'Investment-grade diamond values are on the up,' says research


2015-06-26 12:00:40


'Investment-grade diamond values are on the up,' says research

Demand for 'safe haven' assets is outstripping supply - promising steady upwards price movements in 2010

Prices for investment-grade polished diamonds are continuing to move upwards, inching up a further one percent over the last month say new findings by Fusion Initiatives, the diamond investment house.

According to Fusion, since the beginning of the year prices have been steadily increasing; posting a nine percent increase on average with some categories soaring as much as 20%.

Trade figures for the world's major diamond markets point to a considerable increase in activity compared to the corresponding period last year, when the diamond industry took a major hit in the wake of the global financial crisis.

After two quarters of sustained increases in trading activity as well as upward price movement, it is now clear that the diamond industry has rebounded from last year's lull.

Big sales like the $1.76m Emperor Maximilian Diamond shows obvious investor appetite for investable tangible assets with perceived "safe-haven" characteristics

Theconsecutive monthly price increases are forcing more aggressive buying activity among collectors and investors, with many buyers now acknowledging the sustainability of the price increases going forward.

The higher prices are being supported by shortages of available goods on the market, a rebound in demand from the US market and continued robustness in the Chinese and Asian markets.

Soaring gold prices have yet to bear influence on the diamond market.

There are those who may think that the record high gold prices will negatively impact on consumer demand for diamond jewellery, however with the value of the gold component of diamond jewelry being relatively small we do not foresee any such downside.

The upside relates to the obvious investor appetite for investable tangible assets with perceived "safe-haven" characteristics - which does bode well for investment diamonds.

Evidence of this can be found in the very high prices achieved on the global auction markets for special and unique diamonds throughout the first half of 2010.

The $6.7m Riviere diamond necklace is among 2010's big jewellery sales

In April, Sotheby's strongest ever Hong Kong jewellery sale saw the De Beers Millennium diamond sell for an incredible $6.4m to Moussaieff Jewellers of London.

Elsewhere, also in April, Christie's auctioned the Emperor Maximilian Diamond for $1.76m - more than twice its original auction price since its first market appearance, also at Christie's, in 1982. (It was outsold by the Riviere diamond necklace, sold for $6.7m, pictured above.)

Although Fusion reports that an element of uncertainty has re-emerged with certain speculative rough diamond trading transactions taking place, it says that the underlying fundamentals for the investment diamond market remain strong with demand continuing to outstripping supply.

With no major new diamond mine expected to come online within the next few years this demand-supply mismatch will continue to support steady upward price movements.

There still remains upside potential for investment-grade diamond prices to rise further during the second half of the year and recent price increases are in line with projected estimates of 15% for 2010.

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