Investing In Diamonds and Gems: Important Points to Keep in Mind

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Investing In Diamonds

Investing in diamonds, and other gems, is simple. You purchase rare stones from a dealer, keep hold of them for a few years, and sell them to gain value. There are no guarantees for investing, yet, at present, the market outlook is positive. Examples of high-quality gems that are worth investing in are rubies, emeralds, blue sapphires, jade, and imperial topaz. An ever-increasing number of investors are becoming aware of the fact that investing in diamonds and other gems is good business. The jewels maintain their value over time, so they’re protected from inflation and decreases in the value of the currency. What is more, the demand for diamonds, and gems like emeralds, has been increasing.

If you too want to invest in diamonds and other precious stones, you must become aware of certain things. Consider the following factors.

There Are Several Ways of Investing

During these challenging economic times, we’ve come to realize and appreciate the value of physical commodities. The use of diamonds and other gems as investments and financial hedging tools has grown steadily over the years to the point that Internet pages are dedicated exclusively to this topic. There are several ways to buy precious stones, as follows:

Holding Physical Diamonds and Gems

You can purchase rough diamonds and gems, which can be set into jewelry. The precious stones are mined ethically and sustainably and cut into a general size and shape. You must confirm the quality of the purchase through independent third-party grading and expert confirmation. In this respect, it’s recommended to establish a close relationship with an industry expert, who can provide solid advice about quality. The best way to buy a gem is through a trader, just to be clear. Unless you’re a connoisseur, you risk losing money. Keep in mind that brilliants aren’t homogenous, which means that they have to be valued individually based on shape, color, and clarity.

Investing In a Fund

There are specialist diamond funds, where you can put your money directly into rare stones. Attention should be paid to the fact that most of them are closed to the broader public. The combined efforts of those who trade diamonds and financial experts are necessary to oversee such a fund properly. The fund doesn’t need to be a top performer, but it should be transparent. More precisely, you should receive regular updates on the diamond fund and its performance. Another way to get exposure to gemstones is to invest in an actively managed commodities fund. Not only do diamonds sparkle, but also they enjoy spectacular price runs, just like gold, oil, and copper.

Buying Stock in A Mining Company

If you want to gain exposure to diamonds and other gems, consider buying stock in a company related to the industry, such as a mining company. A mining company has decades of history, with world-spanning operations and steady cash flow. It’s not recommended to invest in a smaller company, as it will operate only one mine. It would be best if you looked for a larger company, which is likely to have broader mining operations. The value of the mining stock will follow the market value of its reserves, which are evaluated through feasibility studies. The point is that large mining companies are well-capitalized and are, generally speaking, less volatile.

Buying Low Is Harder Than It Looks

Buying an emerald is less technical as compared to purchasing a diamond. The emerald cost varies according to the quality of the stone.  An investment has to be bought at a low price and quickly resold at a higher price. Buy low, sell high is the most famous strategy for making money. It can be challenging to implement. Buying low is difficult, if not impossible. Lest you buy from a non-VAT area or via a VAT-registered company, you’ll lose a significant percentage of your investment. Also, the prices of gemstones fluctuate constantly. You need to confirm the quality of your investment. Imagine what it would be like to try to sell your investment back to the trade only to find out that you’re stuck with the purchase.

Gems Aren’t Liquid Assets

Precious stones are an attractive investment, but they’re not liquid assets. Put simply, you can’t get your hands on the cash right away. You can’t just simply walk into the buyer’s premises and get the rate going for gems. A brilliant’s value is determined by many factors including quality and how much the person is willing to pay for it. The fact is that diamonds and other gems are liabilities until they’re sold. In finance, there’s the concept of intrinsic value. An asset’s value is determined by the value of future cash generated by the gem. If you buy a diamond or an emerald, unless you make money from it somehow, its value is equal to its resale value. 

You’ll Need Professional Assistance

If you’re seriously thinking about venturing into this territory, you might want to seek professional help prior to going shopping. The most important decision you must make is whom to trust. What you need is someone knowledgeable about the nuance of gems, not to mention pricing and markets. As with any investing, it helps to know an expert in the business. You could leverage valuable insights from someone who knows exactly what you need to know. Regardless of your knowledge level, you’ll need a trusted ally. Find an expert to guide you on your journey, rather than going at it alone.

To sum up, investing in gems can be difficult at times, especially if you don’t know what you’re doing. However, the effort is well worthwhile. Diamonds and precious stones like emeralds have always been desired commodities. Even when the economy is down, prices continue to surge. Suppose you’re looking forward to making a move and investing, good for you. Buy quality gems and have a little bit of patience if you don’t want to lose your money. You have to endure the short-term hardship for a future reward.