Myths about the pink diamond investment

With a bad reputation and dotted with the doubtful practices of certain actors: the pink diamond investment market is not without controversy. Therefore, Argyle Diamond Investments believes that it is necessary to regulate the sector on which it rests and remember that good practices exist.

To help shed some light on this sector, the pink diamond investment website reviews the 10 most widespread myths.

1 / The pink diamond market is not regulated

FALSE. The pink diamond market is not, in effect, regulated by any external financial authority, but the value of the stones is determined independently by the Rappaport Diamond Report, a benchmark for all professionals in the sector. 
Although each stone has unique characteristics (4Cs: color, cut, carat and purity), its value is determined by very fixed scales, subject to variations in the stocks of real diamonds and gem production

2 / Does not exist a high return without a high risk

TRUE BUT ...Unlike other values, the particularity of pink diamond investment is that it is a non-speculative investment: its profitability must be valued over a minimum period of 10 years. Since the 60s, the price of the diamond remains stable: If in 1960 a carat was worth about $ 2700, its value is close to $ 31,000 today. 

And if, in effect, price fluctuations can intervene in it from one year to the next depending on the fluctuation stocks and a more or less strong production, their value is still growing in the long term: it is the reason why That professionals recommend investors not to consider diamond as a short-term investment.

3 / The certificate of authenticity is not enough to prove the quality of the

FALSE diamond .The "diamond certificate" or "diamond quality certificate" is established and granted by a team experienced in gemology in laboratories worldwide recognized as the CGL, HDC, Gemological Institute of America or laboratories of the Chamber of Commerce of Industry of Paris. The experts classify there the characteristics of the 4Cs (size, purity, color and weight) after an analysis, allowing then to decide on the value of the stone. 

This document proves that the diamond has been well examined by an expert and that its price has been set according to its quality level: it is your identity card. The diamond certificate has two main interests: that of regulating diamond exchanges and limiting the parallel trade of this gemstone, but also that of being an accurate proof of the quality of the diamond, 

4 / It is preferable to invest in a pink diamond than in a

FALSE colored diamond . Although pink diamond is best known to the general public, colored diamonds, known as "fancy", are the most chosen by experts. In fact, they present very interesting yields thanks to their great rarity, the price of a colored diamond can thus reach up to 50 times more than that of a "pink" stone. And, currently the most demanded is the pink diamond: its price can be seen multiplied by four times the demand peak.

5 / The pink diamond is safe from financial bubbles

TRUE. The price of diamonds is not subject to external influences. Contrary to what happens with investments in the stock market, the pink diamond effectively resists market turbulence, the value of which then remains fairly stable, and can, on the other hand, be seen as an effective economic stimulus tool in case of crisis .

6 / All diamonds are good investments

FALSE.The key to a good investment lies in proposing to each of the investors the product that best suits their needs. The pink diamond investment is indeed a very interesting option for savers who wish to diversify their assets, but professionals recommend, however, to pink diamond investment only up to 10% of the equity portfolio. 

On the other hand, it is recommended that investors focus primarily on the diamond between 0.5 and 3 carats. The reason lies in the fact that a diamond of less than 0.5 carats does not have to be required by a diamond certificate drawn up by a laboratory. 

On the other hand, beyond 2 carats, the stones are rare and may find a new buyer harder than a more classic stone, in which investors deposit their trust beforehand. In any case, the diamond is primarily a pleasure investment and investors consider it as an ideal asset to easily bequest from generation to generation.

7 / The pink diamond is extracted in bad conditions

FALSE BUT ...There is still a pink diamond production market. However, since 2003 the Kimberley Process has been established, which ensures that the sale of raw diamonds is not used to finance an armed conflict and also prevents these diamonds from reaching the legal market. 

Under this certification system, participating states must respond to certain minimum conditions and are required to introduce a series of legislative provisions as well as national institutions, and controls on export, import and internal trade in diamonds.

States also have to be obliged to ensure the transparency of activities related to diamonds and to carry out exchanges of statistical information. According to this control, only commercial activities on diamonds carried out among participants that meet the minimum conditions of the certification systems will be lawful. 

The Kimberley process and the certifications of internationally recognized laboratories have, since then, been a guarantee for most of the players in the sale of diamonds.

8 / The pink diamond is subject to a

TRUE complex taxation ... But it has an advantageous taxation! VAT does not apply to diamonds stolen in free zones (such as Antwerp, Rotterdam, Gênes and le Havre, in Europe). This means that investors are exempt from paying taxes on the purchase. 

And in countries like France, during resale, they are subject to a 5.5% reduction. This appraisal depends on whether the transfer price of the diamond is less than or greater than 5000 euros, in which case there could be another exemption. 

9 / The pink diamond market is an opaque market.
FALSE.The pink diamond market is a market mainly unknown to the public. In addition there is usually a great distrust around this, justified, however, by old doubtful and unregulated practices. However, the implementation of numerous controls at various stages of diamond production has allowed regulating the market and considerably reducing the bad practices of the sector that were still in force at the end of the 1990s. 

Parallel to the professionalization of the sector and to the reinforcement of the controls that have sanitized the market, the online diamond sales platforms have made it easier to access this product to the general public, to make them understand their gears and to simplify their purchase. 

10 / The resale of a pink diamond is complicated

FALSE.  Pink diamond Investment suffer less and less difficulties in resale thanks to the emergence of transnational platforms specialized in the purchase and sale of diamonds. However, in the context of equity investments, it is advisable to buy pink diamonds, which more easily find a buyer.