For centuries, prudent financial planning meant possessing your assets as tangible goods rather than paper money. Items of true worth are accepted and valued across cultural and language barriers, and those with the means to do so have been insuring their wealth with such goods as long as they have been treasured. There is perhaps no better example of such an item than diamonds.
Some think keeping wealth in physical goods is as an antiquated notion — but the importance of holding tangible goods as a store of wealth has perhaps never been higher. Since the removal of the gold standard backing American currency, the dollar has steadily declined in value, leaving investors uncertain and placing generations of resources at risk.
In fact, contemporary times have brought even more unpredictability to the value of a dollar as skyrocketing American debt makes the currencies of its creditors and competitors much more valuable. The green credit slips we carry in our pockets are a fiat-based currency in its purest form, good simply because the issuers claim its worth. History teaches us that a promise, no matter how ironclad and altruistic, is always subject to change. An excellent way to ensure your financial health separately from that of any other entity is to turn your paper and credit money into physical goods such as diamonds.
Most people make the mistake of assuming a diamond is a piece of unnecessary opulence worth only as much as the frivolous will pay for it. However, diamonds are indispensable in a wide range of industrial applications from drilling to machining parts to heavy polishing tasks. This combination of timeless value, prized beauty and widespread utility makes diamonds an investment with bulletproof value.
In these erratic times, loose diamonds are making a return as an effective vehicle of wealth retention. Diamonds are traditionally thought of as an extravagance or an ostentatious luxury, but like other precious materials such as gold and silver, diamonds have true universal worth. This means that regardless of fluctuations in markets or political vagaries, diamonds are virtually guaranteed to hold their value. Unlike most other items traditionally thought of as consumer goods, diamonds do not depreciate in value with time.
Traditional methods of investment such as banking and bonds carry the same flaws as maintaining resources in paper money. Many federal bank accounts in the US are only insured up to $250,000, and interest rates are subject to frequent and often capricious fluctuation. Investment in land is a risky prospect because of external factors that could drastically affect value.
With diamonds, the perpetual demand for precious goods determines and safeguards the value of the investment, guaranteeing the worth of your diamonds lasts as long as they do. Diamonds are durable, portable and discreet, making them an ideal choice for those seeking a secure and subtle way to lock in wealth with tangible goods. Owning tangible goods as wealth and in this rapidly changing world of today, there may be few better opportunities than investing in the emerging diamond market. You may wish to consider investing in diamonds to shield your prosperity from undue influence.
Photo Credit: Kim Alaniz
You’re a lot better off holding gold instead of diamonds. You can sell gold on practically any street corner and there is a limited supply. It’s easy to determine the value of your gold. Diamonds are almost impossible to sell, especially for a profit, by private person. Go visit any jeweler and ask to see his loose diamonds, they all have a drawer full, gotten when scrapping jewelry, the jewelers can not sell all they have. The world’s supply of diamonds is controlled by cartels like DeBeers who hold back enormous amounts of diamonds in order not to depress the market. Plus the average person can’t tell a diamond from a QZ, and has no idea as to quality of cut, color, clarity, brilliance. Holding diamonds strikes me as a great deal for the person who SELLS you the diamonds, and a poor deal for you if you try to sell the diamonds or view them as an investment. If you want to hold a small, portable, valuable asset which you can carry in your pocket in case of the apocalypse, or as a hedge in case of currency collapse, stick with gold or sterling silver, everyone wants them, they are easy to sell and the world’s supply is limited. As to the $250,000 limit, if you are husband and wife, the limit is effectively $750,000 in each bank as you have CD in husband’s name, CD in wife’s name and third CD titled jointly. Since all three have “different” owners, you can have three in one bank for total of $750,000.
Everything you said is spot on Karen….especially how DeBeers manipulates the market. I wouldn’t touch diamonds with a 10′ pole.
Investing in loose diamonds sounds interesting. Sounds risky as well though.
I like tangible assets, but if it comes down to money being worth less and you needing to eat, you can’t eat your diamonds. I believe more in agricultural land or cattle for example.
My uncle works at a jewelery shop, and they buy and sell a lot of gold. Sometimes the pieces will have the tiny diamonds attached, that they basically scrape off and set aside. After a few years he had quite a pile, and was able to sell it for over $40k. Pure profit.
I’m in the wrong business 🙂
+1 for precious metals.
If I were going to invest in physical assets, I’d go with precious metals: gold, silver, platinum. With the development of synthetic diamond creation so good that you can only tell the synthetic from the real is because the synthetic is too perfect, the diamond cartels are under pressure. Eventually, they’ll crack and prices will drop.
“…the diamond cartels are under pressure.”
I’m sure there was no pun intended there, Jack!
And yes, it seems to me that the uncertainty of high-quality cubic zirconia could pose a problem. Of course, gold and silver can be faked too, but there are basic tests that can be performed to easily verify their authenticity.
Len, Karen is spot on. This is an article everyone should read before wasting hard earned money on diamonds. It was written in 1982 but it is still true today.
http://m.theatlantic.com/magazine/archive/1982/02/have-you-ever-tried-to-sell-a-diamond/304575/
Rusty, I agree. This article was written by a guest poster. Precious metals — particularly gold and silver — are my preferred choices when it comes to wealth preservation.
Great post! Been reading a lot about investing in diamonds. Thanks for the info here!
I think it is still better to opt for precious metals the likes of Gold. Knowing the actual price of Diamonds is actually quite and contacting a genuine buyer is difficult as well.
Precious metals cannot be made, they are basic elements (remember the periodic chart from chemistry class?) and are only available in whatever amount we can pull from the earth.
Diamonds are carbon that has been compressed. With carbon being readily available and technology that can compress it, the supply of diamonds can grow as big as the demand. As the value goes up, so will the efforts to compress more of them. And the easier the technology makes it, the more supply there will be.
I think silver and gold seems a more solid bet.
I agree.
Diamonds are released in limited quantity by a closely knit group of brokers. It is to keep the price of diamonds inflated. Diamonds are useful in drilling bits, and other industrial purposes. Otherwise, their greatest value comes from bragging that you have one.
Before Queen Victoria, diamond engagement rings were not a big thing among the general public. DeBeers is the one trying to tell you how much of your income you should spend on an engagement ring.
A friend in college told me that her future husband said I have “X” to spend on a ring. You choose how you want to spend it. She chose a simple gold band, and large appliances. She was a wise lady.
Sounds like my very simple 18k gold band, Bill. In dollar terms it cost $84 in 1996 – although its true value to me is priceless.
one of the best ways to invest in the gold market is through gold mining companies.