Points to remember about the diamond investment

Points to remember about the diamond investment

Precious pink diamond of great rarity

Certainly, it is no longer to remember that the pink diamond is a gemstone of the most expensive known to date. Although the gem is much sought after both in the field of investment and jewelery, it is primarily a particularly rare pink diamond. Indeed, a few years ago, no discovery of new deposits has been declared. However, analysts also predict a depletion of world diamond reserves around 2030. In other words, the pink diamond continues to dwindle, which is precisely why demand has been growing for several years now.

At present, the annual increase in demand is estimated at 6% for the next seven years ahead, with annual production growth of only around 3%. In other words, by 2020 diamond demand is expected to double, signaling a rise in prices over the long term. The current conditions of the pink diamond market are then favorable to private investors, knowing that the gem that is increasingly rare attracts greed in all countries of the world.

Excellent alternative of gold

Gross or cut, the diamond can then be considered as a safe bet in terms of financial investment. An eternal and unbreakable natural stone, diamonds are also less volatile and less speculative than gold. Indeed, the value of a gemstone of one carat - 0.20 g - would be equivalent to the value of a yellow metal ingot of one kilogram. As a result, it is more than certain that the gem is an excellent alternative to the precious metal in terms of capitalization. It is clear that unlike gold, the pink diamond is easily transported or even mounted on jewelry.

The gem can even be bequeathed or transmitted without a particular procedure. What makes the pink diamond all the more interesting in terms of investment is that stone is synonymous with security for its owner. Indeed, the purchaser keeps his anonymity completely, because no registration is required. In the face of uncertain economic conditions, investing in the rare gemstone is the ideal solution for anyone wishing to build a secure complementary savings. Moreover, the pink diamond market has already proven itself in resisting the crisis.

Safe haven and international currency

Concretely, the eternal and unalterable qualities of the pink diamond make it an indisputable safe haven. The intrinsic value of the gemstone remains very real, even over the years. Not to mention the fact that the price of pink diamonds is totally independent of the economy, laws, currencies or countries. For private investors, the pink diamond is tangible and mobilizable product that necessarily generates a real counterpart. Unlike a real estate property for example, the gem benefits from a fully standardized and internationalized evaluation system.

Like gold, the pink diamond is convertible throughout the world. A real alternative currency, the pink  diamond investment is considered as an international currency of exchange. In other words, it will be easy for the owner to negotiate the gem in any country in the world. Although the gemstone resells easily, it is recommended that you only bet on genuine pink diamonds. In other words, you have to make sure to invest in a quality gem that really stands out in terms of value in the market.

Colorless or colored diamond?

You have to know that in the diamond industry, every stone is unique. For two diamonds of equal weight, the actual value of the gems will not be the same. What you need to understand is that there are several diamond rankings that define the quality and the real value of the stone on the market. The classification that interests mainly investors is that of colors. Indeed, if colorless diamonds are the best known, colored stones are also more and more sought after.

These naturally colored diamonds are particularly rare, as their price on the market has virtually exploded in just a few years. While colorless diamonds are still rare, their color counterparts seem to have become much more successful. Be careful though, only pure stones are really valuable on the market. For this, it is always important to sift through the main quality and value characteristics required in the diamond industry.

The 4Cs: between value and quality

In the international and standardized pink diamond grading system, four main criteria are taken into account in assessing the quality and value of a gemstone. The famous 4C are factors relating to the carat, "cut", "clarity" and "color" of the gemstone. Concretely, they correspond to the weight, the size, the purity as well as the color of the stone. Depending on these parameters can then be precisely defined the intrinsic value and quality of the diamond.

It should be known for example that the weight of a stone is expressed in carat, a measure having nothing to do with the carat of gold. In the pink diamond market, one carat is equivalent to 0.20 g. Otherwise, a carat is also divided into 100 points, which comes to say that a pink diamond of 50 points corresponds to a stone of 0.50 carat. Knowing the 4C facilitates the shopping experience, while making it more interesting and enjoyable. Also note that since each pink diamond is unique, all gems of 1 carat and more have an "identity card", a certificate with the characteristics of each stone.

