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INVESTMENT DIAMONDS Diamonds are an excellent investment, providing almost guaranteed returns, please see "a brief history" for details. At glitternation we can supply diamonds that are laboratory certified diamonds confirming quality and price from £1000 to £500,000 in value. We supply diamonds at 40% below retail price. Due to the value and nature of these transactions, clients are unable to buy through our usual internet purchase system, however if you would like to book an appointment with our diamond specialist anywhere in the U.K. please feel free to call 08712 316560 or email sales@glitternation.co.uk, and we will call you back immediately. The Diamond - A Brief History Since the dawn of history, man has held the diamond in awe, surrounding it with revered mysticism. Ancient man first put the hard stones to a practical use, shaping tools and weapons. Then, because of their shape and unique qualities, man came to believe that diamonds possess supernatural powers. He used the gems in amulets to ward off evil. The name diamond is, in fact, derived from the ancient Greek word meaning invincible or unconquerable. As nomadic tribes in Africa and the Middle East expanded their trade with one another, theses rare stones became a medium for the world’s first hard currency.? Written history is filled with stories of monarchs who amassed fabulous treasures of diamonds, of powerful conquerors whose lust for these gems drove them to murder and mayhem, and of young lovers who kissed and shared the beauty of a tiny stone that symbolises affection and eternal happiness. Today, man still treasures these brilliant gems. Both the meaning of their value and use has changed little. Diamonds are still used in critical applications, helping modern man shape his tools of technology. More than ever, they are used as symbols and tokens of love, and modern investment treasures. QUICK LINKS: Diamonds are pure carbon – Earth's most common element and the material as fireplace soot or the graphite in a common lead pencil or the brilliant perfect crystals. They were formed eons ago under intense pressure deep in the Earth. Great volcanic upheavals millions of years ago forced the “blue earth” containing diamonds to the surface where they were scattered along rivers and into the oceans. Only about one-fifth of all mined diamonds could be considered of quality. From 40 to 250 tons of gravel and sand must be processed today to find one rough diamond from the world’s thinning diamond deposits. Experts estimate that all known supplies of diamonds will be depleted within 30 to 40 years. Most diamonds, some 75-80% of all those mined, are used for such applications as drilling, grinding, or sawing. The remainder are used for jewellery or investment. Less than 2% are of such high quality that they can be considered perfect. Using the”4Cs” to find the best diamond for your money… It pays to be as educated as possible when shopping for a diamond. But with so much information out there, shopping around becomes very confusing, very fast. In response, Liberation Jewellery has condensed the information you need to know into a summary of “The Four Cs”: [ TOP ] CUT, COLOUR, CLARITY, and CARAT-WEIGHT CUT – Many people confuse cut with the shape of the diamond. Diamonds are cut into a number of shapes, depending on the nature of the rough stone. The most popular are round, marquise, oval, pear, heart and emerald, and the choice is largely a matter of personal preference. Whatever the shape, however, a well-cut diamond is the work of a master diamond cutter. When cut to good proportions, the diamond is better able to handle light, creating more scintillation, more sparkle. And that’s a great reflection on you. It is the cut that enables the diamond to make the best use of light. When a diamond is cut to good proportions, light is reflected from one facet to another and then dispersed through the top of the stone. If the cut of the diamond is too deep, some light escapes through the opposite side of the pavilion. If the cut is too shallow, light escapes through the pavilion before it can be reflected. COLOUR - Diamonds are found with a range of colour, from faint yellow or brown through to the very rare pinks, blues, greens and other colours known as “fancies”. However, the best colour for a diamond is no colour. It is a totally colourless diamond that allows white light to pass effortlessly through it and be dispersed as rainbows of colour. And to give a woman such a diamond is to show your true colours, as well. Colour grading scales from totally colourless to light yellow. The differences between one grade and another are very subtle, as can be seen by the number of grades within any one category. CLARITY – To determine a diamond’s clarity, it is viewed under 10-power magnification by a trained eye. Most diamonds contain very tiny birthmarks known as inclusions. However, the fewer and smaller the inclusions are, the less likely it is that they will interfere with the passage of light through the diamond, and the more beautiful the diamond will be. Diamonds, more than any other gemstone, have the capability to produce the maximum amount of brilliance. A diamond that is free of both inclusions and surface blemishes is very rare and therefore very valuable. So, the clearer the diamond, the clearer your choice. CARAT-WEIGHT – This is the weight of the diamond