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Archive for the 'Buying Diamonds' Category

Investing in Diamonds through a Diamond ETF

Sunday, April 28th, 2013

Gold investment, or any other commodity for that matter, is comparatively easy. Gold, although it comes in many forms, shapes and sizes, is basically a metal that is standard throughout. Diamond is a different matter. It has no fungibility such as gold or other precious metals. Due to the diversity of diamonds there is no standard by which one can measure one a one for one basis. The liquidity is limited and special expertise is required in order to establish the value of a diamond or selection of diamonds. In addition most of the transactions are private and there is minimal real time market pricing to rely on.

How can one invest, then, in diamonds other than actually buying some diamonds and hoping their value will increase in time?

One possibility is a Diamond Exchange Traded Fund such as has been developed by PureFunds, the PureFunds ISE Diamond/Gemstone ETF set up on November 2012.

Given the complexity of diamond investment the fund has found a way to provide investors a way to invest in the supply and demand cycles or rough and polished gemstones and attempts to engage in the complete cycle from the diamond dug up out of the ground through the entire process and into the retail market.

This is done by holding an investment in around 23 or so stock in various companies actively engaged in the diamond industry across 6 continents, the idea being that these companies are representative of the life cycle of a diamond from start to finish.

According to PureFunds,

“The ETF attempts to represent the full life cycle of the gemstone industry via some of the largest and most liquid public companies of the industry in the world. The fund represents some of the largest rough diamond producers in the world, such as, Petra Diamonds (6.31% of the Fund), as well as, exploration and early stage production companies such as Stornoway Diamond Corp (2.01% of the Fund).”

“The ETF also holds companies that primarily deal in the sale of polished stones and/or hold inventory such as Signet Jewels (9.03% of the Fund). Vertically integrated companies that produce or procure rough stones and also sell polished stones such as Chow Tai Fook Jewellery (8.69% of the Fund), Harry Winston Diamond Corp (8.06% of the Fund), and Anglo American (5.80% of the Fund), which owns 85% of DeBeers, are also included.”

Diamond ETF Holdings

The chart displayed shows the holdings in each of these companies held at 11/30/2012 and, of course, are subject to change.

Although it is a clever way to invest in diamonds and there are some advantages to this, there are disadvantages also. These include the fact that some companies may not be exclusively diamond although may hold an influence of the industry. A typical example is Anglo American which is concerned with the diamond industry in that it owns 85 percent of De Beers. The stock price and value of such companies can be dependent on the performance of other areas of interest to the company.

In addition the performance of the stocks can differ from the price performance of physical gemstones due to both systematic and non-systematic risks. Systemic risks are those relating to stock market performance and non-systemic related to company performance. Systemic risk is dependent on the stock market performance and is the inherent risk one takes by investing in that quarter. The way to reduce non-systematic risk is by diluting the potential risk through diversification into a number of companies.

Advantages of investment into diamonds include:

More value per weight than gold
Diamonds never go out of fashion
Rarity
Durability
Ease of transport and storage
When a good balanced portfolio

The chart give the percentage of the fund for each stock held based upon these and other risks to provide a balanced portfolio that is representative of the diamond market as a whole.

It should be noted, as per the prospectus that:

“Individual shares may only be purchased and sold on a national securities exchange through a broker dealer. You can purchase and sell individual shares of the Fund throughout the trading day like any publicly traded security. The Fund’s shares are listed on the NYSE Arca. The price of the Fund’s shares is based on market price, and because use exchange traded fund shares trade at market prices rather than net asset value (“NAV”), shares may trade at a price greater than NAV (premium) or less than NAV (discount). The Fund issues and redeems shares on a continuous basis, at NAV, only in blocks of 50,000 shares (“Creation Units”), principally in kind for securities included in the Underlying Index Except when aggregated in Creation Units, the Fund’s shares are not redeemable securities”

Not long ago, Diamond Investing News spoke with Paul Zimnisky, CEO of PureFunds. One question asked was, “Since it’s not a physically backed fund and there are no futures contracts or other forms of trade, how does your ETF account for the qualitative nature of valuing gems? How is it priced?

Zimnisky Responded, “All of the companies in the fund are exposed to diamonds or other gemstones in one way or another, so fluctuations in the price of diamonds should directly affect these companies’ cash flows.

As far as how the fund is priced, the fund’s index is based on a market cap-weighted methodology across a basket of about 25 stocks. The fund is passively managed, attempting to mimic the stocks in the index as closely as possible, and the stocks are marked to net asset value every day, which is right around where the fund is usually priced.”

For someone who is interested in diversifying into other investment opportunities, diamonds could well hold the key and investing in Diamonds through a Diamond ETF such as PureFunds may well be the answer.

