Are diamonds a good investment option?
investment?
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Most industry experts respond with a resolute ‘no’ to the second question. Diamond’s price is not standardised, it’s non-fungible and, even if you do find a diamond in the rough (pricewise), it lacks a healthy secondary market that makes it hard to sell.
“Historically, diamond has not been preferred as an investment asset class,” says Manohar Annappanavar, Associate Director, CareEdge Ratings. “During the pandemic, the negative performance of other asset classes like real estate and equity markets had supported the increased demand for diamonds. This has witnessed a reversal in the recent past,” he adds.
The fall in demand and an oversupply have brought down the prices of these gemstones. After peaking in February 2022, rough diamond prices have been on a declining trend. “Over a period of five years, rough diamond value has depreciated by 13-15% making it a less lucrative alternative option. Polished diamond prices move in line with rough diamond prices but with a lag effect, making it a less lucrative investment option as well,” says Rahul Guha, Director, CRISIL Ratings.
Data shows that both Sensex and gold have beaten diamond by a wide margin in the recent past. Sample this: Rs.1 lakh invested in the Sensex in January 2023 would have fetched you a 25% return by May this year, increasing your investment to Rs.1.25 lakh. The same amount in gold would
