Everyone knows diamonds as jewelry, but what are investment quality diamonds? Like gold, diamonds are held as a form of investment, with the biggest draw being that its value rarely depreciates. Indeed, as less diamonds are being mined, the dwindling supply is increasing its demand and value!
What are investment quality diamonds?
Large diamonds, clear diamonds and flawless diamonds are rare; diamonds combining all three characteristics are rarer still! In the simplest terms, investment quality diamonds are of greater beauty and rarity, have higher purchase prices, and see greater appreciation. Basically, the rarer it is, the more its value increases over the years.
While the the 4 Cs – clarity, cut, color and carat – apply to investment quality diamonds as well, they are on the higher and rarer end for each characteristic.
Fancy colored investment quality diamonds
Rarity being an important factor, almost all fancy colored diamonds fall under investment quality diamonds. Recent years have seen fancy colored diamonds emerging as secure investments.
Pink diamonds are rarer than red and slightly rarer than blue diamonds. Yellow diamonds, though quite common in fancy colored diamonds, are still rarer than whites. Both of these are expected to potentially double in value in the next 7 - 10 years and, as such, are considered viable investments.
The four Cs in Pink and Yellow investment quality diamonds
For fancy colored diamonds, when applying the 4 Cs, there is an order of importance that influences its value – color, carat, clarity and cut.
The more vivid and intense the color, the more valuable the diamond. The important thing to remember is to only go for diamonds that have "fancy" in their color classification, as lower end classifications fall more within white diamonds.
Greater carat weights are rare and more valuable – this is true in white and fancy colored diamonds. However, a smaller fancy color diamond may have greater value than a larger white diamond.
Clarity is less important in a fancy colored diamond simply because the color, especially the more intense ones, can hide flaws that would be easily visible in a white diamond. Hence, color and carat have greater importance.
Unlike the cut quality of white diamonds, fancy colored diamonds are cut in a style that enhances the color of the diamond. That being the case, its contribution to value cannot be measured in quite the same way.
How to buy investment quality diamondsIf you plan to invest in diamonds, here are some tips to keep in mind:
- Make sure your diamonds have been certified by GIA and meet the Rapaport Specification 2+ quality standard
- Buy something you personally find beautiful, set in a classic and handmade piece of jewelry that will protect the diamond
- Cultivate a relationship with a jeweler experienced in dealing with fancy color diamonds and investment quality diamonds.