“A Diamond Is Forever” – De Beers Own Slogan
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There is no alternative to a
precise system of grading by scientific testing of colour, clarity, cut and
carat if the diamond is to become an acceptable international medium of
investment.
Unsystematic and subjective standards up until now have militated against the
establishment of the diamond in such a role. However, the picture appears to be
changing despite the apparent reluctance of the diamond trade to amend their
traditional testing procedures and the move is likely to gather pace as
investors become unwilling to hazard ever larger sums of money on arguable
opinions.
But apart from the revolution in grading techniques, the diamond trade is also
being disturbed by the whole concept of the diamond as a medium of investment.
The doubts are very understandable in that the creation of a large pool of
diamonds held as investments implies the establishment in due course of a
secondary source of supply of diamonds in a trade that relies for its stability
on one single source.
Fears have therefore been expressed that "investment diamonds" could
build up a potential for wrecking the market by disturbing the careful control
of supply that De Beers has exercised since the early 1930s. Such fears are
almost certainly greatly overstated.
The market for investment diamonds is small and specialized in that it is
restricted to high-quality stones within narrow weight brackets (ideally from
0.45 to 1.65 carats) which form far too small a proportion of the total supply
to have any significant effect upon it in the future.
The possibility exists, of course, that many less reputable firms will arise,
as indeed they already have, with the object of selling lower-quality stones on
the basis of subjective grading techniques. But if this happens, the danger
will not be to the trade but to the gullible investor.
The best firms do not promise a quick return but strictly advise at least a
five- to ten-year minimum holding period. On this basis top-quality diamonds
have proved an outstanding investment over the past forty years, and given the
prospect of growing demand allied with a decreasing supply all known reserves
are likely to be depleted within the next forty years at the current rate of
extraction-there is little reason to doubt the investment merits of diamonds
over the next decade.
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