ETF Ticker:GEMS
Exchange:NYSE Arca
Inception:11/29/2012
CUSIP:30304R100
ISIN:US30304R1005
Expense Ratio:0.69%
Index Provider:ISE
Index Ticker:ZIG
# of Holdings23

(As at 04/26/2013)
NAV (Net Asset Value) MARKET PRICE
Net Asset Value $18.89 Closing Price $17.76
Daily $ Change -$0.13 Daily $ Change -$0.31
Daily % Change -0.68% Daily % Change -1.72%

References
http://diamondinvestingnews.com/5781-purefunds-paul-zimnisky-diamond-etf-investing-de-beers-anglo-american.html?utm_source=Resource+Investing+News&utm_campaign=32f47104d8-RSS_EMAIL_CAMPAIGN&utm_medium=email
http://www.pureetfs.com/materials.html

Investing in Diamond Mines and Diamond Juniors

Monday, March 18th, 2013

Loose DiamondsHow do you go about investing in diamond mines and diamond Juniors? Of course investing in diamonds by purchasing from jewelers is not the best way since one is maying a premium for the diamonds which may take years to recoup. But investing in diamond mines and diamond juniors can be a different story provided some study and due diligence is done.

Diamond have the potential to withstand economic fluctuations and downturns as well as inflation, currency devaluations and other financial issues that can disrupt the price of oil or precious metals such as gold. As an enthusiastic example of this, IQ just recently applied with the SEC to launch a physically backed, with diamonds, Diamond Fund.

So let’s look at the types of diamond investment available.

Diamond Auction Sales
One can buy diamonds directly through diamond auction houses. Usually one has to be a dealer to do that but, more importantly, one has to know a lot about diamonds. Being able to assess the value of a bag of diamonds, both cut and uncut is vital as is the ability to trade and negotiate a price. One is not so much investing in diamonds here as trading in diamonds. Provided one knows what one is doing and has plenty of experience and knowledge in the field this can be a satisfactory way to make money. But if one is simply buying bags of diamonds to keep and expect them to increase in price, that is a bit iffy and with the expertise a poor way to invest in diamonds.

Diamond Juniors
Diamond juniors are more concerned with exploration and these types of companies are high risk but potential high reward. One of the main components of diamond juniors is strategy. What does a particular diamond junior plan to do and how do they plan to do it? What costs are involved and what is their plan to bring new sources of supply into the diamond arena? Checking the business plan and proposal is vital. Diamond deposits are extremely hard to locate and the odds against locating one is very high. Quite apart from the existing market and price of diamonds, this is what you would call a highly speculative investment.

Much of the capital is spent up from with companies spending “a quarter of a million dollars every time it drills a hole in Northern Canada” according to William Lamb, CEO and president of Lucara. The costs vary of course but that is the ball park figure and amounts just either side of that figure are not unusual. Consequently it is the larger miners with the larger cash reserves and established deposits that can afford to venture forth seeking new deposits. And if a deposit is found, then there is the cost of establishing and working the mine which can take years. Also there is no guarantee that the mine is going to be profitable long term.

Of the 6,500 kimberlites discovered since the 1800s, fewer than 50, or less than 1 percent, have become profitable mines, according to one statistic. So the results of a diamond juniors mining success is very risky. If it pulls it off it can be extremely profitable for the investors but they should be fully aware of the odds and not invest funds they cannot afford to lose. Treat it like a lottery. The chances of winning are extremely remote, but if you do win….

Existing Diamond Miners
It can take anywhere from two to four years to being a new diamond mine online and producing profitably. Existing diamond miners have the advantage here as they have existing mines in operation and producing revenue, have the capital to expend on further exploration and setting up new mines and often have the equipment and labor on hand saving additional costs there also. An existing mining company can often afford to ally with a diamond junior if they consider the diamond junior has found a promising lode or kimberlite.

When it comes to investing in diamond mining companies such criteria as the value using earnings with the market ascribing a multiple to determine a fair price can be applied to companies producing an asset of course which usually precludes diamond juniors.
A number of factors which potential diamond investors can use to assess diamond companies include the size and potential of the company. What other diversity are they engaged in, such as precious metal or base metal mining. The structure of the company. The potential of the diamond mine or mines. The type quality and quantity of gem stones being produced. the quality of the gem stones being produced. The location of deposits can affect the time and expense afforded by the company and this can have a bearing on the potential. Also to be considered is the segregated nature of the diamond deposits. These can range from kimberlite pipes, fissure systems, alluvial deposits in river systems and in the sea. Of course factors such as the strategies employed security measures etc all play a part in the initial assessment of choice in deciding who to invest in.

