If you are looking to diversify your investment portfolio, diamonds and rare coloured gemstones should be considered. Like with a piece of art, the beauty of a gemstone is that you have the option to enjoy it as long as it is in your possession. Diamonds are by far the most valuable asset you can own, especially in comparison to their size. They are easy to store, move and sell, making them an attractive alternative to other physical assets.
Diamonds as an investment
In the past 15 years, the value of 3-carat diamonds have increased by 145%, and 5-carat diamonds have increased by 171% (source: Rapaport Diamond Trade Index).
With the exception of diamonds that are rare due to their size or colour, diamonds are a commodity, and for the most part, your success as an investor will depend on the price you pay for it. It is that simple.
Fancy colour diamonds are in a category of their own. They are graded according to the intensity of the colours they display, ranging from faint to vivid. Fancy diamonds come in nearly every colour; however, the rarest and most desired amongst investors are red, green, pink and blue. Fancy diamonds are valuable for a reason. Only 1 in 10,000 diamonds has a fancy colour. This rarity has made fancy diamonds the ultimate gem for connoisseur investors and collectors over the past five years, driving the prices to extraordinary figures. The pricing is complex and heavily influenced by colour, consumer taste and what others are willing to pay.
The finest specimens of the fancy colour diamonds are rare to find on the market, and they will only be available to the inner circle of the industry unless seen on auction.
Investing in coloured gemstones is a lot more complex than diamonds since minor colour variations can significantly influence the price. Treatments are common, and without reliable access, a buyer is at risk of financial loss and disappointment.
Rubies, Sapphires & Emeralds
Due to over-mining, rubies, sapphire and emeralds are becoming rarer and rarer. Unlike tanzanite, which was only discovered in 1967, these gems have been known and desired for thousands of years. Along with diamonds, these three gems are classified as precious stones, and therefore there is no need to educate the market of their importance.
After fancy colour diamonds, rubies are the most expensive gemstone, followed by sapphire and emeralds. Some of the oldest rubies are more than 700 million years old. Whether a ruby is heated or unheated, of Burmese, Thai, or African origin, finding a top colour ruby of more than 3 carats has become very difficult. Rubies with a glow of clear pigeon blood colour due to their high chromium and low iron content have always been desired. The finest rubies and sapphires' auction price has increased by approximately 1,000% and nearly 2,000% for the finest emeralds in the past decade.
Due to the unique and complex geological conditions perfect for their formation, tanzanite is only found in one place on earth, the foothills of Mt. Kilimanjaro. The exclusive mining area is approximately 7x2 kilometres, and the miners have to go deeper and deeper to find excellent quality. Currently, most of the mines are more than 1000 meters deep, and inevitably the cost of extraction will go up as the mining progresses. The source's lifespan is unknown, and it is highly doubtful that tanzanite will be discovered anywhere else.