Sparkling Returns In The Diamond Sector With Flambard Williams

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Diamonds are fast becoming an alternative to gold and silver as a commodity backed investment according to Flambard Williams.

Alternative Investments Made Simple

Prices are rising because demand is increasing. That's due to the slowdown and more interest from buyers in the east like China and India as well as other developing countries such as Brazil.

Diamonds are currently proving extremely popular with clients who are looking for a solid asset with great growth prospects.

Over the year many clients have seen gold as the safe haven, especially when the stock market is going through turbulent times. Due to the dip in gold, we are now seeing many investors look at other assets classes where they can achieve a better return on their money.

Like any tradable asset, diamond prices are driven by supply and demand. Currently we are seeing falling supply coupled with increasing demand, which is providing a buoyant market for investors.

Over the past 50 years the diamond market has proven to offer solid returns. A surprising fact is that over the medium-longer term they have outperformed the major indices, including the FTSE 100. Due to a lack of major mining discoveries, many experts believe that prices look set to increase for the foreseeable future.

Michael Bradley, from BD Diamonds Invest, has been trading diamonds for over 30 years. He states ‘Over the last 5-6 years I have seen a dramatic increase in stones being purchased purely for investment purposes. I believe this is due to investors looking for a tangible asset, which can withstand the fluctuations of outside influences such as wars and the subprime crisis such as we have seen over the last decade. In regards to price increases, we have seen diamonds increase by 10% a year on average over the last 10 years and I feel this will continue for many years to come’.

When investing, each client should undertake a number of steps.

  •     Choose a reputable brokerage with a proven track record and ideally one which is based in Hatton Garden (the centre of the diamond trade in the UK).
  •     Ensure that the diamond you purchase is a polished clear stone. These are clearly priced using the ‘Rapaport rate’ and allows a more straight forward exit strategy.
  •     Ensure that your stone is certified and of investment grade quality. The best way to see this is by using the ‘Four C’s’ which can be verified on your certification. Ensure that your stone is certificated
  •     Research the market and, in particular, the specifics of diamond. The four Cs still determine the price of a finished stone: cut, colour, clarity and carat (the weight, with a carat equivalent to one fifth of a gram).

Denis Yakovenko, head of the Russian desk at Flambard Williams (http://www.flambardwilliams.co.uk), is starting to see an increase in interest in the sector from Eastern Europe, especially the wealthy elite in Russia. He states ‘I have seen a dramatic upturn in the amount of enquiries about the sector. The fact that the commodity is easily transportable and is coupled with tax advantages means that the diamond market is attracting large investments’.

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Jon Woods
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