The Rich Invest in Diamonds As Prices Are Boosted 76% in A Year
While stock markets and real estate values decline, prices of the most rare colors and colorless diamonds are being increased and are attracting the wealthy investors as well as structured funds. Diamonds, which are a commodity rather than a necessity, are being used as a new investment.
According to the website of International Diamond and Jewelry Exchange, 5-carat gems that are originally sold for $1 million or more, have gone higher by 76.5% within the year, stopping at May 2008.
The managing director of London- based Graff Diamonds International: Francois Graff said in an interview, “There’s a group of savvy, tremendously wealthy people who have put a small portion of their fortunes aside to invest in diamonds… They’ve made incredible returns.” Graff continues to state a comparison of the present to five years ago, when dealers paid $70,000 per carat for colorless diamonds for 10 carats and above.
Dealers are now paying over $200,000 per carat.
Diamonds have become more rare then ever. Christie’s International European director of jewelry says there is an approximate of only 200 highest grade, D-flawless colorless diamonds of over five carats that are discovered per year, let alone blue and pink stones of large scale, which are even more uncommon.
According to the IDEX website, Diamond Circle Capital is the first known fund to invest in rare colored and colorless diamonds.
At an interview, Allan Bronstein, New York diamonds dealer was quoted saying, over the last twelve months, the best pink and blue diamonds have increased in prices between 75 and 100 percent.”
The Natural History museum in London now has Bronstein’s Aurora Collection of 296 colored diamonds on loan. These diamonds are considered the rarest and most beautiful makings in the world.
The diamond market is very similar to the art market in the sense that they are both based on individual dealings, says Graff. He continues by stating that, “The wealthy don’t need to invest in funds. They can just pick up a telephone and buy the things for themselves.”
Graff has sold a D-flawless, emerald-cut diamond of 243.96 carats to an Asian buyer for $99.6 million and says that this was not the only person who was ready to buy the stone. Another of Graff’s stones was a flawless 20-carat fancy deep-blue diamond, also marked for about the same price.
It is assumed that when stock markets drop it benefits the diamond district, since people with much wealth begin to turn to more tangible things to invest in. Diamond prices are expected to stay high for at least the next six months if not more, believing that the amount of colored diamonds will still be scarce.¼/p>