Why diamond could be a better investment than gold

By: | Updated: May 13, 2016 11:58 AM

Industry players believe diamond could be a good replacement to gold as an investment option with likelihood of steady price appreciation as has been witnessed in recent years.

diamond better investment than goldIndustry players believe diamond could be a good replacement to gold as an investment option with likelihood of steady price appreciation as has been witnessed in recent years. (Photo: Reuters)

Did you spare a glance for diamond jewellery during the recent gold buying rush on Akshaya Tritiya 2016? If you are planning to invest in precious jewellery, diamond could be a good alternative for good returns.

Industry players believe diamond could be a good replacement to gold as an investment option with likelihood of steady price appreciation as has been witnessed in recent years.

“The price of diamond has been on and upward trend. I think it will give steady returns of 7-8 per cent annually in the medium term,” says Vijay Jain, CEO and Director – ORRA Fine Jewellery.

Over half of sales of Orra Fine Jewellery consists of diamond, while the remaining is gold, while the overall industry’s sales of diamond is around 15 per cent, Jain points out.

Jain says that unlike gold, prices of diamond do not prone to volatility.

Jignesh Mehta, MD Divine Solitaires agrees. “Diamond has emerged as a very good alternative to gold and has given annual returns of around 12 per cent over the past few years,” Mehta said. Divine Solitaires has 116 stores in 15 cities.

He pointed out that Rs 10,000 investment in diamond in 2010 would have become Rs 18,000 (an 80 per cent gain) whereas the same amount in gold would have become Rs 15,500 (55 per cent gain).
Mehta point out that the starting price of diamond jewellery compares will expenses to be incurred to buy gold. “Diamong starts from Rs 15,000 for a single unit. At current levels 5 gram of gold is more expensive,” he said. Gold prices have been ruling above Rs 30,000 per 10 grams in the domestic market.

Jain said that in his stores the entry price for a diamond item is Rs 8,000-12,000 while the average of diamond jewellery is around Rs 25,000.

He said that diamond sales during Akshaya Tritiya was higher by 14-15 per cent over the previous year. “The overall demand for diamond jewellery is up. For the year, sales of diamond has been up by around 10 per cent,” Jain said.

Jignesh Mehta said that diamond jewellery is also adequately liquid. “Liquidity is not an issue with diamond. You can get 90 per ent of the prevailing price any time. Since prices are moving up one can easily recoup the original investment,” Mehta said.

In case you are planning to buy diamond, Vijay Jain points out the 4 Cs that you should look for:

Clarity: Almost all diamonds have tiny imperfections. Diamonds with few or no imperfections receive the highest clarity grades.

bThe cut of a diamond determines its brilliance. Put simply, the better a diamond is cut, the more sparkle it will have.

Carat: This is the term with which people are most familiar, but bear in mind that carat is specifically a measure of a diamond’s weight.

Color: A diamond’s color grade actually refers to the lack of color. In other words, diamonds that are white, containing little or no color, receive higher quality grades than those with visible color.

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