Diamonds as an investment
Diamonds were largely inaccessible to investors until the recent advent of regulated commodities,[1] due to a lack of price discovery and transparency.
The characteristics of individual diamonds, especially the carat weight, color and clarity, have significant impact on values, but transactions were always private.
Causes for the continuing decline were suggested as lower demand in China, the general global economy, and fewer marriages, but improvement in speed of laboratory growing of diamonds from weeks (and billions of years for natural stones) to hours was thought to be the biggest change.
Rough diamond prices have historically been impacted by the mining companies controlling supply, most notably De Beers.
Stones near the top of a size band (or rarer fancy coloured varieties) tend to be uprated slightly.
[citation needed] There are numerous diamond grading laboratories, with each offering investors, consumers and dealers similar diamond-grading and verification services, including the Gemological Institute of America (GIA) and the CIBJO (Confédération Internationale de la Bijouterie, Joaillerie et Orfèvrerie), also known as the World Jewellery Confederation.
[citation needed] If the standards set by such organisations are called into question, ramifications are felt throughout the diamond industry.
[citation needed] In 2005, the GIA was sued by a dealer who had supplied diamonds to the Saudi royal family after the accuracy of GIA-issued certificates was questioned.
[citation needed] The investment parameter of diamonds is their high value per unit weight, which makes them easy to store and transport.
The exchange is an attempt to overcome the traditional investment barriers of sales tax and low liquidity on the resale market.
[citation needed] In 2012, DODAQ nv and the Antwerp World Diamond Centre joined forces to create DIAMDAX.
[citation needed] Rare "fancy colored diamonds" such as yellows, pinks, blues and greens have proved to be a secure investment over the five years preceding 2012.
Rio Tinto has announced that they intend to close the Argyle Mine in Western Australia in 2016–2018 which will impact the dwindling supply.
[citation needed] The largest diamond company in the world is Alrosa, which surpassed De Beers in carat production in 2008.
[22] De Beers is privately owned by Anglo American (85%) and the Botswana government (15%), so its shares are not traded on the stock market.
[23] The Oppenheimer family had previously owned a 40% stake in De Beers, but this was sold to Anglo American in 2011.
[24] Rio Tinto and BHP [citation needed] are the next largest producers, but diamond mining is a small part of their commodity portfolio.
In 2012, Tacy Ltd. stated that it expected $1 billion worth of recycled diamonds to be put back into the market.
[citation needed] Diamonds of smaller sizes are traded in parcels of similar stones, called 'melee,' after the French word for mix.
Small recycled diamonds need to be sorted, have their cut modified and resold to manufacturers in large parcels to allow them to pick matching stones to set in jewelry.