Conclusion
So when it comes to investing in diamond mines and diamond juniors there is a lot to consider and work through before one decides to invest in a diamond mining company junior or not.

Diamonds the Next Gold?

Sunday, August 19th, 2012

Diamonds the next gold?Is it possible that diamonds are going to be the next gold?

Traditionally diamonds are not an investment due to the high premium placed on the sale of diamonds and the ready availability. In fact diamonds are not as rare as one might think. De Beers, a major diamond producer, has a very large diamond production business and has been known to stock pile surplus diamonds in order to maintain the price of its sales. As De Beers now have a whole chain from mining to retail shops across the world they are able to recoup virtually all the profit normally retained by wholesalers and retailers.

Diamonds generally have a mark-up of anywhere from thirty to one hundred percent. The wholesaler and the retailer each want to make their cut and this adds to the retail price naturally. So when it comes to buying diamonds the closer one can get to the source the better.

Another factor that affects the price of diamonds is that the majority of diamonds produced are industrial quality and only a small percentage are suitable for the jewelery business. Twenty percent of all diamonds mined are used in jewelery and the remaining eighty percent in industry such as for lasers and other cutting equipment.

In view of the fact that cultured diamonds can now be produced through chemical vapour despoliation for example, the diamond industry is no longer totally reliant on mined diamonds. All of this tends to reduce the potential of diamonds as an investment vehicle.
However there are some exceptions.

The price of diamonds varies with the quality and weight of the diamonds so there is no universal weight benchmark for diamonds as there is for precious metals such as gold and silver. A diamond is valued according to its own characteristics such as its color, clarity, the cut and weight of the diamond. This is as individual as the diamond itself.

The Gemological Institute of America, the American Gemological Society and the International Gemological Institute are three major institutions which are used to ratify the value and quality of individual diamonds.

When it comes to diamond investment there are basically two ways to invest in diamonds.

The first is to buy and keep diamonds for a very long time and the other is to buy with the intention of selling at a higher price.

The first option is the one that is open to most people and the question then becomes, where do I get diamonds and what type do I get that I can keep, at the best price? Firstly one would be looking for loose stones, not diamonds that have been set into any kind of jewelery. Buying wholesale or as close to it as possible would be the order of the day.

Getting certificates to establish the quality and value of the stones, a certificate (Kimberley Certificate) to establish that they were not conflict diamonds would be required, and an insurance assessment to establish the value for insurance purposes. Then one would store or keep them in a safe place, such as a deposit box or bank vault for an extended period of time. Funds for this would be those that are not going to be used for a long time.
In the long term the value of the diamonds stored would depend on two factors. The availability of diamonds worldwide and the economic climate. There is no real shortage of diamonds in the world. DeBeers and Argyle Diamonds hoarding activities ensure that the supply of diamonds are regulated to maintain a specific price level. In practice diamonds price value tends to increase at around five percent per annum. Currently not a bad interest rate in today’s climate.

In the short term this is not a particularly attractive investment but in the long term, provided one has acquired diamonds at a good wholesale price, then the steady increase in value will, at least, counter inflation if not improve the value of one’s asset.

So to either buy and keep or buy and sell diamonds, you should be looking to buy wholesale or even better, direct from source, if possible.

Of course one should not put all ones eggs in one basket and some diversification, such as money in property, precious metals, the bank as well as diamonds would be prudent in this day and age.

When it comes to diamond investment, it is possible to at least retain your investment if not make some money, but you will certainly need to do some work and research first.

It was recently found that many wealthy investors own equal amounts of gold and diamonds. The difficult with using diamonds as a security is the pricing factor. Where as gold is simply … gold… you have the weight the size and fineness, but with diamonds you have such a diverse range of factors, the 4 Cs for example and the variable in price per carat as the size increases, makes it difficult to use a standard price. Everyone knows what the price of a bag of coffee or a bushel of corn is as they are easily accessible in the market. Diamonds, on the other hand, are all unique, making a standard pricing very difficult. In fact, you can often take the same stone to two different dealers and receive two different price quotes because it is so difficult to nail down a standard way to value these minerals.

However a company called GemShares, a Chicago-based firm is expected to secure a patent to create an index for diamond pricing which can then be applied to futures contracts and ETFs and so on.

What Took So Long?

But that could all change with the new index, “in which diamonds are arranged in 10 layers of comparable quality and value from cheapest at the bottom to most expensive at the top” writes Jason Zweig. GemShares even has a plan to displace conspiracy theories that often plague GLD and SLV (along with other precious metals ETFs); they are contemplating picturing each diamond on their home website for all of the world to see.
GemShares hopes to create as many trade-able units as the market can handle.

