Primer: Investing in diamonds
The complexities of Diamond need an expert judgment and similar to the purity in case of Gold
The wobbliness in precious metals like Gold has resulted in customers seeking other avenues in the market. Diamond is one such product where the investment rate is picking up and even for the jewellery industry it is bringing a sigh of relief, considering the high imports duty on Gold being 8 percent.
The curbs on gold buying is getting traders shift to something more bankable. Having said that the penetration rate of Gold is still no match to the Diamonds but it has been a growth industry. The cost of diamonds used to be a matter of worry for the investors and jewellery owners few years back but not now.
The rapid fall of Indian Rupee towards 60 against the US Dollar has made the price of Gold costly. The complexities of Diamond need an expert judgment and similar to the purity in case of Gold, diamonds should also be checked on various parameters.
How to evaluate a diamond?
The evaluation of a diamond is done on the basis of grades. You either have to take a professional opinion before buying diamonds or you should be aware of the “C”s that are generally used in diamond purchase terminology.
The first and most important C is the carat weight. One carat weight is equivalent to 0.2 grams. The carat weight is equal to 100 points similar to US Dollar pennies. Now what’s the significance of carat weight? The simple reason is that the more the carat weight, more is the cost of the diamond. This is due to the fact that it is difficult to polish and find a larger stone.
Second important aspect while purchasing the diamond is to check the color. Most of the amateur investors think that diamonds are colorless, which is not the reality. The diamonds are found in almost all colors. There is a definite color grading scale in the diamonds. The cutting and polishing has to do majorly on how the diamond is seen. This also means that the larger the size of a diamond, the more colors it will portray.
It is advised that the purchaser of diamond must be fully cautious of this stage. This is because many dubious deals occur in diamond trading where the investor is often fooled based on the clarity. Those who are not in the business or first time buyers are very easily carried away by the marketing person’s claims. There are specific grades that have been assigned to the clarity of the diamond based on the flawlessness, blemishness and the degrees of starches, polishing and roughness. The more the clarity, lesser are the defects are lesser should be the price, but this can be judged only by an expert.
Some of the colorless diamonds are treated artificially to make them look good. The scars and cuts are treated in a manner that a diamond looks flawless. This is done by fracture filling. The light is expected to pass through it after the treatment and this increases the clarity.
The better the cutting of the diamond, higher is its price. This cutting is done to enhance the color of the diamond. This is sometimes done to do away with any inclusions and to increase the color and style in the stone.
The certified diamond pieces are more authentic and safer than others. The pieces can be certified at International Gemological Laboratories and Institute (IGL&I), GIA-Mumbai etc. The rate appreciation of certified pieces is better and true price of the piece can also be ascertained with the help of certified report.
Investment decisions should always be made on three aspects. You have to decide whether you want to make physical investment, i.e. jewellery or loose diamonds, or you want to invest in the equity markets in companies that are dealing in diamond mining. The problems that purchasers like you and I usually face are the lack of any price mechanism and transparency in this business.
People have often come across situations where they have purchased cheap stones and jerkins considering it as a real diamond. Gold investments have seen similar difficulties like content but people are used to it now. In Diamonds, there are very many things to check and clarify. So invest safely and take the help of a gem expert to avoid hoodwinking.
Source: InvestmentYogi.com is one of the leading personal finance webistes in India
Read more on: