“Pink diamonds are the best friend of women” is probably one of the best known movie quotes, but that is not true in the world of investment. Pink diamonds shine and rise in value if you are a distributor, but when it comes to buying pink diamonds for a diamond investment or trading, remember that a trader’s best friend is liquidity. Just because a value is assigned to an asset, that value is only accurate at the time of sale. Having something of great value that cannot be converted into cash means that you have nothing.
This, together with the fact that each pink diamond is unique and that the prices of diamonds are a great secret, from one trader to another it seems that there is a huge significant variation and, since there is a virtual infinite supply, the only way of That you can convert your pink diamonds or other precious stones into cash is by selling them below the market to a willing dealer or looking for a retail buyer.
This is the same as in the antiques market and the art market. The dealers are very reserved about pricing and when they see the “grandmother’s” antiques, they become only used furniture, but once they put them in their antiques store they are invaluable.
This sector is known for its lack of transparency, so it is difficult for investors to assess risk factors and analyze profit opportunities. Getting an accurate and updated pricing is not always easy, which further complicates investment decisions. That said, there are also a lot of opportunities for pink diamond investors, especially since prices stay in 2015.
Now, with all this said, the question is whether there is any way to invest in pink diamonds, as with contracts or ETF online. Investing in diamonds is never simple, even when there are stones – especially since their valuation is very complicated. Unlike other precious objects, such as gold, the wide variety of individual rocks discards any simple price-per-ounce price mechanism. The basic assessment template is reduced to four Cs – Carat (weight), Color, Clarity and Cut. But there is plenty of room for subjective interpretation.
Unlike gold, you cannot simply enter a pink diamond store or go to a buyer and get the cash price you saw today in diamond prices. What buyers are looking for is the quality of a gemstone and the money that a buyer is willing to pay, and those two subjective factors that can hinder their desire to get their best selling price.
Pink diamonds are cheaper
Like a car, a pink diamond is an asset that depreciates as it loses a large part of its value at the second of buying it. Think of gold and silver. Its market is very liquid and fungible since it can store coins, sell them at any time or even negotiate with them later. During that period of time they could even appreciate and provide protection against inflation.
Given the level of knowledge involved, some believe that buying pink diamonds is a fool’s game unless you have real experience – although it is worth noting that the first rule of purchase is to avoid being fooled by jewelers’ margins. If you want to get an idea of the prices, take a look at the largest online distributor.
Due to the difficulty of pricing pink diamonds, ETFs and investment funds depending on the value of the gemstone have been difficult to achieve. However, there are two important initiatives for ETFs, says Golan, from the IQ Index and GemShares. Both companies have applications under review before the SEC.
The way in which ETFs would work, according to Golan, is that companies would buy and store physical pink diamonds, probably 1 carat, round white stones, since they have maintained their value during the 2008 recession and are traded more easily. The shares will be issued to investors and an index created to track changes in value in the wholesale market.
There are, however, other ways to invest. Due to the difficulty in pricing, vehicles such as the Negotiated Funds on the Stock Exchange (common in the gold market) are rare in gems and are not regulated anyway. But funds are emerging tracking the fate of pink diamond miners and associated companies. The PureFunds manager, for example, recently launched what is claimed to be the first ETF in the pink diamond industry.
Novel Diamond Private Equity Fund LLC, based in Chicago, is a private equity fund that invests in the rare jewelry market. The absolute return fund, which has a minimum investment of 100,000, uses colored diamonds as its underlying product, says Alan Landau, who runs the Hong Kong trade.
He points out that white diamond prices could be more volatile, but colored diamonds are more valuable. For example, when an impeccable white diamond could be worth $ 30,000 per carat, an impeccable strong pink diamond could sell for 1 million per carat and a bright red diamond for 2 million per carat, and those prices have continued to rise.