How to Invest in Gold and Diamonds
Gold and diamonds have been the symbols of stability and wealth for centuries. Gold coins and jewelry secured the trade among tribes, countries and nations. Even now some currencies have the correspondent equivalent of set weight in gold. It means that gold and diamonds are good enough commodities to secure your finances. But are they good enough to become an investment.
Every time inflation rises, the investors tend to secure their finances investing in rather stable assets, and every time gold and diamonds are considered among such. The first half of 2022 is the proof, as the gold managed to end it with 0.6% higher taking into account all the market volatility and inflation.
The experts in industry suggest investing in gold or diamonds as a defensive asset without the expectations to make a fortune on it. The best advice is to make those commodities a small percentage of your total assets.
But what is the best way to start? There are two main ways to invest: direct and indirect. Direct investment in gold or diamonds means that you’re investing in physical gold or diamonds in forms of coins, gems, bullion or jewelry. While indirect investments include buying gold or diamond-related securities and funds that buy the commodities instead of you but for you.
When you decide to directly invest in gold or diamonds, you’d better have an expert to guide you, as not every yellow metal and colorless stones are the best options to bet your money on. And if you don’t have someone to trust in this sphere rely on documents, certificates and other papers that prove the authenticity and state the quality of the gold or diamonds you’re investing your money in.
Gold bullion or gold bars are the classic way to invest in gold. The safest place to buy is a bank that will also provide the certificate stating the weight and purity of the bar. Often along with the bullion you’ll get the offer to store it in the bank cell for a set fee. For a gold bullion to be considered an investment the preferred purity of gold should reach 21k or higher, and it’s better to contain a serial number stamped on it for security purposes.
Another very popular way to invest in gold is gold coins. Collectors, coin shops and private dealers are the main places you can find gold coins for sale, but be careful and buy only from those you trust. There are coins the value of which determines the amount and purity of gold that is used in them, but some exemplars may be valuable due to their collector status, as Canadian Maple Leaf coin or the Saint Gaudens Double Eagle.
Gold jewelry is probably the most enjoyable type of direct investment. Jewelry makes around 50% of global gold production that’s why it can be easily called the most popular gold investment, though not all the jewelry is bought for this purpose. As well as not every gold jewelry item can be considered an investment. The gold jewelry with 14k or higher purity of gold has the right to be called an investment. The best part in this commodity is that it’s probably the most practical and beautiful way to hedge from the inflation. You don’t need to pay any fees for storing, or looking for places to keep the jewelry. You may just enjoy your assets on your neck, finger or hand and turn them into a part of your style. But if you’re planning to resell your gold jewelry in the future, you’d better keep the receipts and certificates to make the process easier.
The situation with direct investment in diamonds is a bit different. It’s highly unlikely that you will be able to manage without an expert as the standards for diamonds are rather high. To understand all the requirements, you need to know that the quality of diamonds is rated according the 4Cs – carat weight, color, clarity and cut.
The carat weight is literally the weight of the stone, where 1 carat equals 200 milligrams.
The color of the diamond has the range from D to Z, where D-F are considered as colorless diamonds, G-J are near-colorless, K-M have slightly visible tint, N-R are very light stones with noticeable tint, S-Z are light diamonds with yellow or brown very noticeable tint. In this scale D is considered to be the most valuable. Rare fancy colored diamonds such as red, blue and green, are not rated by this standard as they are more valuable.
Clarity of the diamonds has also the scale of its own:
FL, IF – Flawless and internally flawless (no inclusions in the diamond visible under 10x magnification);
VVS1, VVS2 – Very, very slightly included (inclusions in the stone are present, but they are hard to see under 10x magnification);
VS1, VS2 – Very slightly included (inclusions are visible under 10x magnification but considered to be minor);
SI1, SI2 – Slightly included. (inclusions are visible under 10x magnification but not visible to the unaided eye);
I1, I2, I3 – Inclusions are obvious under 10x magnification and can affect brilliance and transparency of the diamond.
And the last criteria of the diamond that impacts its price and value is the cut. It’s the skill of the jeweler to arrange the facets for the best their interaction with light.
Keeping all this in mind, we can proceed to the requirements the diamond should possess to be an investment. Its carat weight should reach 1.01 or 1.49 carat. The color range should be D-H. Clarity shouldn’t be less than IF – VS2. And the best diamond cut is considered a Round Brilliant.
That is really unlikely to make sure everything is right without an expert.
Buying a jewelry with diamonds as the investment commodity you need to take into account the metal as well, which makes it even harder to verify everything. You need to find a reliable place, like ItsHot, where you can be sure of both quality of materials and price. Besides, all the quality certificates are provided, so if you want to resell the diamond jewelry in the future, it shouldn’t be of any difficulty.
There are options of indirect investments, like gold and diamond mining stocks, where you can buy a share in a gold or diamond-mining company and expect to get monthly dividends without the troubles and expenses of physical ownership.
Another option for investing in precious metals is to consider precious metals loans, where you use your gold or other precious metals as collateral for a loan. This can be a good option for those who want to hold onto their precious metals but also need access to cash for a specific period of time.
Gold and diamond ETFS and mutual funds also provide the opportunity to invest in those commodities indirectly. They perform purchases and sales of gold and diamonds on your behalf for fair fees, presenting you a chance to benefit from fluctuations of prices.
So, in general gold and diamonds are considered as the safest investments that can be made to hedge the temporary market volatility. The experts don’t recommend considering those commodities as lucrative, rather as defensive assets, that are better made in small proportions.