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All you need to know about the correlation between Diamonds and the Stock Market

February 2022 | ankit agarwal

We all want to save money and preferably make it grow by leaps and bounds. The idea of money sitting at a bank account or the home locker does not help multiply it. Often, stock markets scare people away, as it’s a complicated way of investing, requiring a lot of knowledge and time to track stocks.

Precious stones and metals are the next best bet in making lucrative profits with investments. It is a safe market and guarantees liquidity in emergencies. Diamonds are a smart investment too, for those who like to invest in them for gains. The diamond industry has been a victim of many misunderstandings, complexities and history. In the 21st century, there are some myths surrounding diamond investment that often keep investors from taking advantage of a gainful opportunity.

Diamonds are not rare

Loved and adored by many, diamond is one of the most sought after gemstones for sentimental occasions such as engagements and weddings. The advertising industry has also pegged it as forever. Diamonds are the hardest substance on earth. Because of its complex combinations and form, each diamond that is mined or cut is unique. Although diamond mining has been paused for a few years, the ones in the market are all special.

The diamond investment market is not regulated

It is true that the diamond market is not regulated by an external financial authority, although there is a market price depending on the Diamond Report, which is followed globally by diamond merchants. You do not need to be a professional jeweler to understand the value of a diamond.

No high performance without high risk

Diamond investment is a non-speculative investment. It means that its profitability must be valued over a minimum of 10 years. Since the 1960s, the value has remained stable. Because of the growing economy globally, the value of a diamond remains advantageous. Therefore, professionals recommend investments in a diamond for the long term.

Only the white diamond is profitable

The white diamond is a common gemstone in jewelry. Coloured diamonds are considered fancy and having less value. On the contrary, a coloured diamond is popular in investment circles for its rarity. Since mining has become less over the years, both coloured and white diamonds have gained in value. The most valued diamond right now is the pink diamond. A diamond’s value keeps growing with demand over the years.

Other metals and gemstones are more lucrative

The safest way to invest your money is to diversify your investments. It is advisable that you invest in precious metals such as gold, but diamonds will add a higher return rate to your portfolio. Diamonds are a tangible form of investment. It means they have a value in physical form and they allow you instant liquidity.

Your investment portfolio will not only get a boost but will also give you more returns than you would, with a limited portfolio. It is becoming a popular investment option for many. It is vital to note that the size of the diamond does not determine its value. Diamonds are an investment that you can flaunt without having to hide them inside the locker. Diamonds look gorgeous on women and are the most sophisticated form of fashion. Diamonds are not only a girl’s best friend, but also a man’s most trusted form of investment. It creates a win-win for both. Look beautiful and watch your money grow as you enjoy the riches of the gemstone that is most desired — the diamond.

Diamonds are a popular and generally well-regarded fund. Owning shares of Diamonds allows investors to attain the diversity of the DJIA with relatively low transaction fees. The fund is highly regarded for its relatively low gross expense ratio of 0.16%. Diamonds, like other etfs, may offer some investors tax advantages over owning mutual funds. The fund's large size provides ample share liquidity, and investors can buy or sell shares any time the exchange is open. The etf's high market capitalization and liquidity have spawned a variety of options chains from which traders can choose. Then NYSE allows investors to trade Diamond shares using margin, as well as to short-sell Diamond shares.

Diamonds as gemstones--not the etf--are generally considered a poor investment vehicle, mainly due to the illiquidity of the market, a lack of price transparency, high transaction fees, and high risk related to quality assurance. Investors who want exposure to diamonds could reduce some of the risks by owning gems, an ETF that invests in the diamond and gemstone industry. Many wealthy individuals consider diamonds a good investment because they can buy high-priced stones with relatively low transaction costs, and they can enjoy the diamonds while their value grows, as with antiques or art.

Significance of Diamonds in Stock market:

Over the last few years, the use of diamond jewellery as an investment tool has seen a rapid increase. Several factors make it a good investment option as compared to gold.

Size: The first and the most obvious advantage it has over gold is its size. Unlike gold bullions, diamonds don’t take a lot of room. These precious gemstones were used as a great means of money transfer since a long time ago. A diamond trinket, no matter how small it is, costs double or triple compared to gold jewellery of the same size. This means diamond ornaments, whether it is diamond bangles or necklaces, make good investment options.

Storability: With small size comes great storability. So much that you can keep a diamond worth hundreds and thousands of rupees in even a small safe. Also, diamond jewellery is an investment one can see, hold, and wear. As a result, many people feel it’s a safer bet than stocks and other digital investments.

Durability: The durability of diamonds is another advantage they have been naturally bestowed upon. It is the hardest thing on planet Earth. You can be sure that nothing will happen to it. You don’t have to worry about diamond jewellery wearing off as long as you take good care of it. This means you can wear your investment and enjoy it as long as you want.

CONCLUSION

Diamonds are also inflation proof, just like other physical commodities, such as gold, silver, and real estate. However, unlike other physical commodities, diamond jewellery is a more movable and durable investment. Other than the physical aspects and psychology behind diamond jewellery as an investment, they also have financial benefits.

 

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