There has been a mounting interest in diamond investing over the last couple of years. Partly due to investors becoming aware of the fact that the price of diamonds reliably increases over time, but several other reasons have drawn more people to diamond investments.
One of them? Diamonds embody luxury for many people, and they’re among the most durable materials on earth. But if diamonds are long-term investments that pay big when you expect the most, what about diamond stocks – those companies involved in everything from mining stones to their sale? With the global diamond jewelry market reaching almost $100 billion per year, stocks involved with the production of diamonds are worth a peek for investors.
Why Do People Invest in Diamonds?
One of the reasons people choose to invest in these precious gems is that they maintain their value over time. If you purchase a diamond and hold on to it for a while, it is almost certain that it will be worth more when you sell it.
There’s also the supply-demand problem. When demand for diamonds is growing, and supplies are decreasing because of people buying constantly, it is expected that prices will continue to surge.
Diamonds are also a good store of value. Having a diamond means you can hold a lot of value in a very small package, not to mention its value won’t degrade or require pricey maintenance to retain it. As long as you store your precious gems safely, they will retain their value even if you don’t pay any attention to them.
Valuation is one of the biggest barriers for those investing in diamonds. Most of us know diamonds but know very little about what makes one gem more valuable than another.
The weight is the simplest factor in evaluating a gem. With diamonds, weights are measured in carats, and below that, you add points. A carat is 200 milligrams and a point in .01 of a carat. For instance, a 25-point diamond makes a quarter of a carat.
The color grading scale goes from D to Z, where D contains the least amount of color and Z has the deepest hues. When it comes to investing in diamonds, less colored gems are a way to go.
The clarity scale points to the number and appearance of blemishes in diamonds. If after a 10x magnification you see no inclusions, the diamond is rated as flawless. However, there are more other grades that run from internally flawless to included.
The cut of a diamond will tell you a lot about the way it’s made. The quality of a diamond’s cut is massively due to the skill with which wash shape. Diamonds cuts can also be graded on a scale that goes from excellent to poor.
Top Diamonds Stocks in the U.S Market in 2021
Diamonds have been around for a while now, and the industry is well-established. Those looking for high growth should probably pass on this segment on the mining sector in favor of stocks. That said, there are countless diamond producers that fall into the penny stock category, such as Petra Diamonds (LON: PDL) and Gem Diamonds Limited (OTC: GMFMF).
However, if you’re looking for a big and well-established company that offers slow but solid growth, a few names dominate the current market and are worth the grind.
LVMH Moet Hennessy Louis Vuitton
LVMH Moet Hennessy Louis Vuitton is the world’s most influential luxury company and the owner of some top names that invoke the spirit of high fashion. LVMH also happens to be involved in producing and retailing diamonds and jewels to big-name fashion designers such as Chaumet, Bulgari, and TAG Heuer.
To strengthen its presence in top-of-the-line gemstones and jewelry, LVMH completed its acquisition of Tiffany early in 2021. Immediately after More Hennessy, Louis Vuitton announced the launch of a joint gemstone and raw materials sustainability endeavor to promote a positive change in the industry.
Contrary to most inexperienced beliefs, LVMH isn’t a pure-play on diamonds. The company also provides shareholders with exposure to accessories and high-end apparel, cosmetics and perfumes, and alcohol products. But if a big-name company that includes some of the top diamond businesses in the world is what you’re looking for, LVMH Moet Hennessy Louis Vuitton may be the place to start.
U.K-based is another big-name mining stock with a global operation that produces copper, platinum, iron ore, nickel, and, of course, diamonds. However, metals and iron ore make up the volume of Anglo-American sales that’s actually the best way to play in the diamond industry. The UK-based diamond producer owns 85% of the diamond company De Beers Group, with the other 15% owned by the Republic of Botswana’s administration.
De Beers and its affiliates produce more than one-third of the global supply of rough diamonds. De Beers also cuts, polishes, and sell diamonds to the end consumer. Along with Anglo American’s base metal assembly, this is a diamond and mining investment that pays a semi-annual dividend, so it’s worth the thrill for an investor looking to generate serious income.
If you’re out and about to get some exposure to the market but don’t; want to own the gems, you could consider an investment product that has some links to the industry. And diamond stocks could be one viable option.
Diamond investing offers a lot of value, but it’s something you need to commit to if you’re going to have success. You will need to be willing to dedicate time to learn about diamonds and also be wary and patient when it comes time to sell. If you’re a restless individual by nature, then diamond stock investing might not be the right option for you.