Diamonds are rare, beautiful, valuable and famous as girl’s best friends, but traditionally they are not considered a separate class of assets, enjoying the same rights as the rest, the portal www.wealth-bulletin.com writes.

Diamonds do not share the status of “asylum”, which has the gold, and the price for diamonds is more volatile than prices of the precious metals. While the spot price of gold this year has increased by about 25%, the price of diamonds fell by at least 10%, following the low rates of the luxury industry, according to the American edition of IDEX Online Diamond Prices, which tracks the asking prices of diamonds around the world.

Some jewelry experts hesitate in the utility of making investments in diamonds. David Bennett, the head of jewelry office of London auction house Sotheby’s located in the Geneva, working in Europe and the Middle East, said: “As is the case with objects of art, we would not advise to buy diamonds for investment purposes, although people are doing it. We believe that diamonds should be bought just for the fun of the fact that they are worn.

Investments in diamonds have controversial history, which covers most of the previous century, when the market was dominated by a cartel, headed by a group of mining companies De Beers. In recent years, however, the market expanded, and De Beers now controls 45% of the market, but Russia and Canada became the leading foreign suppliers.

But the growing demand for tangible assets and the diversification of investment portfolios this year led to the emergence of many diamond investment funds the founders of which believe that they can make a profit for investors in double digit percent.

In March 2009 the company KPR Capital, managing alternative investments, established open-ended investment fund diamond accepting investments for more than $ 250 000 (€ 168 168) in the Cayman Islands.

In November, an investment boutique Emotional Assets Management & Research established a fund that invests in collectibles, from paintings and rare stamps to diamonds and diamond jewelry. Foundation plans the growth rate of investment of 15% per annum with a minimum deposit of £ 100 000 (€ 111 967).

Dazzling Capital, the company based in London, invest directly in precious things relating to any period of history or art, has also opened its doors in November. Co-founders of the company are former Christie’s auctioneer Humphrey Butler, a former jockey and accountant William Sporborg and co-founder of a brokerage KBC Peel Hunt in the City, Christopher Holdsworth Hunt.

This company, which requires a minimum investment of £ 10 000, promising to about 11% of the profits, as one of its investors is Lady Madeleine Lloyd Webber, wife of British composer Sir Andrew Lloyd Webber. Investors can also rent jewelry from the company Dazzling Capital for a nominal fee of £ 50.

Other investors argue that diamonds are a too narrow branch, to get a significant result. Scilla Huang Sun, the director of securities in the company’s Swiss & Global Asset Management, said that they do not have a diamond fund, because this asset class is too narrow to create its own fund for it.

Diamonds trade is getting more complicated.

Until recently, the precious stones were considered illiquid assets. Auctions for them are rare, and their evaluation is considered to be art rather than science. But in January, Dealers Organisation for Diamond Automated Quotes (Dealers Automated Quotations organization for diamonds) – an online exchange for diamonds, managed by Dutch bank ABN Amro began its work.

Market in Belgium is trying to overcome other traditional barriers to investment in the diamond market, such as higher brokerage commissions and low liquidity, and suggested bilateral auctions for diamonds to form a first market with a cash payment for these precious stones.

Some gems “hold” value better than others. Holi Midvinter-Porter, a gemologist from the British company Boodles, said: “If you want to buy diamonds for investment purposes, they must be big and fancy. Red and green diamonds are the rarest and in contrast to, for example, white artificial diamonds, they are “finite”, since they can be found only in one or two places on the globe”.
She added that rare diamonds – are long-term investments and their portability makes them more attractive to some investors than gold or pieces of art.

Another option for investors – is the market of antique jewelry with diamonds, which are believed to be able to offer greater profit. In 2004, the auctioneer Butler made a deal at $ 4.5 million to the Louvre in Paris, whose object was an old necklace and earrings of the jeweler Nito, a gift by Napoleon Bonaparte to his second wife Marie Louise of Austria. For many years before the owners bought them at a price that is only a fraction of the price at which they were eventually sold.

Private buyers take advantage of the recovery in prices for diamonds, but buying at the auction could mean for buyers paying the large price premiums as high as 25% and VAT at such auction houses as Sotheby’s and Christie’s. Since the seller is also charged 10% to 15%, reaching up to £ 150 000, so that the auction house can pick up a much as 40% of the amount of each transaction.

In December of the previous year the diamond sold at the auction, cost a record amount. Blue Diamond Wittelsbach, weighing 36 carats, was sold for $ 24.3 million at the auction Christie’s in London. In May this year the record was set by bright blue diamond: 7 carat diamond Josephine change of owner for $ 9.4 million at Sotheby’s in Geneva. On the other Geneva-based auction Sotheby’s as the star lot was made a rare bright-green diamond, price of which is expected to reach $ 5 million. The size of this stone is like a small coin, but it has rare color that resulted from radiation in the rock, all this can make this brilliant the record-breaker.

Stephen Loussier, a representative of the world’s largest diamond company De Beers, expects significant growth in prices. According to him, after a difficult year during which the sale of De Beers fell by more than 10%, a small number of diamond mines in the world, as well as growth in demand for diamonds in China and India can make diamonds in a brilliant way to invest.