In the current low-interest, turbulent financial climate, wearing your assets on your fingers can make more sense than keeping them in the bank.
Some say the 20th century love affair with diamonds started with an advertising campaign run by South African miner De Beers in 1948, which coined the phrase ‘a diamond is forever’.
Others say the diamond has always been a hallmark of success, a standard of self-worth and a signifier of value above all else. One thing is for sure: as their popularity has grown, so have their prices.
According to UK-based diamond authority WWW Diamond Forecasts, rough diamond prices have increased by nearly a third since 2005. The firm expects them to soar a further 20 percent between now and 2017, bolstered by demand from a growing emerging market consumer class in China and India. Appetite from these two hotspots already accounts for a fifth of global spend, according to data from miner Anglo American, and is set to grow to 28 per cent by 2016, or from US$23 billion to US$31 billion. That is taking into account the limited supply, which is pushing up prices even as availability decreases.
“If demand were not constrained by supply, demand would reach 50 million polished carats by 2020, up from 26 million today,” said Richard Platt, managing director at WWW Diamond Forecasts.
So convinced was Milan-based lawyer John France in the success story of diamonds, a year ago he left his desk job to start up a diamond jewellery broker, JF Diamonds. Having worked closely in the legal world with all the big Italian fashion houses — Versace, Cavalli and Armani, to name a few — France gained valuable insight into the world of high-fashion jewels.
2. John France of exclusive jeweller JF Diamonds points out that “Diamonds have shown steady growth … have a proven track record and have a limited supply against growing demand. And, of course, they look much better than a stock certificate.”
“My clients often lamented the difficulties of sourcing reliable suppliers of fabulous diamond jewellery. So I saw my opportunity to sit on the other side of the desk,” said France. With his roots in the Seychelles (the president of the archipelago is a relation of his), France was educated at British boarding school and Oxford, and has been based in Milan, on and off, for the last 14 years.
France now sources the world’s most flawless white diamonds and statement coloured diamonds to create one-off rings and necklaces that ooze 20th century glamour. He finds these wonders in the diamond mecca of Tel Aviv, has them designed in Milan and crafted in Valenza. Each piece is hand-crafted and customised; France will frequently fly to visit his clients to help work through a design. A single piece could take more than a year to create from start to finish, he said. Currently for sale he has an 18-carat white gold ring (Anello Grigio) with a 21.3-carat grey sapphire, 62 white diamonds and a total of 215 ice diamonds. This piece retails at £81,500. Meanwhile an 18-carat white gold choker (Collana) is made from 864 white diamonds weighing nearly 50 carats altogether. This is priced at an eye-watering £367,000.
His clients, perhaps unsurprisingly, hail from the billionaire hotspots of Monte Carlo, Gstaad, Dubai and Moscow, where wealthy individuals have weathered the global crisis with barely a scratch. According to data from information provider Wealth-X, the world’s population of ultra-high-net-worth (UHNW) individuals (those with US$30 million in assets and above) grew slightly last year to 187,380 with combined global wealth of US$25.8 trillion. Wealth-X forecasts the UHNW population, particularly in countries such as diamond-hungry China and India, to accelerate.
But there are hurdles. Diamonds are still not as readily accepted as an asset class as other commodities, said France. Some buyers are wary due to their lack of liquidity; and concern over fakes is a challenge. “The market is very un-transparent,” he agrees. But France maintains that as supply levels off and demand increases, their investment potential will become undeniable.
Their long-term appeal is clear, he said. While global aftershocks triggered a price slump of around 16 per cent last year, the last 25 years has seen diamonds of a carat doubled in value, according to the Rapaport Diamond Index (RDI). Five-carat-plus diamonds are now 250 percent more expensive, said the RDI.
“Diamonds have shown steady growth over the last two decades, have a proven track record and have a limited supply against growing demand. And, of course, they look much better than a stock certificate,” said France.
1. Driven by demand from China and India, rough diamond prices are predicted to increase 20 percent by 2017, according to pundits at WWW Diamond Forecasts. This piece from JF Diamonds may thus prove a sound investment.