Wednesday, February 9, 2011

How to Preserve Wealth by Investing in Colored Diamonds

Putting your money in colored diamonds can help in preserving your wealth. This alternative investment has proven to be lucrative for countless investors. However, just like any other type of venture, it is important to understand that this kind of investment can only give you substantial gains if you have ample knowledge about colored diamonds. Before you start buying, here’s how colored diamonds can help in growing your money.

Great Value for Your Money

One of the main reasons why you should consider putting your money in colored diamonds is their great value. The potential profits you get from a fancy blue or green diamond is higher, especially if the proportion of the price to the size and weight of the stone is factored in. However, in order for you to reap the maximum benefits of this type of investment, you should always make it a point to buy diamonds from reputable sources. Also, take time to study and become familiar with the colored stones market.

Established Techniques Used to Determine Diamond Quality  

One good thing about investing in diamonds, whether colored or clear, is the presence of established and reliable standards that can objectively measure the carat, clarity, and color of these precious stones. There are a number of reputable institutions around the world that specialize in grading and measuring the value of diamonds. Moreover, grading tools are widely available such that even regular individuals can easily learn how to determine diamond authenticity.

Steadily Increasing Diamond Prices

Major auction houses can attest to the fact that diamond prices are steadily increasing, especially natural colored stones. In 2008, the Wittelsbach-Graff Diamond, a natural grayish-blue stone, was sold for a record-breaking price of $24.3 million in a reputable auction house in London. It is also worth mentioning that the supply of natural diamonds with fancy colors is very limited. For every 10,000 carats of mined diamonds, only 1 carat can be considered as a fancy colored stone. A limited supply would mean higher selling prices.

Growing Demand

As more and more people realize the rarity and beauty of deep green, vivid blue, bright pink, intense yellow, mysterious black, and fire orange diamonds, the demand for such stones continue to grow. Another reason for the surging demand for colored diamonds is the growing number of Hollywood celebrities that buy and use them. Moreover, many men nowadays are wearing diamond jewelries as part of their getup. So men are expected to contribute to the growing demand for colored precious stones, such as black or deep blue diamonds.

Ease of Storage and Portability

Lastly, colored diamonds are a great investment because they are portable and can be easily stored. If you have a couple of pink diamonds, you can easily carry such multimillion dollar investments with you without anyone knowing about it. You also do not need a huge safe in order to keep them. Furthermore, you can use your precious stones as jewelries without worrying about any possible loss in value.

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Colored Diamond Investing as a Wealth Preservation Strategy

The recent turmoil in the global financial markets has convinced countless investors to explore alternative assets, and smart investors are no longer solely focused on ways to maximize their capital gains. They are all seeking tried-and-true strategies for preserving wealth, and a great many have chosen to invest in natural colored diamonds.

In times like these, investors would be wise to consider alternative assets that provide a reliable store of value. A meaningful capital preservation strategy is the path of the responsible investor during these chaotic times. With this in mind, there has never been a better time to consider investing in rare colored diamonds. Let's explore a few of the characteristics that make natural colored diamonds such an attractive store of value.

Diamonds have an extremely high value in contrast with their diminutive size and weight. A two carat intense fancy yellow diamond is worth approximately $25K, and weighs less than 1/70 of an ounce. If the need ever arose, millions of dollars worth of diamonds could be concealed and transported on one's person. For hundreds of years, diamonds have been used as a medium to discreetly transport wealth across troubled borders. As a wise man once said, wealth knows no borders.

Natural colored diamonds also have a rock solid history of steady price appreciation, which is a very appealing characteristic for the keen investor. Just recently, the Wittelsbach blue diamond sold for $24.3 million at Christie's in London, setting a record price for any diamond or jewel sold at auction. An oval-shaped, vivid yellow diamond weighing 36.99 carats, sold at Sotheby's New York in December 2008 for $71,870 per carat.

Lastly, demand for fancy colored diamonds has skyrocketed in recent years. This is partially due to consumer awareness regarding the natural rarity of coloured diamonds, for out of 10,000 carats of diamonds mined only one carat will turn out fancy colored; with the rarest colored diamonds being red, blue, green orange and pink. The reality is that supplies of coloured diamonds are decreasing while demand is increasing, resulting in a great opportunity for investors as prices continue to increase.

Credit: Nigel Schwartz

Nigel Schwartz is a marketing consultant currently on assignment with Genesis Rare Diamonds , trusted distributors and traders of investment grade natural colour diamonds, based in Toronto, Ontario, Canada. For more information on colored diamond investing, please visit to request an information package.