When dealing with diamonds, the aspect of a value investment is not necessarily the decisive factor for its outstanding position within the family of gemstones. It does, however, constitute a very important criterion amidst all of the remaining superlatives which a diamond carries with it. Some jewelers or merchants attempt to downplay the investment aspect or even deny its existence. This happens, most probably, due to the fact that they do not feel sufficiently qualified to offer the client reliable advice in this respect. However, even the most unemotional and objective handling of this topic cannot simply ignore the following points:
The intrinsic value as an investment constitutes, particularly nowadays, a secure investment. Almost all securities, shares, shareholdings, insurances, etc., have proven to be very risky in the recent past.
A movable tangible asset is always much more interesting and more stable than an immovable one. If we compare the various tangible assets in the recent economic crisis which struck Southeast Asia, we receive a very clear picture: numerous real estate investments fell to 10% of their value within a short period of six months, while diamonds, precious stones and gold increased their value by 100% in local currencies, while remaining stable when measured by international currencies.
Even German real estate assets dropped sharply in value in the course of the economic crisis of the past years, while diamonds increased their value in the parallel period. Very generally speaking, the rule is that real estate is always under pressure in times of crisis, while movable tangible assets are especially in demand in such times. This occurs because due to their mobility, movable tangible assets always maintain their value at international levels, as opposed to fixed assets which are linked to local value levels.
This is why, in times of crisis, movable tangible assets are the most demanded value assets, both because they enable a possible escape to the international level, thus evading devaluations of national currencies, and because they enable the customary flight of assets in times of crisis.
Diamonds are usually tax-neutral investments. They are not subject to capital gain taxes, and are taxable only when their owner expressly wishes it to happen.
Since the price of a diamond is not a free market price, being mostly determined by the diamond syndicate, the price of diamonds has not been subject to fluctuations for almost an entire century. With the exception of the 1978-1980"diamond rush", diamond prices have almost continually risen over a period of approximately 100 years. Presumably no other investment exists, which is as stable and consistent as diamonds.
No real "rest risk" exists in diamonds. Any currency, raw material, real estate asset, any security or state loan entail a certain risk. A world war could theoretically devalue any currency, make any real estate investment worthless, while a new technology could theoretically replace any raw material overnight, and an able competitor could destroy any company and its shares overnight too. As far as the diamond is concerned, no war, new technology or newly appeared fashion would be able to undermine its value. The potential raw diamond deposits are relatively well-known, and the diamond will become ever scarcer along the history of mankind, as is the case with other natural resources (oil, iron, carbon, etc.).
Together with valuable pieces of art, diamonds constitute one of the few commodities which combine their usage with a value investment aspect. One can enjoy a diamond as a piece of jewelry and simultaneously perceive it as an investment.
Amongst luxury commodities, the diamond is almost the only one which maintains, or even increases, its value over time. Most other luxury items (cars, furs, furnishings, etc.) are subject to rapid decreases in their value.