So who would invest In diamonds? Well the existing investors no doubt and possibly some who were not sure how to invest, with an index such as this, would possibly feel more comfortable investing in diamonds.

The return may not be a lot of course but, hey, with bonds returning a negative investment you can hardly go wrong.

As Wealth Wire says, at first it may seem like a rather far-fetched scenario, but the use for a diamond security has the potential to be very high. First, there are all of the producers and miners who could utilize the diamond-based products to hedge against unforeseen issues in production. But more importantly, the average investor would be able to invest in these ultra-expensive minerals with (presumably) a much lower cost, allowing even the average Joe to add diamond exposure to their portfolio.

The introduction of the first futures or ETFs investing in diamonds is expected to be around mid-2013 but that might change with regulation issues, set ups etc.

Where to buy diamonds

Tuesday, November 1st, 2011

Where to buy diamondsWhere to buy diamonds is just as important as knowing what to buy, especially as one can buy diamonds from many places both locally as well as online.

It is a good idea to select established jewelers that offer an extensive range of gemstones as well as full back up customer service support and easy contacts.

Such things as guarantees and warranties, a good reliable and fast shipping service, insurance and attention to quality are just as, if not more, important as price.

There can be nothing so disappointing as buying a cheap diamond that is worth even less than you paid for it. One gets what one pays for and this applies in the diamond industry as much as anywhere else.

We have sought out and located a small number of professional jewelers that fit these criteria.

All offer a superlative service and a money back guarantee. The prices are reasonable and even some discounts are available. But the main emphasis is on the quality of the gemstones and customer satisfaction.

Price of diamonds recommended Jewelers that fit these criteria are:

Diamonds USA
James Allen - Professional Jewelers
Zoara Jewelers

Others may or may not be good but these have been carefully selected and are our preferred jewelers and are the best place, in our estimation, where to buy diamonds.

GIA Three Step Advice on Buying Diamonds

Sunday, January 17th, 2010

GIA Three Step Advice on Buying DiamondsThe Gemological Institute of America (GIA) has issued a three step process for anyone wanting to buy the best diamond of their choice.

Step 1
The GIA advises, is to choose a qualified jeweler. “Choose your jeweler as you would choose your doctor, lawyer or any other professional. Ideally your jeweler will be a GIA Graduate Gemologist (G.G.) or a GIA Accredited Jewelry Professional (A.J.P.). In addition, look for affiliations with jewelry industry groups and professional associations. A knowledgeable jeweler will clearly explain the “4Cs” of diamond quality and will encourage you to compare diamonds to suit your price range.”

Step 2
The second step is to learn the “4Cs” of diamond quality. The key to a diamond’s value is its rarity and no two diamonds are alike. Rarity is determined by a diamond’s unique characteristics as measured by the 4Cs: Carat (weight), Clarity, Color and Cut. Using these criteria, a small diamond of exceptional quality will likely be more valuable than a larger diamond of lower quality.

• Carat: Diamonds are weighed using metric carats. A carat weighs roughly about the same as a small paper clip. Just as a dollar is divided into 100 pennies, a carat is divided into 100 “points.” This means that a diamond of 50 points weighs 0.50 carats. But two diamonds of equal weight can have very different values depending on the quality as expressed in their clarity, color and cut.

• Clarity: Created by nature, most diamonds contain unique birthmarks called “inclusions” (internal) and “blemishes” (external). Diamonds with few birthmarks are rare – and rarity translates to cost. Using the internationally recognized GIA Diamond Grading System, diamonds are given a clarity grade that ranges from flawless, to diamonds with more prominent inclusions.

• Color: Colorless diamonds are extremely rare and highly valued. Most are nearly colorless with yellow or brown tints. The GIA Diamond Grading System uses letters to represent colors, beginning with D (colorless) and ending at Z (light yellow or brown).

• Cut: While diamonds come in many different shapes, from round brilliants to hearts, pears and marquise, cut has to do with the proportions. The well-cut diamond uses light to create brilliance, sparkles and flashes of fire.

More information on the four “Cs” can be found from the links on the left.

Step 3
Finally, the GIA advice for step 3 to ask for an independent diamond grading report. that states, “For the ultimate peace of mind, ask your jeweler to provide an independent diamond grading report with your diamond. The most widely used and respected reports are those issued by the independent GIA Laboratory, who provides reports on the world’s most important diamonds. A professional jeweler can arrange to have your diamond graded and even have a personal message or unique GIA Grading Report number laser-inscribed onto the diamond’s outer edge, called the girdle.”

To this could be added.

