Buying Natural Fancy Coloured Diamonds As An Investment Now

It's important for new diamond investors to be-aware of the difference between investing in colorless (white) diamonds and colored diamonds. Colorless (white) diamonds are typically used for engagement rings and have more or less been commoditized whereas, savvy investors understand that natural fancy colored gemstones are becoming the fastest growing hard asset investment in North America.

For every 10,000 carats of colorless diamond mined, 1 carat of color is found. Only 20% of diamonds mined are considered gem worthy and out of these only a small percentage are called "eye-clean" or without visible inclusions. This leaves only a small number of gems that can be considered rare thereby providing a hard asset investment that is likely to continue to appreciate in value.

Given the current state of the global economy, investors are naturally turning to hard asset investments such as gold, silver and investment grade diamonds as a store of wealth. In hard economic times, an investor's highest priority is to protect purchasing power. In normal times, when inflation rates are stable, fiat currency is just fine for protecting purchasing power. But when confidence in currency is lost, the only way to protect purchasing power is to move wealth from the medium of exchange function (fiat currency) over to the store of value function (hard assets) of money.

Natural fancy colored diamonds are highly portable and can be stored in a saftey deposit box or worn as jewelery. It's the only multi-million dollar investment portfolio that fits into an envelope, contains no security numbers, no names and requires no registration.

It is essential that investors understand that there is a significant difference between paying retail prices for diamonds and paying prices offered by official rare jewel investment houses. In fact, diamonds from Tiffany or Harry Winston can be marked up as high as 200% and 300% on the original price tag.

Savvy investors know this. New investors need to know that there are alternatives.

Rare Jewel Investment Houses and wholesalers offer rare gems of similar or equal quality to name brands diamonds (specifically for investment purposes) at a fraction of the price. The reason why 'rare jewel houses' have emerged in recent years is to cater to investors looking to diversify their portfolio; these are 'luxury diamond consumers' who are less interested in 'brands' and more interested in buying a loose investment-quality stone poised for great appreciation.

The diamond industry is inevitably going to see the prices of rare gems and natural fancy colored diamonds rise even more, therefore, it's especially important that investors don't pay more than they have to.

The Gemological Institute of America (GIA) developed the 4Cs as a way to objectively compare and evaluate diamonds. The four "C's" of diamond evaluation (with more emphasis on colorless (white) diamonds) are 1) Color 2) Clarity 3) Cut 4) Carat (weight). This criteria is typically use for valuing colorless (white) diamonds, whereas natural fancy colored diamonds are graded on Hue, Tone and Saturation.

For a colorless (white) diamond to be considered rare, it needs to be valued at a high level in all four C's. However, many jewellers will advise clients that clarity is not as important as size depending on the purpose of the purchase. For an engagment ring, clarity is less important then weight. You will very rarely have someone ask "What clarity is your diamond ring?" However, you may have someone say, "Your diamond ring is HUGE."

For investment purposes, it is not enough for the gem to be large, it must also be am exqisite Hue, Tone and Saturation. In the last 30 years, industry experts have developed cutting techniques that exemplifies a colored diamonds brilliance. Carat is less important when investing in colored diamonds. In recent years, some colored diamonds have gone for as much as 7 figures. On Oct. 15, 2011 a 4.19 ct cushion-shaped natural fancy vivid orange diamond ring achieved a record price of $2.96 million or $705,587 per carat.

Investing in rare natural fancy colored diamonds is a great way to add low risk value to a portfolio. Find a 'Rare Jewel Investment House' with a good track record and who has established credibility in the industry. Also, make sure that they have a 'no fault return policy' that allows you 30 days after your purchase to return your stone if you are not satisfied.