measured in carats. One carat is divided into 100 “points”, so that a diamond of 75 points weighs .75 carats. Carat-weight is the easiest of the 4C’s to determine. But two diamonds of equal weight can have very unequal value, depending on their cut, colour and clarity. Fine quality can be found in diamonds of all shapes and sizes. And a fine quality diamond is a little extra weight she’d be pleased to put on. [ TOP ] A DIAMOND IS FOREVER – De Beers Own Slogan QUESTIONS AND ANSWERS How would a million dollars in money, gold and diamonds compare in size? Regarding money, one million dollars in one hundred dollar bills would weigh approximately 21 pounds and be 40 inches high; in 20-dollar bills, it would weigh 106 pounds and would be 200 inches high. A million dollars in gold at $200 dollars an ounce would weigh a little over 312 pounds. A cigarette package could easily hold a million dollars in diamonds and it takes 142 carats to equal one ounce. What is meant by price control of diamonds? The origins of the present day price control began with Cecil Rhodes, who initiated the policy that is today the basis of price control in the diamond market. Rhodes believed that the only way to control wide fluctuations that could occur in diamond prices, variations in demand and supply, was to control production at its source through the mining claims and its companies. The original policy of Rhodes has been maintained to this day. Control is acquired through the purchase of controlling interests in diamond producing mines and by persuading the owners of other mines not under direct control that it is better to sell fewer diamonds at higher, non-competitive prices through a single selling organisation than it is to permit prices to fluctuate freely. Control of production is intended to avoid an oversupply in the world market, resulting in price wars and reduced profits. By means of amalgamation with most of the more affluent companies and by outright purchases of some of them, Rhodes eventually brought the whole through the possession of the company, and this occurred in approximately 1887. DeBeers mines 40% of all diamonds, controls 80% or more of all diamonds marketed and is in control of all the important productions of the world. With the technique suggested by Mr Rhodes, it is now possible to design and conduct mining operations systematically and economically, and to regulate output according to the market demand. Stability and prosperity of the mining industry still depends on these great principles. Other than DeBeers' control, are there any other reasons for diamond stability and value? Yes. It is probably based on history, in that diamonds have been embedded in our culture, and since earliest times have been a symbol of value and power. [ TOP ] The policy of DeBeers as leaders of the diamond industry is to maintain a high degree of price stability for gem diamonds at all times, so the trend of demand is upward. Setbacks have been experienced from time to time affecting sales in general or sales of particular quality of diamonds. For this reason the group builds up large financial resources in good times, so that the purchases from producers can be maintained and the excess production held in stock when the market is weaker. When the demand improves, these stocks are offered to the market, thereby restraining any upward pressure on prices. What about price stabilization? The Diamond Corporation Ltd., a subsidiary of DeBeers, contracts with various important producers who are not members of the Diamond Producers Association for the purchase of their productions. Diamonds are also purchased on the open market in Africa and elsewhere by associated companies of the Central Selling Organisation. Mr Oppenheimer, Chairman of DeBeers, has stated “A degree of control is necessary for the well-being of the industry, not because the production is excessive or demand is falling but simply because wide fluctuations in prices which have, rightly or wrongly, been accepted as normal in the case of most raw materials, would be destructive of public confidence in the case of a pure luxury such as gem diamonds of which large stocks are held in the form of jewellery by the general public.” He further quotes “Whether this measure of control amounts to monopoly, I would not know, but if it does, it is certainly a monopoly of the most unusual kind. There is no one concerned with diamonds, whether it is producer, dealer, cutter, jeweller, or customer that does not benefit from this. It protects not only the shareholder in the big diamond companies, but also the miners they employ and the communities that are dependent on their operations. The well-being of tens of thousands of individual diggers of all races depends on its maintenance…” What do bankers think of diamonds? This depends on the familiarity of the bank with the market. A Swiss banking report suggests the investment of up to 15% of one’s capital in diamonds is a responsible and commendable thing to do. Why are diamonds considered a safe currency? The reasons are numerous, but diamonds possess stability second to none. They are never the objects of governmental or administrative measures, which tend to alter price values, of yardsticks out of general or financial considerations. No restrictions or devaluations can affect the diamond economy. The fact that diamonds do not bear the stamp of any particular government or central bank