncommon hue or intensity, fancy coloured stones are frequently valued at significantly higher prices than a white diamond of comparable size and clarity, with some particularly fine examples fetching millions per carat at auction.
Of the coloured stones, one that attracts the most attention, the highest valuations and the loudest demand is the pink diamond. An extremely resilient investment, pink diamonds have outperformed real estate, the ASX and other hard commodities including gold over the past ten years, displaying strong performance even during downturns.
When assessing a pink diamond, it is the most intensely coloured stones that are the most prized, not just for their aesthetic qualities but their comparative rarity against other, less vivid stones. For this reason, any investor seriously considering including diamonds as part of their portfolio would do well to consider purchasing the darkest pink stone they can find.
The most fundamental guarantee of a good investment diamond is that it is a stone with intrinsic value. This means selecting a stone that – for some reason or another – has a degree of rarity higher than the average. While there are many factors that affect a diamond’s rarity, one of the most obvious is size.
Exceptionally large stones will always be in demand by other investors, collectors and dealers who may wish to on-sell the stone or recut it into a new form. A quick glance at the most valuable stones in history will confirm this, with most on the list weighing in the dozens of carats and many attracting prices in the hundreds of millions of dollars. While you’re unlikely to find the next Pink Star, seeking out diamonds through marketplaces and brokerages that are uncommonly large can be a way to ensure that your stone always has a willing market.
One of the most important characteristics of any diamond, clarity is a measure of the number and significance of internal and surface defects present in the stone. A diamond said to have good clarity is one that has minimal or minimally noticeable defects, with those of truly exceptional clarity assigned the rare category of ‘Flawless’ under the internationally-utilised Gemological Institute of America grading system. Stones falling into either Flawless or the adjacent category Internally Flawless are highly sought after, as the lack of defects allows the diamond’s full ability to capture and scatter light to be seen. As such, seeking out stones of exceptional clarity can also help to support your portfolio’s overall liquidity.
Choose the right stone
Until very recently, more than 90% of all pink diamonds in the world and nearly all of the finest examples of the colour mined right here in Australia, at the Argyle diamond mine in Western Australia. The closure of the mine in November 2020 has sent shockwaves through the international investment community, as buyers move to secure the last of this precious supply of high quality stones.
If you’d like to take advantage of a rare but rapidly closing opportunity to add a truly valuable stone to your investment portfolio, talk to the team at APDX today to learn how we could help you secure one of the last of the Argyle pink diamonds.