Keep the purchase secure. One should have one’s diamond appraised and insured. According to the GIA a diamond grading report can act as a gemological blueprint of a diamond. This is, in effect, an independent assessment of its quality. An appraisal mentions the monetary value on the diamond.

It is also a good idea to buy a loose diamond and have it set into a ring afterwards. It is easier to grade the stone that way and also tends to be cheaper as well.

Lastly, always, always, always get a receipt. A diamond buyer should always ask for a receipt and also ask for a 30 day guarantee allowing the buyer to return the diamond or ring for cash if it is found to be not up to scratch.

These GIA steps on buying diamonds are important and can save a lot of money on the price of diamonds for the diamond buyer.

Get a Diamond Price on your iPhone

Thursday, November 5th, 2009

Get a Diamond Price on your iPhoneYou can now get a diamond price from your iPhone. Diamond dealers these days use the Rapaport Price List constantly during the day and is an essential tool for diamond dealers all around the world. Now, with the advent of new software for the iPhone diamond dealers can simply switch on their iPhone and get a price for a diamond anytime of the day or night wherever they are in the world.

Roei Kashi, son of diamantaire Moti Kashi is a software engineer and a Stanford University graduate with a double major in Economics and Industrial Engineering. A close association with the diamond industry since his childhood brought to his attention the need for a on the spot access to the price of diamonds for a diamond dealer. So he developed some new software compatible with Apple’s iPhone that enabled quick and easy access to the Rapaport Price List.

Using this software one can download the most updated information from the RapNet website on condition, of course, that you are a member. If you have not yet subscribed to RapNet it is possible to do so through www.diamonds.net.

This device offers all the usual filtering criteria of all of the accepted options such as color, clarity, shape and weight, which contribute to the price calculation of a carat and the whole diamond.

The iDiamonds software, as it is called, can be purchased at Apple’s online store by conducting a search using the word iDiamonds. You can also purchase the software through your iPhone by going into its software store and entering the word iDiamonds.

To visit the software’s website: www.roeikashi.com/iDiamonds

Tips on Buying Diamonds

Tuesday, August 11th, 2009

One of the first tips to buying diamonds is to have some understanding of diamonds, what types there are and what are the characteristics of a diamond.Tips on Buying Diamonds

There is a wealth of information on this site to cover just about all there is to know about diamonds and how to buy them.

But to make it easy I have put some useful tips on buying diamonds into one articles into this article in point form.

1.   Given that one has some understanding of diamonds and their characteristics, the first tip is to known exactly what you want by way of diamonds and how much you want to spend. Make sure you include the setting, such as a ring or earrings for example.  Is it to be gold or platinum, if gold what karat you want.  Ideally 18 or 22 karat is good. Most jewelers sell gold jeweler in 9, 19 or 14 karat.  The 14 karat is fine but any less and you will find you are paying too much for the gold.  There is little resale value also in a jewelery piece of under 14 karats gold.

 

2.   Secondly  browse online to find out the sort of diamonds that are available and how much they will cost.  Do comparisons with different diamond dealers and jewelers.  There can be a big disparity in the prices between them. Make sure you compare apples with apples.  The same characteristics for each diamond should be as near as possible.  What is the cut, the weight in carats, the color and clarity.  These should be as close as you can possibly get to get a good idea of the prices available.

 

3.   The third tip is to know your dealer.  Whether you are buying from a jeweler or dealer online, or from a shop close to you or down town or from an auction site such as eBay, you need to know something about the person or business you are buying from.  Who are they.  Especially if you are thinking of buying from an auction or online.  You need to know who they are, where they are, what sort of guarantee and returns policy they have.  There is little point in buying a diamond sight unseen and when you get it home find it is not what you expect if there is no provision for you to be able to return it.  Most good quality jewelers will have a returns policy of 10 to 30 days where you can inspect in the comfort of your own home the merchandise to see if it is firstly, as was described and secondly is the right color, size and shape for what you want. Are there contact details? A fixed address, phone and fax numbers, email address you can actually get a human response from?  All these may not seem important but when it comes to contacting the person after the sale it can become very important.

 

4.  Can you negotiate with them?  These days many dealers or jewelers are willing to negotiate a price with you so do not be afraid to ask.  In Asia negotiating, or bargaining, is common and expected.  No reason why it should not also be done in the big city or even in a small country town.  You would be surprised what sort of a discount you could get.  Even on eBay sellers are starting now to offer an option of “make an offer”.

 

5.      Shipping should have insurance to cover the cost of the diamond also.  What if the Postal service or courier loses the diamond or it is stolen during transit?  Unless it has the right amount of insurance you will only get the standard insurance value which is usually only a hundred dollars or so.  Not good when a diamond is worth say 5,000 dollars.  Always make sure appropriate insurance for shipping is included.

