Investing In Colored Diamonds

Share this Post

Investing in Colored Diamonds - 101

If you are new to the world of investing in fancy colored diamonds there are, like any investment, things you should know before starting. Beyond the basics of how to maximize profit and minimize loss there are many areas you need to familiarize yourself with. Fancy colored diamonds are one of the most profitable investments you could make if you know the pitfalls to avoid and what you should pay attention to.

Any investment advisor will tell you that before you invest one cent in something it pays to do your research. At Hard Carbon Inc. we have been working with investors for decades to educate them in fancy colored diamonds. We have found that the more research a person has done the more successful they are. To assist our current and prospective clients we have developed a specific education program to provide as many resources as we can to help them learn about fancy colored diamonds.

Colored Diamonds Supply & Demand

In microeconomics the law of supply and demand is the correlation between the fact that when there is a higher demand for a commodity there is a rise in supply for this commodity and vice versa. The law of supply illustrates that when a product is highly-desired and the supply is low it will lead to an increase in the price of the product. And this is the situation with fancy colored diamonds. For decades fancy colored diamonds have been sought after, both by people for pure investment opportunities and for jewellers and collectors of fine jewellery. Fancy colored diamonds are included in some of history’s most famous pieces of jewellery and objets d’art.

For some time, the desire for fancy colored diamonds has far outpaced the supply. There are numerous reasons for this, and it is important for an investor to understand the complex relationship between supply and demand and the factors that go into the sourcing and bringing fancy coloured diamonds to market.

Unlike ‘clear’ diamonds whose value increases when there is a complete lack of impurity or imperfection, fancy colored diamonds are created by the addition of chemical impurities and even structural defects that impact the crystal lattice of the diamond create the colored hues we have come to value so highly. Fancy colored diamonds come in almost every color. The greater the intensity of color raises the value of the diamond; in general, yellow and brown diamonds are valued lower than pink or blue diamonds. Red diamonds are the rarest of them all and are most expensive.

Knowledge of the mining industry and its geo-political connections is integral to understanding how the fancy colored diamond market works. There are only a few mines which produce fancy colored diamonds in the world.

Fancy Colored Diamond Mining

In South Africa the Republic of Botswana has operated, since the 1980’s, four of the most significant diamond mines. The four mines are owned jointly by the partnership of Debswana, the De Beers Company and the government. Botswana produces clear diamonds but two of the most significant blue diamonds have been found there in recent years. One of the mines, called Jwaneng, has been predicted to produce diamonds until 2032.

The fancy colored diamond world, specifically the highly sought after pink diamond market, underwent a seismic shift recently. It is important for investors to remember that diamonds are not in infinite supply and from first discovery to bringing them to the consumer market can take at least a decade. The Argyle diamond mine owned by the Rio Tinto Group was located in the East Kimberley region of Western Australia. It is estimated that over 90% of the world’s supply of the highly coveted pink diamonds were from the Argyle mine. They also produced yellow, blue, green and champagne colored diamonds. In 2019 Rio Tinto announced that they would be closing the Argyle mine in late 2020. Mining operations started in 1983 and while they produced an average of 8 million carats annually (and a whopping high of 42 million carats in 1994!) they had depleted the resources of the mine and had to end production. This closure shifted the supply of pink diamonds significantly and is sending investors looking for new sources of these gems.

Seasoned investors who took an interest in the Argyle pink diamonds experienced incredible returns on their investments. A pink diamond from Argyle purchased in 2000 is estimated to have increased 500% in value in twenty years.  Keeping an eye on the mines in operation is key in achieving success when investing in fancy colored diamonds.

A Good Investment in Uncertain Times

The last two years and the global struggle against COVID has shown that nothing is certain. Which is why all investors should focus on preservation of capital. Those that invest in fancy colored diamonds have learned that this investment is one of the most dependable and they are not as vulnerable to the ups and downs of other investment vehicles. Overall fancy colored diamonds have not lost value within any given year for over 50 years in a row.

And an often overlooked, yet crucial, part of investing in fancy colored diamonds is the ease in which they can be purchased and stored. As a hard asset, investors can easily store them in safety deposit boxes or even at-home vaults. They are virtually indestructible, require little to no upkeep and are easy to transport. Perhaps most importantly they are also a private investment and not a public one. There is no bank or government agency that knows what your holdings are.

Colored Diamonds Potential Investment Gains

We hope this article has helped you understand the complex and fascinating world of investing in fancy colored diamonds. At Hard Carbon Inc. we help educate investors to make sure that they make the right purchase at the right time. We care about your investment journey and take the time to get to know you and what your goals are. Our network of global suppliers produce the best possible diamonds for you to choose from and we can help investors wanting to invest in uncut diamonds or even people wanting a specific diamond to create a piece of jewellery.

As industry leaders we have the expertise to guide you and you can depend on Hard Carbon Inc. to make sure your investment in fancy colored diamonds is a successful one.