Certifications around the gem

Of course, when it comes to buying a pink diamond in a jewelry store or at a diamond store, some doubts can remain when the real value of the gem and its quality. Also, do not hesitate to require the certificate of authenticity of the gem. This is indeed an essential document when acquiring a diamond, representing the written proof of the characteristics of the gemstone. The report is entitled to all the information needed to evaluate the fair value of the stone, as many diamonds are similar, but few have similar qualities.

Delivered by independent gemological laboratories, the pink diamond certificate also facilitates the identification of each stone, as it acts as an identity card. In principle each pink diamond must be accompanied by a certificate, which is also essential for comparing different proposals before making a final decision. In the diamond industry, the most recognized certificates are those issued by the Gemological Institute of America or GIA, the International Institute of Gemology or IGI, as well as the High Council of Diamond or HRD.

Flagship investment product

Given the various points mentioned above, it goes without saying that the pink diamond is today a flagship investment product. Indeed, the diamond market remains very stable today, and the price of stone continues to climb. As mentioned earlier, the fact that stone still has value makes diamonds a lower risk investment. In addition, the physical diamond can not be affected by bankruptcy, one of the most feared situations by investors.

On the other hand, as diamonds become scarce, it is clear that the upward trend in prices is likely to continue over the long term. On the one hand, you should also know that the purchase pink diamond does not require any registration, leaving the investor in total anonymity. On the other hand, there is no additional charge to make the purchase. All these reasons make the diamond easy to access for private investors.

Demand in constant growth

Recent studies also reveal that pink diamond demand has greatly exceeded supply for several years now. If today the production fails to satisfy the diamond demand, it is because to date no new large diamond deposit has been discovered. Moreover, since 2010, it is in their stocks that producers draw their finest stones to offer them on the market.

However, the largest known mines in the world producing more than 80% of global production will have to close between 2020 and 2025. In other words, an increase in gemstone prices is expected in the coming years, generated by a significant decline from production. Although stone is a symbol of luxury and prestige, it is important to know that diamond jewelry is very popular in all social classes. Of course, these jewels are rarely considered as an investment. As for the pink diamond investment, it is mainly collectors and private investors who rush to this asset of great value and originality.

An advantageous tax system

In addition to the strong and constant demand for pink diamonds, the latter also opens up a particularly advantageous tax system for investors. Firstly, if the gem is stored in a free zone, the purchaser benefits from a total VAT exemption of 20%. It is only at the time of resale that the investor will have to fulfill his tax obligations. Indeed, if the gem is resold at a price below € 5,000, the transaction is also exempt from VAT. On the other hand, for transactions over € 5,000, diamonds are considered as movables.

In this case, the capital gains are taxable, but the seller can choose the best option for him to fulfill his tax obligations. Indeed, he will have the choice between paying a flat tax of 6.5% of the amount of the transaction and paying the tax of 34.5% on the capital gain, with from the third year of detention a reduction of 5% per year. After the 22nd year of detention, the tax on the capital gain becomes totally void.

The beautiful prospects ahead

Finally, it also turns out that a promising future awaits the pink diamond investment industry. Indeed, given the structural imbalance between diamond demand and supply, gem prices are expected to show overall an annual increase of around 5% over the next decade. In other words, the gemstone is meant to be an investment opportunity to seize because of the bullish outlook ahead, both in the short term than in the long term. On the one hand, we must understand that if the diamond is today highly stressed, this is not a fashion phenomenon.

Indeed, diamond demand has always existed. However, the peaks in production in 2007 and 2008 led to a sharp drop in the budgets devoted to the exploration of new diamond mines. In other words, supply is no longer able to keep pace with structural changes in demand. On the other hand, the fact that the colored diamond becomes a gemstone increasingly rare, it is logical that prices continue to increase. To get an idea of ​​the inestimable value of the gem, it is necessary to know for example that in 1996, a pink diamond of 0,25 carats was sold for the sum of 326,800 dollars. Concretely, it is not so much the weight of the precious stone which conditions its cost, it is especially its beauty and its originality that take precedence.

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