has been vital in making them an accepted international currency. Why are diamonds accepted as currency? One very important reason is that the Central Selling Organisation has built up diamond prices over the years as the best hedge against inflation. It has insured the value of purchasers’ funds against all rises and falls of currencies around the world. It has the stamp of approval of no government, but has been increasingly accepted as international currency. [ TOP ] Can diamonds be used as bank collateral? Not at all banks, but at many, diamonds are recognised as stable collateral for loans. How do diamonds compare to real estate, lots and/or multiple dwellings for investment purposes? Real estate has its place in any investment program; however, diamonds have one thing that no other investment has, and that is its extreme portability. As mentioned previously, you can carry a million dollars worth of diamonds in your pocket and sell them anywhere in the world. It is impossible to do this with any other investment and real estate, of course, in particular. What about investment in diamonds? The diamond investor is not interested in the diamond as jewellery per se; he is interested in the loose gem. He feels that there is an advantage to investing in diamonds rather than stocks, bonds, real estate, gold or art, and one of the most important reasons for this is that there are no limitations in its mobility. If you do not have holes in your pocket, you can carry your fortune with you. In addition, diamonds appear to be relatively immune to currency fluctuations. Investment in diamonds is essentially a sign of scepticism about the world’s political situation. Most of us in the diamond business are convinced that the market can only go in one direction – and that is up. Are diamonds better than gold? Basically gold is a speculative investment. It does not produce income and there are no guarantees for capital appreciation. When inflation is high and there is international uncertainty, the demand for gold, either as a commodity speculation or as a horde, helps to increase the price. Investing in gold is risky. Its price can fluctuate widely, and at times, the price of gold can rise to a point where it offers little protection and a lot of price risk. Diamonds are totally controlled with their prices based on the world’s strongest currency or gold, whichever is the most valuable. Thus diamonds offer a built-in resistance to devaluation. As currencies lose their value, diamonds automatically adjust upward. Are diamonds a safe and stable investment? The prospects for the diamond trade are excellent in our present prosperous society. Because of the improvement of the standard of living, more and more people are becoming increasingly attracted to the gem and diamond markets. Diamonds have always held particular fascination to people because of their fire, their beauty and their rarity. In times of monetary devaluation and fluctuation, diamonds constitute a guaranteed safe and stable investment. [ TOP ] What diamonds can be considered an investment? The best values are those of finer qualities, irrespective of size and shape. Probably the best sizes, however, are between one and three carats. Loose diamonds are preferable, as settings go out of style. What stones should be purchased for investment? Roughly speaking, stones between one and three carats with the main purchase being centred in round, brilliant-cut between one to one-half carats. If larger purchases are to be made, the money should be spread over a number of stones, rather than one particular one, and the purchaser should plan to retain the stones for at least five years – with three years being considered the minimum. When is a diamond an investment and when is it a gift? To a certain extent, people in some countries have recently termed the buying of diamonds as some form of investment; but when a man buys his wife a $10,000 diamond ring or piece of jewellery, it is partly a gift for pleasure and partly an investment. It is difficult to define which purchase is strictly one or the other. If a man has a savings of £10,000-£15,000, would he be wiser to keep the savings account or purchase diamonds? If he does not know anything about diamonds and does not know anyone that he can trust implicitly in the diamond trade, he would be better off keeping the savings account. Based on a £15,000-£50,000 savings account and a diamond of similar value, how much interest can I expect to earn? No dogmatic answer can be given to this; however, in the past diamonds have appreciated close to 10-15% annually. If you were recommending the purchase of diamonds as an investment, what % of the man’s capital should he spend? Approximately 10-20% of his assets can be invested in diamonds. I would also advise him to hold these stones for a period of at least 5 years. [ TOP ] What type of diamond ring would you consider ideal for a man or woman from an investment and beauty standpoint? Actually, there is no ideal ring for a man or woman. It is individual taste as to the style of mounting. As far as the diamond is concerned, it should be the best one can afford, preferably of the round, brilliant-cut, as these are the ones that have always been in the greatest demand and trade-in valuation. What is the present opinion of the business world relative to the value of diamonds? This is a direct quote from the Diamond News and S.A. Jeweller, In