Not only do they last forever, diamonds also yield a remarkable pricing zeal proven to be recession-proof.
It is present at your life’s biggest moments – engagement and wedding – and still probably wrapped around your ring finger for all these years. No matter how big or small they are, diamonds are a form of investment that not many are aware of. Some may have heard the term “Blood Diamond” – starred by Leonardo Dicaprio in a film back in 2000s – but then again when one is asked about the investment side of the story, most responses come as a bit of disappointment. Why? Well, banks don’t really put their hands on it and, considering banks being the most accessible and trustworthy institutions for public investment, we hence see this investment option remain rather obscure in the eyes of the society… though very much profitable.
Rule of thumb: 4 C’s
The rule of thumb is that all diamonds are an investment. Be they the one stuck on your wedding ring or even the synthetic stones, every unit has its own price. Diamonds have also been circulated worldwide, both for jewelry and industrial usage. The former use is where the value of investment lies, where the beauty of the stone truly shines. But as such other investment products, that beauty needs to be put into perspectives. The gemologists all around the world these days have come to an agreement to follow through with what is now commonly summed as: 4 C’s.
Jelita Setifa, marketing manager from Mondial Jewellery, illustrates, “The thing about diamonds is that it’s not solely a matter of size. The 4 C’s hold very much all the reasons why some small stones soar higher in price than the rest.” The C’s stand for color, clarity, cut and carats (weight).
Although color seems to be the easiest to recognize, most quality diamonds on sales are hardly purely colorless. A tinge of yellow or brown is commonly found in the mix of composites responsible for the gem formation. Fortunately, Gemological Institute of America (GIA) has already come to the rescue by setting up a standard range of color spectrums, from D as the highest clear transparency level to Z the bottom score. But retailers on the market would call the existence of a D-color diamond, if any, as a rarity nowadays.
Aside from colors, clarity marks the flaws on and inside the diamond. Given the natural habit of gem formation, it is not strange that sometimes alien particles get stuck inside the stone. Such inclusion will hurt the value, of course, and so are blemishes on the surface which usually arise from long-term wear of the diamond. On these, GIA gives a scale from F (Flawless) or IF (Internally Flawless) all the way down to I2 – I3 (Included).
The finest radiance of a diamond nevertheless relies heavily upon the cutting. This is the part where human contribution takes a major role, since a slight mishap on the pavilion shape will inhibit the stone’s potential to bring out their utmost “bling-bling” effect. In a discourse of gemologists, perfection occurs when a diamond is able to deflect shine with three intact properties altogether: brilliance, the white color effect; fire, the rainbow color effect; scintillation, the sparkles. What does a diamond do anyway if not sparkling?
Carat is the last but not least quality a gemologist will deem at when certifying a diamond piece. Logically, the heavier the gem is, the more expensive it shall be. It is important to note though that, unlike gold, diamonds do not pertain to fungibility, meaning that two diamonds of a carat each are not necessarily of the same price of a two-carat diamond. The respective pricing follows on an ever-changing index released by global institutions; the famous one of which is the Rappaport index – initiated by Martin Rappaport.
Sizzle the dazzle
Once you’ve managed to set your eyes on fine diamonds, the investment begins with two simple steps: certification and appraisal. These actions are justified only to be done by a professional gemologist, and will categorize as to where your gems belong. It is encouraged that you keep yourself posted on how much the carat is valued – as stated in the Rappaport index – has risen, and the best is probably to figure it out from a certified diamond retailer.
Should you be worrying over the changing climate of the global economy, diamonds have proven to be resilient so far with significant value increases occurring throughout the last decade. The reason for this is the global DTC (Diamond Trading Company) system that works under the sole private management of the largest diamond distributor in the world, De Beers group. It is said that the group sustainably controls the diamond pricing without direct interference from the banking institutions, making it impregnable from bank bankruptcy or falling share prices.
In comparison to other precious stones, diamonds definitely hold many aces. Constant demands from the like of engagements and weddings never fall short from time to time. Different to pearls, the synthetic diamonds have not yet substituted the intrinsic quality of a natural gem. There is such distinct prestige bestowed by the public upon a wearer of fine diamonds, as appeared in the international occasions such as Oscar and Grammy Awards, or elsewhere in Indonesia. Vis-à-vis gold, diamonds win the competition owing to the size, weight and value. It would be virtually impossible to do luxury travels around the world with a bag of pure gold bars, but not so for a pocket full of diamonds. Ultimately, their association to romance is a characteristic that no other precious stones may compare. Altogether, it’s sufficed to say that with diamonds, good things do come in a small package.
By Chris A. Published in HighEnd, December 2011