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Diamonds in the rough: price fall 'creates buying opportunity' for investors

Adam Williams
Coloured diamonds can be a cheaper alternative to classic white stones - Moment Open

A fall in the value of diamonds has opened up an investment opportunity for people looking to shield their wealth from the turbulence of global stock markets.

De Beers, the world’s biggest diamond producer, made sales of £240m at its most recent auction, 39pc less than the equivalent sale in 2018.

The sluggish sales figures were blamed on a global surplus of stones, which have depressed values in the past 12 months.

However, those who have invested for the long-term have earned strong returns from diamonds in the past 15 years.

Tobias Kormind of 77 Diamonds, a jeweller, said white diamonds had increased in value by around 45pc since 2005, demonstrating strong returns for those willing to invest over a long period.

“For those looking to invest today, you can start with around £5,000 and will be able to buy a small white diamond of high quality,” he said.

Coloured diamonds have also delivered strong returns to investors since 2005, according to the The Fancy Color Research Foundation, which charts the value of coloured stones.

Its research said yellow diamonds had risen in value by 39pc since 2005 while blues had grown by 212pc and pinks by 364pc.

Although they have substantially increased in value already, Mr Kormind said that coloured diamonds still had strong growth potential as the Argyle mine in Australia, the biggest producer of pink diamonds in the world, will close next year.

However, there were some drawbacks of purchasing less common colours. 

“If you are buying expensive pink diamonds then you will need patience when you sell, because there are fewer potential buyers," he said. "It’s like selling a classic car, it can take time. But when Argyle stops mining pinks we think the demand will go through the roof.”

As with investing in gold, investors may prefer to buy multiple, smaller stones as these can be traded more easily.

Mr Kormind also recommended avoiding laboratory grown stones, as these typically lost value over time.

“The idea with diamonds is you can pass them through the generations but lab-grown diamonds are becoming cheaper to produce and losing value every year,” he said. “They’ll eventually become like Swarovski crystals, essentially worthless.”