 

6.   This brings us to the very important sixth tip on buying diamonds. Make sure you have a certificate of authenticity from a gemological laboratory.  This certificate should list the characteristics of the diamond.  No two diamonds are alike.  There are always some differences, even with a number of small diamonds cut from a larger diamond.  You want to know that the diamond you bought is genuine to start with.  Then you also want to know that it is the right diamond for the price.  The price of diamonds can depend very much on the color and clarity of a diamond.  Industrial diamonds are worth very little compared to a jewelery diamond. Only 5 percent of all diamonds found are suitable for jewelery.  The others are only suitable as industrial diamonds, suitable for cutting.  Many industrial diamonds find their way into the jewelery market however and are sold in cheap diamond shops such as you might find in the Mall. These diamond are unlikely to have a proper certificate of authenticity.  Only a certificate by the jeweler selling the diamond and that is usually worthless.  A certificate from a proper gemological laboratory such as the IGA for example is invaluable in establishing that the diamonds is as it is presented. As well as for insurance purposes.  

 

7.   Lastly, you should insure diamonds for REPLACEMENT VALUE not market value.  If the diamond was stolen, how much would it cost to replace it?  This is because the market value of a diamond is going to be less than the price you paid for it.  If you want to know the market value of a diamond take it to a jeweler and find out how much they will give you for it.  You will find it is going to be around a third of the price you paid for it. Even diamonds sold at action are sold above the market value.

 

The above tips on buying diamonds will go a long way to ensuring that you get what you pay for and that you are satisfied with your diamond provided they are observed and some common sense and due diligence is applied.

Tips to Buying Diamonds

More on diamonds here

Diamond Investment

Tuesday, May 19th, 2009


Diamond Investment

The  disadvantages with diamond investment is the high premium placed on the sale of diamonds and the ready availability.  Diamonds are not as rare as one might think. De Beers, a major diamond producer,  has a very large diamond production business and has been known to stock pile surplus diamonds in order to maintain the price of its sales. As De Beers now have a whole chain from mining to retail shops across the world they are able to recoup virtually all the profit normally retained by wholesalers and retailers.

Diamonds generally  have a markup of anywhere from thirty to one hundred percent. The wholesaler and the retailer each want to make their cut and this adds to the retail price naturally.  So when it comes to buying diamonds the closer one can get to the source the better.

The majority of diamonds produced are industrial quality and only a small percentage are suitable for the jewelery business. Twenty percent of all diamonds mined are used in jewelery and the remaining eighty percent in industry such as for lasers and other cutting equipment.

In view of the fact that cultured diamonds can now be produced through chemical vapour depositation for example, the diamond industry is no longer totally reliant on mined diamonds. All of this tends to reduce the potential of diamonds as an investment vehicle.

However there are some exceptions.

The price of diamonds varies with the quality and weight of the diamonds so there is no universal weight benchmark for diamonds as there is for precious metals such as gold and silver. A diamond is valued according to its own characteristics such as its color, clarity, the cut and weight of the diamond.  This is as individual as the diamond itself.

The Gemological Institute of America, the American Gemological Society and the International Gemological Institute are three major institutions which are used to ratify the value and quality of individual diamonds.

When it comes to diamond investment there are basically two ways to invest in diamonds.

The first is to buy and keep diamonds for a very long time and the other is to buy with the intention of selling at a higher price.

The first option is the one that is open to most people  and the question then becomes, where do I get diamonds and what type do I get that I can keep, at the best price?  Firstly one would be looking for loose stones, not diamonds that have been set into any kind of jewelery. Buying wholesale or as close to it as possible would be the order of the day. 

Getting certificates to establish the quality and value of the stones, a certificate (Kimberley Certificate) to establish that they were not conflict diamonds would be required, and an insurance assessment to establish the value for insurance purposes.  Then one would store or keep them in a safe place, such as a deposit box or bank vault for an extended period of time.  Funds for this would be those that are not going to be used for a long time.

In the long term the value of the diamonds stored would depend on two factors. The availability of diamonds worldwide and the economic climate.  There is no real shortage of diamonds in the world. DeBeers and Argyle Diamonds hoarding activities ensure that the supply of diamonds are regulated to maintain a specific price level.  In practice diamonds price value tends to increase at around five percent per annum. Currently not a bad interest rate in today’s climate.

In the short term this is not a particularly attractive investment but in the long term, provided one has acquired diamonds at a good wholesale price, then the steady increase in value will, at least, counter inflation if not improve the value of one’s asset.

So to either buy and keep or buy and sell diamonds, you should be looking to buy wholesale or even better, direct from source, if possible.

