Gold or diamonds? When the thoughts of investors today turn from the mundane – stocks and bonds – to investments with significantly more sparkle, it seems like the discussion always comes down to gold or diamonds. Of course there are solid arguments for each – that’s precisely why virtually everybody understands that both gold and diamonds are accepted investment choices, not simply materials from which to craft jewellery.
Deciding whether gold or diamonds are better investments for you depends on several factors, including market conditions, personal preferences, and individual financial goals. Where diamonds are concerned, it can often come down to a choice of which type of diamonds, seeing as pink diamonds historically outperform colourless diamonds by a very significant margin. Let’s consider some aspects of each investment:
Gold or Diamonds – historical performance
Both gold and diamonds have been considered stores of value for centuries. Gold has traditionally been a popular choice for investors during times of economic uncertainty, as it tends to retain its value and even appreciate. Colourless diamonds, on the other hand, have not demonstrated the same level of price stability or consistent appreciation over time and are not quite as well entrenched as an investment. This is where pink diamonds demand attention. Far rarer than their colourless cousins, pink diamonds have performed very strongly over the past two decades, steadily gaining value and standing tall even through unsteady market conditions.
Liquidity
Gold generally enjoys higher liquidity compared to diamonds. Gold can be easily bought and sold in various forms, including bars, coins, and exchange-traded funds (ETFs). Diamonds can be more challenging to sell. So in considering the choice of gold or diamonds, it must be noted that investing in diamonds calls for experts with specialized knowledge or contacts within the diamond industry. Having an expert on your side is mandatory, particularly if you are dealing with high performance pink diamonds, whose provenance is such an important part of their value.
Gold or Diamonds – market accessibility
The gold market is more accessible to individual investors compared to the diamond market. When considering gold or diamonds, an advantage of the former is that gold can be purchased through various channels, such as bullion dealers, online platforms, and financial institutions. The diamond market is more complex and requires expertise to assess the quality, value, and authenticity of diamonds. While (investment quality) gold is simply gold, every diamond is unique. It can be argued that all investing calls for the assistance of experts, but this is doubly true when it comes to diamonds, particularly pink diamonds.
Market Volatility
The prices of both gold and diamonds can be subject to market volatility. While gold is often considered to be a more stable investment compared to diamonds, the situation is not quite that simple. Depending on the cut, colour, size and rarity of diamonds – particularly pink diamonds – some gems will stand up to market fluctuations better than others. By far the best performers, proven across more than two decades of market variations, are high quality pink diamonds, which tend to shrug off market fluctuations. So the ‘gold or diamonds’ choice must be considered beyond traditional colourless diamonds.
Storage and Maintenance
Established in the market as it is, gold is a relatively low-maintenance investment, although of course it does require secure storage to protect its physical form. Diamonds – particularly pink diamonds – are an incredibly concentrated source of wealth. So while they, too, call for secure storage, the space needed to store and transport them is far less than a quantity of gold of comparable value.
Ultimately, the choice between gold or diamonds as an investment depends on your personal preferences, risk tolerance, and investment strategy. It’s essential to conduct thorough research, consider market conditions, and consult with financial professionals or experts in the field before making any investment decisions.
More about pink diamonds…
No conversation focused on ‘gold or diamonds’ could be complete without expanding somewhat on pink diamonds. Pink diamonds are so much more rare and precious than colourless diamonds that they really are in a class of their own. Pink diamonds have gained attention in recent years due to their scarcity and increasing demand, which has led to significant price appreciation. Although value will always depend in part on the provenance, quality and size of the individual stone, pink diamonds on average are a far higher value investment than colourless diamonds due to factors including:
Rarity and Scarcity
Pink diamonds are exceptionally rare compared to colourless diamonds. The Argyle Mine in Australia, which was responsible for the majority of pink diamond supply, has ceased production, further contributing to their scarcity. Rarity is one factor that positively impacts the long-term value of pink diamonds.
Market Demand
The demand for pink diamonds has been steadily increasing, particularly in emerging markets such as China and India. Their unique colour and limited supply continues to attract investors, driving up prices.
Value Appreciation
Pink diamonds have shown impressive price appreciation over the years. In fact, over the past two decades the value of pink diamonds has increased very significantly, outperforming colourless diamonds and most other traditional investments.
Summary – gold or diamonds…or pink diamonds?
We’ve established that no ‘gold or diamonds’ investment conversation can be complete without taking the time to underline the vastly higher rarity and value of pink diamonds when compared to ordinary colourless diamonds. Nonetheless, it’s important to approach investing in pink diamonds carefully. Consulting with experts in the field, such as gemmologists or reputable diamond investment advisors, can provide valuable insights and help you make informed decisions.
If you’d like to add pink diamonds to your investment portfolio or include them in your Self-Managed Super Fund, we would be delighted to explain our end-to-end service to you in a no-obligation consultation, or you can learn more by downloading the Pink Diamond Capital Investment Guide.
