Investment Grade Diamonds

 

What is an Investment grade diamond?

An investment grade diamond is usually classified as a perfect to almost perfect white diamond. The rarest rough diamonds are shaped by the most talented diamond polishers, offering the most demanding quality standards and potential for major price increases. Investment grade diamonds are more valuable and of higher quality than jewelry grade diamonds. The most popular shape for investment grade diamonds is the brilliant round shape. Another necessity of an investment grade diamond is that it is certified by an excepted gemological laboratory with a certificate that displays the unique measurements and physical characteristics of that diamond. These diamonds sell for a higher price than non-certified stones, since they have been graded by an independent, certified gemologist. All investment diamonds sold by A’per Trading are certified by the GIA and come with the original certificate and laser inscription registration number on the diamond.

There are many characteristics and factors that affect the value of a diamond. To begin with, you have the famous 4C’s, Cut, Carat, Color and Clarity. Cut is the shape and polish of the actual finished diamond. Carat is the weight of the diamond. Color is defined as the shade of coloration that the stone has. For white diamonds, the less color it has the more valuable the stone will be. The grade for white diamonds starts with the letter D and goes to Z, with D being perfectly colorless and Z having the most color. If the diamond has more color than a level Z it is considered a fancy colored diamond. Clarity grades define the amount of, or lack of inclusions in the diamond. The highest clarity grade is IF which stands for internally flawless. The next grades are VVS1 (very very slight inclusions), VVS2, VS1 (very slight inclusions), VS2, SI1 (slight inclusions), SI2, I1, I2, and I3 which has the most inclusions. Other Important characteristics are the Certification, Cut Grade, Polish Grade, and Symmetry Grade, Depth %, Table % and Fluorescence. The certification of a diamond shows that it has been graded by a professional gemologist from one of the well-known diamond laboratories. The best certification for investment diamonds is from the Gemological Institute of America (GIA). They have set the highest standards for diamond grading. The Cut grade shows how well the diamond was cut. The grades are; Excellent, Very Good, Good, Fair and Poor. The Polish and Symmetry grade, like the cut grade, show how well the stone was made. The grades are; Excellent, Very Good, Good, Fair and Poor. The Depth % is the height of a diamond, measured from the culet to the table, divided by the width of the gemstone. The depth percentage is critical to creating brilliance and fire in a diamond, and a gemstone with a depth percentage too low or too high will lack sparkle. The Ideal percentage for a diamond is 60.1 - 62.8%. The Table percentage is the width of the table divided by the diameter of the stone. The table percentage is critical to creating sparkle in a diamond. The Ideal table percentage is 53 – 57%. Fluorescence is when diamonds produce a visible reaction when exposed to ultraviolet radiation. Generally the more fluorescence a diamond has, the lower its value. 

Investment Grade Diamonds 

Exchange Traded Funds containing portfolios of Investment Grade Diamonds may soon be accessible to anyone with an online stock trading account. This means that demand will heat up for specific top quality polished diamonds. Diamonds have a long track record for providing fantastic returns, as they have increased in value by an average of 13.8% every year since 1938. China and India are now two of the world's largest buyers of diamonds. Just as global demand appears to be increasing, supplies are plateauing. According to a report by Bain & Co, diamond demand in carats will rise more than 6% a year until 2020, outpacing the 2.8% annual growth in supply. Investment Grade Diamonds may be the ultimate hard asset investment, and expected price increases may even surpass recent gold returns. Based on growing global demand, especially from China and India, De Beers expects demand for rough diamonds to hit a new record in 2013. As middle class consumers continues to grow within emerging nations, De Beers expects China, India and the Middle East to account for 40% of global diamond demand by 2015.

 Diamonds have been held by savvy investors throughout history to protect against political and economic disruptions and the ravages of hyperinflation. The most recent example of this occurred in the hyperinflation that struck Zimbabwe. The portability of diamonds is also more favorable than that of gold or silver. A diamond investor can carry a million dollar portfolio in his shirt pocket, whereas the same amount of gold can be a challenge to transport. Try boarding an airplane with a million dollars of gold or silver. Diamond prices have increased an average of 15% per year since 1959, and the values of these precious stones are not directly linked to the stock or bond markets. Investment Grade Diamonds are a good hedge for investors looking to protect against inflation risk and interest rate risk. The average price of rough, or uncut, diamonds is forecasted to rise 9% to $145 a carat next year, 1.4% in 2013 and 4.8% in 2014. Prices of top-quality diamonds climbed 23% in 2011, the biggest gain since 2006, according to the Rapaport Diamond Trade Index. Emerging nations, first and foremost India and China, will drive the demand for diamonds in the upcoming years, while diamond jewelry consumption of developed nations is likely to moderate somewhat. On the supply side, the commissioning of new mines should be largely offset by depletion of matured ones that are seeing production taper off or at best stay flat. Global demand for diamonds will probably outstrip supply by 7 million carats by 2016, compared with a shortage of only 1 million carats this year. Signaling a boom in demand, China recently overtook Japan to become the second biggest diamond buyer behind the US, where demand rose 7% last year, compared with 25% in China, according to De Beers. 2010, rough diamonds provided an overall return of 20%, outperforming the S&P 500 gain of 12.78% for the year. Analysts at the Royal Bank of Canada predict the upward trend of higher diamond prices will continue over the longer term. In 2011, prices for 1-carat diamonds returned about 20%.  A rapid development of new mining opportunities is unlikely due to the extremely long lead time of a new mine from discovery to production takes up to 13 years. In a recent study performed by Bain & Co., the “base” scenario, demand is projected to grow at 7% between now and 2020, while supply increases only 3%. The “higher” scenario pushes those figures to 11% and 4%, respectively, while in the “lower” scenario, demand is forecasted to grow 5%, while supply is flat.

 Investments in diamonds in the past has not largely impacted overall demand due to difficulties with valuation, the absence of a spot market, and the lack of liquidity. With the development of organized international markets, investment in diamonds is growing more popular, with some companies even proposing tradable diamond funds for the public investor. This new demand by investors will push the price even higher. IndexIQ, exchange traded fund provider of alternative investment strategies, has filed with the Securities and Exchange Commission to launch a physically backed diamond fund. According to the filing, the IQ Physical Diamond Trust will hold physical diamonds, dividing diamonds into subcategories with characteristic variations. The diamonds used in the portfolio will be certified by the Gemological Institute of America. This could send investment demand much higher if approved by the SEC. Since there is no diamond futures contract being trading on the commodities exchange, a diamond ETF would most likely be backed by physical holdings, another factor that will push demand higher. Being properly positioned in physical investment grade diamonds purchased at true wholesale market prices ahead of a paper ETF investment could prove to be a very wise investment. This is especially true when you consider what happened to gold and silver prices after precious metals ETFs became popular with investors. Although the diamond market does not have all the same characteristics of gold and silver, we expect a similar trend to occur if the SEC approves the pending diamond ETF.

Investment Quality Diamonds for Sale

GIA Certified D Color IF -VVS Clarity Excellent Cut 

 

Exceptional Quality 1 Carat Round Brilliant Diamonds

GIA Certified Excellent & Very Good Cuts