Of course one should not put all ones eggs in one basket and some diversification, such as money in property, precious metals, the bank as well as diamonds would be prudent in this day and age.

When it comes to diamond investment, it is possible to at least retain your investment if not make some money, but you will certainly need to do some work and research first.

Information on How to Buy Diamonds

Saturday, March 28th, 2009

Before you set out to buy a diamond ring, earrings or a pendant for example, it is a good idea to find out as much information on how to buy diamonds as possible.

There are 5 factors in knowing how to buy diamonds

• How much is your budget
• What is the diamond for you
• What is the right price to pay for diamonds
• Where to buy diamonds at the right price, and
• How to get a good deal

How much is your Budget
This can depend on a number of factors. What is the purpose of buying a diamond? Is it a diamond engagement ring, a diamond wedding ring? Or perhaps just a gift for another. Maybe it is simple you want some diamond earrings or a pendant you would like to have.

DeBeers have promoted the idea that two months’ salary is a good benchmark for how much to spend on a diamond ring. This is all well and good but if you are on little or no income this is really out of the question. At the other end of the scale if you are extremely wealthy then two months ‘salary’ may seem a paltry figure to spend on a large rock!

For the average person however, this is probably as good a benchmark as any.

Another issue is how one intends to pay for it. If you’re using a credit card you need to factor in the additional costs. Interest and, sometimes, an extra charge should be included in the cost. If possible it is always ideal to pay cash up front. Apart from the fact that one is not running up a debt and additional costs, one can sometimes do a deal and get a discount by paying cash up front. Not only that, there is also some extra leeway to perhaps buy a more expensive diamond.

All these points can make a difference to the cost and how much of your budget goes to pay for those costs.

What is the Diamond for you?
Having established what you can spend, you can now look at what sort of diamond you can get for the price.

It is a good idea to have what you want in mind before you go looking for a diamond or diamonds.

What do you want in a diamond? Is it a ring, earring, pendant or even a necklace or bracelet? As a general rule the more diamond weight you buy the more expensive it or they will be. A single large diamond per carat weight is going to cost more than a number of smaller diamonds adding up to the same carat weight., This is because the larger a diamond is the more rare it is and you pay for that rarity. This is why 30 carat diamonds cost considerably more per carat than say a 1 or 2 carat diamond. Whereas a 2 or 3 carat diamond may cost a few thousand, a 30 carat diamond is going to cost in the millions.

You might, then, want to consider buying a ring with a number of smaller diamonds in it. That will enable you to have more diamonds for your buck, so to speak.

So as well as the price of diamonds varying depending on the weight of the diamond there is also the quality to consider.

Which brings us to what is the right price to pay for a diamond?

What is the right price to pay for diamonds?
Diamond prices are based on four important characteristics of diamonds.

These are Cut, Color, Clarity and Carat Weight.

The first is the cut. It is the cut that determines the brilliance of the diamond. If the diamond is cut correctly then it will have excellent brilliance. Poorly cut and the brilliance will be less. A poorly cut diamond will sell for less of course.

There are 8 main cuts of diamonds.

Round Brilliant
Emerald Cut
Princess Cut
Heart Cut
Oval Cut
Marquise Cut
Pear Cut
Round Brilliant

The second important characteristic is the diamond color.

Diamonds are graded into 13 colors or tints with pure white being the top, to a poor yellow being the bottom. It is important to know the color of the diamond you are going to buy as that will make a tremendous difference to the price of the diamond.
Clarity is the next grading method with diamonds, and indicates the amount of blemishes and inclusions (imperfections) in the diamond. Most imperfections are too small to affect the performance of a diamond but in the cheaper diamonds, you can find clouds of imperfections. These affect the ability of the diamond to transmit light and so produce less sparkle.
In addition if there are any cracks in the diamond this will make it prone to fracture and even break. This is why it is important to examine a diamond free of any clasp or prongs. present in gem-quality diamonds do not affect the diamonds’ performance or structural integrity.

Some diamond experts consider inclusions and blemishes can be advantageous as it means that diamond can be recognized. Despite this “flawless” diamond is that which commands the best price.

Most people are aware of what carat weight means. Although the other qualities are often overlooked, the carat weight is very understood. For those unfamiliar, the carat is a unit of mass used for measuring gems and pearls. One carat is divided into 100 parts. Each part is called a point. A diamond that weighs one (1.00) carat also weighs 100 points. A carat weighs .2 grams.
It is probably considered the most important characteristic way of valuing diamonds.

Where to buy diamonds at the right price
Also should be factored in is where and how you buy them. You can buy diamonds and diamond jewelry from many places. The shop in the Mall, professional jewelers, at auctions where you are present or online, even advertisements or jewelery clubs.

