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Investment jewels
 
 Investing in jewelry have the same purpose like any other investment – to generate profit over time, and make the dollar invested to come back with a friend attached. It is different from investing in gold shares on the stock market, where the investor does not physically see the investment and trades in virtual shares. The jewelry investor, physically owns the jewelry, enjoys it and in some cases wears it.
Jewelry and gemstone investor often turns into a collector, surrendering to the inherent human attraction to beauty. Great collections have been born trough such transformation, starting sometime with a single beautiful gem. In the case of the collector, the initial purpose of investing is lost somewhere along the way, as the idea of selling for profit does not seem attractive anymore. Investment in jewelry and gemstones is a long term investment, since the increase in value is generally moderate, and it have to cover some profits paid from the investor, to different levels of trading with the initial purchase. "If you want a nice sapphire for your wife, you want to buy the best sapphire on earth," says Richard W. Wise, a graduate gemologist and author of The Connoisseur's Guide to Precious Gemstones. "That's very nice and I'm sure your grandchildren will appreciate it. But if you buy it at Tiffany's and think you'll turn it over for a profit in 10 years, you're deluding yourself." Of course, it happens sometime that the price of a gemstone doubles overnight, but this is something characteristic for a volatile market where the risks are rather high. Gems are an imperfect market, with a sale possible only when there is a willing buyer and all prices open to negotiation. Other imperfect markets include real estate, art and antiques.
I can separate investment jewelry into three major sectors:
Investment Diamonds
Investment Colored gemstones
Investment in top Design and Craftsmanship
Diamonds
Diamonds are the most concentrated store of value that exists. They are tangible, portable and liquid investments that investors make privately. Investors can use diamonds without decreasing their value and they pay no property tax on their investment. Diamonds are a long-term, risky investment. Their value is based on their rarity, which can fluctuate with the discovery of new sources and the exhaustion of old mines. Investors willing to venture in this field and eventually be successful, must first invest time in learning about diamonds.
Diamonds can be bought loose, which means free of any mountings or set in a piece of jewelry. Loose diamonds are more liquid because if you need to sell one, you won't need to find someone who likes the setting. They are also much easier to asses and evaluate before purchase, something very important when buying with investment in mind. On the other hand diamond jewelry, is an investment that you can wear without diminishing its value. Since diamonds are a long term investment and one have to hold them for years until they appreciate in value it is not a bad idea to buy a loose stone and then put it in a mounting of one’s choice for the purposes of wearing it. The diamond can be sold loose later and the mounting can be reset wit appropriate colored gem or traded in for its metal value. The lost absorbed in the last case will be rather insignificant compared to the opportunity of wearing your diamond for years.
What diamonds to buy for investment?
Buy fine quality large stones. Colors D,E and F in sizes over 2ct but best over 5 ct. This is the stones which are rare enough to grow in value fast, well, at least much faster than smaller stones in good commercial qualities. The make should be ideal or excellent. Top quality diamonds are more liquid than real estate but less liquid than stocks or gold. It will take some time to find a buyer for your stone. Interestingly, the more rare and pricey the stone, the easier it is to resell. There are so few truly magnificent diamonds and there is a lot of money in the world looking for that type of stone. It is much easier to sell a $100,000+ stone than a $1,000 stone. While fine, large 5+ carat white diamonds can make very acceptable long term investments, the diamonds with the best appreciation track record are natural fancy color diamonds such as yellow, pink , blue, green, purple and red. Since serious recording of prices started on these stones around 1970, they have never fallen in price. In recessions, they tend to move laterally and in healthy economies or inflationary times they tend to move up in price. Blue diamonds have approximately doubled in price every 5 years, pink diamonds have doubled in price about every 6-7 years and yellow diamonds have doubled in price about every 8-10 years since 1970. These diamonds are hundreds and thousands of times more rare than the finest "D" color diamonds. And, most famous diamonds are not white. Think about it! The Hope is blue and the Tiffany is yellow, just to mention two stones.
Always buy an important stone with a GIA or EGL certificate. Most large and rare stones have a certificate that was issued at the time of cutting and will be recorded and will stay with it until it is reexamined for a specific reason. This is the pedigree for the stone, your assurance of what you are buying and the future owner's assurance of what he/she is buying from you. Don't ever take the jeweler's or dealer's word on the quality of an investment stone, always insist on certification. Most truly important stones already have GIA or EGL certificates with them.
Here is a link to updated information about global investment diamond prices
Over the next few days we will look at the viability of the rest of these options. Stay tuned.
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Your host Vasco Kirov
Award winning jewelry designer
and master goldsmith
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