spite of the ferocious bite of inflation and the search for evermore rewarding investments; the diamond has never lost its appeal. Especially now when it seems that day by day the value of the paper rand is steadily eroded, while the solid value of the diamond, if it does not make any sensational leap upwards, at least does not lose its hardening gleam.” Is there any other reason why so much confidence has been placed in diamonds? Mr Joseph Goldfinger, a well-known international diamond businessman, states, “There is no other commodity in the world where a comparable volume is so carefully shielded against speculative manipulations.” The Central Selling Organisation’s ability to balance the supply and demand has proven itself over the years as the best insurance against any deterioration in the stability of the diamond market. How does the market value of emeralds, rubies and other coloured stones compare with the market value of diamonds? The market value of diamonds is reasonably controlled and stable, with relatively definite prices for each class of diamonds. As far as the market for other coloured stones it is extremely volatile and depends a great deal on the vogue or fashion at the time and the demand, and since the mining of these stones varies markedly, it is impossible to have an ordered market. What steps should a person follow when shopping for a diamond? The first thing to follow is a place where you are totally confident. [ TOP ] Is there any key to diamond buying? As mentioned in the previous question, it's knowing someone you can trust and someone whose knowledge you have confidence in. You must find people who know diamonds, know the market and who have those priceless assets – honesty and integrity. Can you make a better diamond purchase in the USA than in Europe? The answer is no. If you look around, you can get an excellent buy in Europe. Can the average person buy wholesale? It is almost impossible. A lack of knowledge in either the wholesale or retail market puts the customer at a distinct disadvantage. You either must know your product or know from whom you are buying. How much does a 1 carat diamond cost? The answer, as we have read in previous questions, is that it depends on the stone. Diamonds all have little differences, so that each graduation of colour, each inclusion and each derivation in cut alters the price a little. What percentage of diamonds on the market fall into the high-grade category for investment purposes? Only about 1.5 to 2.5% falls into the high-grade category or only about 100,000 carats of high quality diamonds annually would be considered as a high-grade investment. Are diamonds only sentimental or do they have business common sense? A value-proof investment requires a well-thought-out information campaign backed by an authority of the highest body, namely the Diamond Trading Company. It should also be noted that no other commodity compresses such great value into such a small volume. The world diamond business is in the hands of an organisation, which, while enjoying the highest confidence of the financial community, applies constant supervision with the aim of maintaining the international value of diamonds. This is also meant to avoid the influence of any passing purely speculative conditions, which characterise the market on other commodities, particularly gold. The difference between gold and diamonds as a sound investment is therefore readily apparent. The measurement of the gold can be changed overnight by the international financial bodies with differing and often conflicting interests, where the diamond is a commodity regulated by a powerful organisation. And it is this difference – stability versus variability – which highlights diamonds. In fact, diamonds can be considered as a commodity which might be safely regarded as a truly international currency accepted all over the world. Diamonds are recognised and accepted universally and can be traded most anywhere in the world. They have been used in trading since 600 BC. What about the value of diamonds during depressed times? Since DeBeers largely controls and supports the market and withholds supplies when the demand lessens, it largely accounts for the fact that during depressions diamond prices decline much less than any other index. Have diamonds had any recent recession or drop? In the recession year of 1970, the diamond prices levelled off but did not drop. It is almost axiomatic that diamonds never go down in price. In the recession times fewer sales may be made, but in general, the prices are not lowered. Why have diamonds risen steadily? During the past few decades, the rise has stemmed from the general control exercised by the Diamond Trading Company in making up with adjustment according to the market, the availability of the rough and the world economic conditions. There has never been a decrease, though there have been market fluctuations. Diamonds represent wealth because they are portable and give the greatest value in the smallest bulk. They have always been regarded as an article of investment, but never more than in inflationary eras. So do you think diamonds will ever saturate the market to cause prices to drop? No. This has never happened in the past, nor is it likely to happen in the future. As long as the world shall last, there will be a demand for these beautiful stones. [ TOP ] |
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