Diamonds: Buying close to the source can be worthwhile!

Diamonds: The world's hardest currency

In contrast to other tangible assets, diamonds combine value retention and return prospects in a very small space. The precious stones are indestructible, require little storage space and are easy to transport. They also have a low correlation with the markets: Even in times of falling share prices and high inflation, diamonds are usually stable in value and sometimes even achieve yield growth.

Provided that the stones meet the requirements of “4 C's”: “carat”, “color”, “clarity” and “cut” — so that Weight, color, clarity and cut — define the The quality of a diamond. As a rule of thumb, the bigger and clearer the stone is, the more expensive. Also a certificate renowned institutes such as GIA, HRD and IGI is a must when investing in expensive diamonds. Because this is the only way for private buyers to be sure that the diamond has the origin and quality that the seller promises.

However, if all these requirements are met, an investment in diamonds can be worthwhile. In recent years, the development of new diamond sources has been limited. At the same time, demand from China and India increased significantly. As a result, prices for rough diamonds rose after a Study by management consultancy Bain & Company with the World Diamond Center in Antwerp by 21 percent over the past year.

High trade margins for rough diamonds

The bottom line is that the brilliant businesses have brought increasing profits to all market players. While mine operators improved their margins by nine to eleven percentage points, processing companies posted an increase of three to five percentage points. Retailers, in turn, achieved a margin increase of six to eight percentage points.

But: For private investors, double-digit returns are barely realizable simply because trade margins in the sector are too high for that. Buying or selling is also proving difficult and sometimes risky for private investors due to limited access to professional diamond exchanges. However, it is advisable to buy diamonds as close to the “source” as possible. specialized retailers or online marketplaces operate on diamond stock exchanges and can therefore offer investors the stones at attractive conditions. They also guarantee a high level of security and transparency in transactions.

As with all tangible assets, the same applies to diamonds: Anyone who buys particularly cheaply achieves a particularly high return. Anyone who buys too expensive must compensate for the increased purchase price through increases in value before the investment returns. When buying, investors should therefore look carefully to see whether the source of the investment diamonds is reputable and the price is really in line with the market.

The profit lies in purchasing

However, finding an adequate price is a major challenge, especially for laymen, as there is no uniform price index due to the unregulated market. Instead, private institutions are offering various indices. In the meantime, the Rapaport diamond price list as an international benchmark used by traders to set diamond prices in all major markets. The weekly “Rap List” is used as the starting point for pricing virtually all loose diamonds — but is only available to professionals with a paid subscription.

For the reasons mentioned above, the diamond industry's decisive factor in terms of return lies in the purchase. Since larger quantities are purchased on the B2B market, diamond prices are usually 20-30% lower than on the B2C market accessible to private customers.

An example: When carrying out due diligence, B2C prices are adjusted to B2B prices. If you compare these values with the purchase price for a Fancy green diamonds, this results in a purchase price advantage of 17.45%.

Of course, private investors would also like to benefit from lower B2B prices, the resulting return prospects and the specific expertise of professional diamond traders. For this purpose, FINEXITY the right solution: An experienced and globally networked partner network of leading diamond retailers, jewelers and diamond experts as well as insurers and collectors enables optimal selection and storage of diamonds. In addition, through professional analysis of markets and market trends, the best possible sales time is anticipated and the maximum return is realized.
Diamonds are also purchased outside German borders and stored securely. This saves import duties and domestic sales tax of 19% and thus maximizes investor returns. As soon as the diamonds are sold, investors benefit from the potential increase in value just like an owner from an investment sum of 500 euros.

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