With interest rates staying at rock bottom, could diamonds be an investor’s best friend?
Diamonds are a limited resource. Easily stored – and beautiful – this most precious of gems is more sought after than ever before, with demand being driven by the newly-rich in China and India.
Returns on five-carat diamonds rose by 165 per cent between 2002 and 2011, beating stock market investments, according to diamond-trading company Rapaport.
But they can be volatile: Rapaport’s RapNet diamond index for one-carat diamonds soared 34 per cent in the first half of 2012, but plunged by 12 per cent in the second half.
Unlike gold bars, diamonds are not standardised. Each is unique, so spotting a bargain, or a fake, is all but impossible for non-experts. There is also no universal pricing system. Loose stones are subject to VAT, and retailers impose high mark-ups.
But if you prefer your investment to be decorative as well as potentially lucrative, diamond jewellery may be an alternative.
Stephen Whittaker of jewellery auctioneer Fellows in Birmingham, says: “A beautifully-made piece of diamond jewellery means you get the diamonds but also potential appreciation because of the setting.”
And, of course, wearing your diamonds brings a sparkle into your life that financial investments just don’t have.
Elizabeth Taylor wore the 33.19-carat diamond given to her by Richard Burton almost daily. She said: “My ring gives me the strangest feeling for beauty . . . it sort of hums with its own beatific life.” It sold for $8.8m (£5.7m) in December 2011, having been bought for $300,000 in 1968.
The Tiffany yellow diamond (right), a cushion-shaped 128.54-carat diamond normally on show at Tiffany’s department store in New York, has just been reset into a new diamond and platinum necklace.
The 105-carat Koh-i-Noor diamond, presented to Queen Victoria in 1850, is now in the platinum crown made for the Queen Mother. Traditionally worn by queens, it is said to bring bad luck to men who wear it.