Very popular nowadays is the online jeweler where you can look at literally thousands of diamonds and diamond jewelery of every type and description. The advantage here is that it helps you to choose what you want or what is closest to what you are looking for.

If you have established how much you can afford and basically what you want, it is a simple matter, then, of scouring the net and shops in hour area to find those diamonds that match your needs.

Doing a comparison of the various diamond jewelery sites will help to find out the best price.

The disadvantage of buying diamonds of the net is that you do not get to actually see the diamonds until you have them in your home. They can look quite different to what is shown on the screen, partially because they may not be the same ones and partially because each screen and computer is going to sow the diamonds differently.

As a result you do need to ensure that the jewelers and dealers you are checking have a suitable policy for returning diamonds that are not as described or even quite different.

One should ensure that one gets a certificate with the diamond to show the characteristics of the diamond, cut, color, clarity and carat weight so you:

a. Know you are getting what you paid for and
b. Can insure the diamonds for their replacement value.

How to get a good deal buying diamonds
Once you have decided on a diamond or diamond jewelery that is within your budget is what you want and the price for that diamond or diamonds is right the next thing is to work on getting a discount or a better deal. These days diamond merchants, jewelers and dealers are keen to sell. There is a slower economy, more competition and diamonds are not always as expensive as some would have you believe. The premium or retail mark up is quite large so there is leeway for negotiation, particularly with the slower moving larger diamonds.

You can ask what the best price is for a stone or piece, You have an advantage if you are paying cash. You can ask, then, what price would you consider for a cash deal? You can offer a comparison with another site, jeweler etc. And ask if they can match, or to get your business offer a better deal.

There are many ways of negotiating a better deal but importantly never be afraid to ask. You might be surprised at what you can get.

The above information on buying diamonds can help to improve your chances of getting the diasmond you want provided it is used.

The Ultimate Cheapest Diamond Buying Guide

Friday, March 13th, 2009

The Ultimate Cheapest Diamond Buying GuideTo have the ultimate cheapest diamond buying guide is an excellent asset, so here are some useful pointers to buying that ultimate cheapest diamond.
It is very true that you get what you pay for so before you start it is very important that you know what you want in a diamond.

What is the diamond for? Is it for an engagement ring or just a ring to wear, or perhaps you want a diamonds for a pendant, or for some earrings. Next is what sort of diamond would you like? The cuts or shapes of diamonds fall into the following categories:

Round Brilliant
Emerald Cut
Princess Cut
Heart Cut
Oval Cut
Marquise Cut
Pear Cut
Round Brilliant

The Princess cut and Emerald cut are perhaps the most popular. The next aspect to look at is the size. Diamonds can range from just a few hundred dollars for a 1 carat diamond to many thousands. This is dependent also on the quality of the diamond. This is found by the Clarity.

Clarity is the word used to indicate the purity of a diamond. Most diamonds have tiny imperfections in them, and the clarity is method used to grading the purity on the basis of how many imperfections it has. Almost all diamonds have some imperfections, often called inclusions. Rarely does a diamond have no imperfections.

The color of a diamond is important too and can have a bearing on the price of a diamond.

When you work out your budget it is a good idea to buy the best diamond you can for your budget. Actually not going for the cheapest means you will not be lumbered with a poor quality diamond worth very little. To go for the very cheapest diamond is really a false economy. The cheapest diamond is a good quality diamond for a reasonable price.

Knowing what you can spend, and what sort of diamond you want the next step is to do some research and ferret out that very stone you want.
Most diamonds are sold by retail and with a heavy mark up. This particularly applies to department stores. The true cost of diamonds is considerably less than the retail value so locating a diamond wholesaler is also a good option to pursue. Checking diamond jewellers on the net is also a good start, there are plenty of them and you can see what sort of selection is available and if any meet your criteria. If so then you can start negotiating with them to buy at the best possible price. Auctions, both internet and ones you visit, can also be a fruitful way of finding that diamond you are looking for.

Of course loose diamonds are cheaper than ones that have been set. You do not have to pay for a setting and also you can see what the diamond is like without any potential flaws hidden by the setting.

When it comes to the price of diamonds it is vital to know the value of your diamond. All diamonds should come with a certificate of appraisal. So it is important that you ask for one when you come to buy a diamond. Not only for insurance purposes but also to ensure you know the value of your diamond and that you have not paid too much for a ‘cheap’ diamond.

The ultimate cheapest diamond buying guide is not a list of dealers that sell cheap diamonds that have little if any value but is knowing how and where to buy diamonds for their true value.

To Top of Price of Diamonds

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