In a time of volatile price inflation and recession economies, it makes sense to invest capital in longer term, more secure angles. Traditionally, precious metals like gold and platinum have filled this role. There is also an established trend of investing in art. For the same reasons, people may also decide to invest in diamonds.
Gemstones are a long term investment because they are a durable item, like gold. This makes it possible to tie up capital in gemstones as a defense against inflation and market instability. Given their relatively small size, gems make a viable option in transporting wealth. Their size also makes them easy to store.
Gemstones are traded on an international level. 70% of authentic stones (that is, stones not produced artificially) are used in industry, while the remainder are bought by the jewelery sector. The gems may therefore be re-sold to an existing market once they have served their purpose in an investment strategy.
Synthetic gemstones are not expected to have a substantially negative impact on the price of the stones. As an example, rubies are also manufactured artificially and this has not destroyed their price. Customers have a preference for authentic gems, and synthetic ones may even be considered unacceptable socially.
At present, gemstones do not have a set commodity price like gold or crude oil do. However, this may change soon as the stones are set to become a traded commodity on the NASDAQ stock exchange by 2014. This development should help to create a more standard price range, paving the way for full-scale publicly traded commodity status.
Because gemstones are relatively expensive, they require substantial capital to acquire. There is also a huge variety of stones for the potential investor to choose from. Any investor seeking long term stability should consider a move to invest in diamonds as an alternative to other long term options.
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