Table of Contents
- Do all diamonds increase in value with age?
- Do imperfections increase the value of diamonds?
- What are investment grade diamonds?
- Is a pink diamond a good investment?
However, not all diamonds can be considered investment diamonds. By definition an investment diamond sustains and rises in value over time.
The quantity of colourless diamonds available can make resale challenging and this affects their investment value. The flip side is a rare Pink coloured Diamond, which is so rare that the investment value has been seen to increase year on year.
In this blog, we will explore this question and shed light on some factors that can impact the value of diamonds over time.
Do all diamonds increase in value with age?
To answer this question, we must first understand the diamond market. The diamond market can fluctuate based on global events, economic conditions, and supply and demand.
However Pink diamonds have displayed strong long-term price growth, with minimal volatility, and minimal drawdown. Interestingly some of their strongest performance occurs in periods other markets are falling.
The Australian Diamond Portfolio Pink Diamond Index (ADPPDI), showed another strong period of price growth, with pink diamonds as a whole rising by 3.6% in Q3 2022.
Note that the ADPPDI is based on the average performance of the three main categories of pink diamonds, with a performance breakdown by category seen below:
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A diamond’s value is based on the “4 C’s” – Cut, Color, Clarity, and Carat Weight. The better its ‘score’ across the 4 C’s the higher its market value and the more likely the diamond is to increase in value over time and with age.
Similarly, if its design is no longer in production or if it becomes a collector’s item for geological reasons, the value can increase with age.
This was certainly the case when the Argyle mine, which supplied 90% of the world’s pink diamonds closed its doors in 2020. With the closure of the mine, the value of pink diamonds increased and, as a result, with each year that passes they become more rare.
It’s important to note that age isn’t the only factor determining a diamond’s value. The quality of the diamond itself is the most essential factor; a poorly cut diamond, or one with a lower colour grade, will not be worth much, regardless of age.
So when selecting a pink diamond for investment, being aware of these factors plays a crucial part.
Do imperfections increase the value of diamonds?
When it comes to diamonds, the general perception is that the fewer imperfections or inclusions a diamond has, the more valuable it is.
However, in recent years, there has been a growing interest in diamonds with flaws, such as blemishes and inclusions. Imperfections in diamonds can come in different forms. Blemishes refer to surface imperfections such as scratches, pits, or nicks. Inclusions are imperfections within the diamond, such as internal cracks, bubbles, or other minerals. These imperfections can be visible to the naked eye or only be seen under magnification.
The traditional view is that diamonds with fewer imperfections are more valuable because they are considered rarer and more visually appealing. However, there are exceptions to this rule. In some cases, imperfections can increase the value of a diamond.
One reason imperfections may increase a diamond’s value is that they can make the diamond unique. Diamonds with unique inclusions or blemishes can have character and personality, making them stand out from other diamonds on the market. For example, a diamond with a slight inclusion that resembles a heart can be more valuable because of its unique and personal quality.
Another reason imperfections can increase value is that they can serve as a form of identification. No two diamonds are exactly alike, and imperfections can help to distinguish one diamond from another.
This can be especially important when it comes to diamonds that have been mined from conflict zones or have a history of being used for illegal purposes.
Finally, imperfections can also provide evidence of a diamond’s natural origin. Synthetic diamonds are becoming more common in the market, and a diamond with no flaws can be a red flag that it may not be a natural diamond. Imperfections can provide evidence that the diamond is, in fact, natural.
Imperfections are just one of the many factors that can impact an investment-grade diamond, either by increasing or decreasing its value.
What are investment grade diamonds?
Investment-grade diamonds have the potential to appreciate over time, making them an attractive investment option for collectors and investors.
While all diamonds are valuable, not all diamonds are considered “investment grade.”
Here are some factors that make a diamond investment grade:
Rarity: Rarity is one of the critical factors that make a diamond investment grade. The rarer a diamond is, the higher its value. Pink, blue, and red diamonds, and diamonds that are incredibly huge or have irregular forms, are some of the rarest in the world.
Quality: Quality is another crucial factor determining a diamond’s value. High-quality diamonds are well-cut, have few inclusions or flaws, and have a high clarity and colour grade. The quality of a diamond is assessed using various grading systems, the most recognised of which was established by the Gemological Institute of America (GIA).
Demand: The demand for a particular type of diamond also plays a significant role in its value. If there is a high demand for a specific type of diamond, its value is more likely to increase over time.
The demand for diamonds can be influenced by factors such as changes in fashion trends, cultural influences, and marketing campaigns.
Certifications: Diamonds certified by a reputable grading organisation, such as the GIA, are more likely to be considered investment grade. A certificate objectively evaluates a diamond’s quality, which can give investors confidence in their investment. For pink diamonds, investors often seek an origin certificate from the Argyle mine.
Marketability: Finally, investors consider a diamond’s marketability a vital consideration. Diamonds that are easily traded, bought, and sold are more attractive to investors than diamonds that are difficult to move in the market.
Focusing on these 5 factors when purchasing an investment-grade diamond, here at Australian Diamond Portfolio, we can support and guide you through the process to ensure you get the best possible return on your investment.
Is a pink diamond a good investment?
Diamonds, including pink diamonds, have historically shown appreciation in value over time.
Pink diamonds are among the rarest diamonds worldwide, with only a handful being mined each year. This scarcity has contributed to the increase in their value over time.
In addition, pink diamonds are often associated with luxury and exclusivity, which has made them a status symbol for the wealthy. As a result, many collectors and investors are willing to pay a premium for pink diamonds.
Various factors affect a pink diamond’s value, such as the intensity of its colour, cut, carat weight, and clarity. Pink diamonds with a deeper, more intense hue are typically more valuable than lighter ones. Diamonds that are well-cut and have few inclusions can also command higher prices.
While there are no guarantees in any investment, with proper care and storage, pink diamonds have shown historically solid performance, with the value of some pink diamonds increasing by over 400% in the past decade alone.
It’s essential to carefully consider all factors that can impact the value of a pink diamond before investing, as there are risks involved, just like with any investment.
Australian Diamond Portfolio offers comprehensive investment services and information on coloured diamonds. If you have any inquiries or want to learn more about investing in coloured diamonds, don’t hesitate to contact us.
If you are considering buying a pink diamond, the best place to start is our Pink Diamond Guide.
You can also contact our team of Argyle mine diamond experts here.