Top Quality Diamonds "Cannot Lose" as Investment

13/09/2016 15:16

Pin Lee, writing for the South China Morning Post, spoke with insiders from the Hong Kong and Asian diamond market to get their opinions on diamonds as an investment. While not without risk, as with any investment, by making a careful choice and focusing on the highest quality and rarest of stones, one should end up with a rock-solid investment.  "Generally speaking," said Chin Yeow Quek, Sotheby’s deputy chairman of Asia and chairman of international jewellery in Asia, "diamonds do not fluctuate but, as with most items of value, there will be some ups and downs. Top diamonds over time will always have an investment return. Arnaud Bastien, president and chief executive of Graff Diamonds Asia, concurs: “Quality diamonds are a commodity. They fluctuate far less than other commodities which are often widely available and subject to many economic/political uncertainties. Diamonds are rare and they offer many advantages [portability, no maintenance, resistance] and over the past decades, their value has always been growing at a fair pace.”

It is true that the Chinese government's anti-corruption campaign has served as a market force, driving down demand and prices. And while Togo Yu, diamond specialist at Pour La Vie bespoke jewelry admits there is downward pressure, this does not hold true for top quality, which has increased in price. "It is always a question of demand and supply; rarity is a key issue," Yu says. "In the long term, diamonds cannot lose value, especially the good quality ones, as there is limited supply but high demand." Bastien agrees: "Diamonds are unlikely to lose their value. Over the years, we have heard that they could be threatened by many things such as new mines, synthetic diamonds and so on but prices have always gone up." The challenge with diamonds is that unlike gold, with a published standardized price, the qualities that determine the value of diamonds are less easy to define."

As always, however, the best hedge is rarity; hence the attractiveness of fancy colored diamonds as an investment, which have held their value and are again on the rise. As Eden Rachminov, Fancy Color Research Foundation Advisory Board chairman told National Jeweler just last month, "Unsurprisingly, fancy intense and fancy vivid color diamonds of all colors enjoy robust demand in the market, driven mainly by supply scarcity that is not likely to change in the foreseeable future.”