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Oct 21

5 top tips for investing in diamonds

Reading Time: 3 mins

For experienced investors, diamonds truly can be your best friend. It’s certainly one of the most rewarding areas to invest in, but only if you know your stuff. For inexperienced investors, finding your diamond in the rough can be quite daunting.

Some of the essentials are obvious for investing in diamonds. For instance, even the most novice of investors will ask themselves, will this diamond keep it’s value over time? What’s the overall condition of the stone and the jeweller? Is there history behind the item in question?

Common sense plays a big part in investing, however to ensure we’re making the right purchases tips from the expert are required. Tony French, the in-house Diamond Consultant, at Diamonds Factory shares his professional expertise on the 5 most important things to look for when investing in diamonds.


1: Value determined by cut, weight and colour

To ensure the growth in value of your purchase, it’s essential to acknowledge the shape, colour, and weight of your diamond. While trends in investing fluctuate over time, the most sought after shape, will more often than not be the round cut. Although the cut is ostensibly superficial, it actually influences the sparkle and therefore, the overall value. The same can be said for the intensity of some colours, such as Blue, Red, Pink, Green etc. Consideration into the weight of your diamond can affect their worth, for example the heavier (bigger) stones will often increase in value by a bigger percentage. Collectively, these factors also contribute to the supply and demand aspect which keeps prices continually high, and will guarantee your item is re-sellable.


2: Provenance

Owning jewellery or diamonds that emanate from an influential public figure will bring significant value. Nonetheless, here’s the important part, it’s an absolute must to have proof of previous ownership if you can own a piece that has significant history, or was owned by a celebrity or person of interest. You will see an increase in your item’s overall value, but it will also likely gain traction within a field of interest such as fans of that person.

There’s a chance to proactively bring provenance to any unique diamonds, or jewellery that you own. For instance, loaning unusual or bespoke pieces to film, theatre, or TV performances – then it can be advertised as worn by/in….


3: Find the source

Identifying and evaluating the source of the diamond is one of the most important aspects of diamond investment. If you’re a beginner, try to buy diamonds that have NOT been owned by a range of people, as everyone in the chain will take a slice and their value will reflect multiple ownership. Alternatively, buying from recognised suppliers who buy directly from the people who have had them certified is always a good idea.

Not only will this enable greater transparency, which is crucial when purchasing such a valuable item, but you should also witness a sudden increase in value in your diamonds, as establishing a source will enable traceability and consequently, market perspective.


4: Certification

Tied closely with my previous point, is the need to ensure that your diamonds are accredited by a reputable lab, and you have the ceritficates to prove so (a written document with specific grading details about your diamonds) – this will remove any potential suspicion.

It’s important to remind customers that not all labs are the same, and some labs are better than others. For example, both the GIA (Gemological Institute of America) and the AGS (American Gem Society) are world renowned and therefore have a stellar reputation. I recommend doing some research when you’ve sourced the pieces that you’d like to purchase and then make a decision based upon your findings in relation to certification. In the end, proving certification will make your stones more insurable and, it’s really nice knowing you have got what you have paid for – trust me!

Don’t forget to keep this paperwork in a safe location as well – you’d be surprised how many people we’ve met who have lost, or forget where they’ve placed it.


5:  Patience is a virtue…

So, you’ve purchased a high value piece and you notice the market is thriving. Many investors, even experienced ones, might look for an immediate sale, but you should think about keeping your diamonds for some time, before even thinking about shifting them. Generally speaking, an item is more likely to increase in value over a few years than a few days, therefore try and be patient!

Also, consider having your diamonds valued professionally on a regular basis. Making a judgement on how much your pieces are worth can be difficult if you don’t have the expertise. Visiting a consultant or an expert can provide both a valuation, and provide perspective in terms of value in the wider market. Once loaded with that information, knowing whether to keep or sell will be a lot easier.

This is for reference purposes only and nothing in this article should be taken as financial advice. Do your own research and/or speak to a financial advisor before parting with any money. 


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