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Diamonds vs Gold investment

Posted July 30, 2012 by Therese Shaw to Investing 0 0
This post was written by a EasyFinance.com Community member. The views expressed below may not reflect the views of EasyFinance.com.

There are reports that Diamonds will soon outperform Gold when it comes to investment. The year 2012 is predicted to be a good year for both commodities, but of course, if anyone can only pick one to invest on, it's quite interesting to see which one would be the better choice.



Decades ago, diamonds have always been considered a bad commodity to invest on, since the market itself is filled with controversy and various urban tales. Gold, on the other hand, has always been used on almost anything that defines wealth - coins, trophies, and symbols of royalty. Gold is also easier to  work with than Diamonds, since Gold is metal - which can be easily moulded, cut, and flattened into strips. Diamonds are precious minerals that require delicate and expert hands in order to be cut, polished, and set in those beautiful jewelleries.

Now, everything has changed. Although Gold just keeps on growing in price, Diamond prices are silently moving upwards, unnoticed by investment veterans due to the old sayings that these gems aren't a good commodity to invest on. Gold are estimated to make a 19% gain this 2012, according to estimates made by Bloomberg analysts. Here's the reason why diamonds maybe able to beat gold in terms of investment opportunities: an Investor's profit will actually depend on which industry is he/she planning to focus on, as there are different types of Diamonds that are used for different types of applications. These industries range from Industrial, Technological, Investment Diamonds (bigger, loose diamonds), and rare stones (which are often put up for auctions). Although rare and investment Diamonds lack pricing forecasts, the broad selection of diamond types will be enough to consider Diamonds as a worthy commodity to invest on. The growth rates of raw diamonds aren't bad this year, either, with numbers ranging from 5-10%.

Another reason why Diamonds are a worthwhile investment venture these days, compared to gold, is that demand for these precious gem is expected to rise in the next 2 years. Demands coming from Asia, particularly China and India, are considered to be the driving force behind the new diamond investment trend in the west, these days. The sudden increase of demand is said to be coming from the jewellery industry. Aside from sudden demands, there are predictions that this sudden trend of diamond investment will cause a decline in diamond supply. Although it is said that diamond production will increase in the next few years, the growing demand for the mineral will easily consume and beat the incoming supply. Even in the last five years, demand for diamonds has always surpassed its always growing supply.

So it may not beat gold as the standard, portable investment commodity this 2012, but every storm starts with a great calm. In this case, diamonds are already starting to run out of supply, and demands are growing at a high rate. Since gold can be reused and moulded into new things, there's little chance that demand for the metal will suddenly increase at the same rate as diamonds. If you're looking for a new investment opportunity, maybe you should consider diamonds.

About Therese Shaw: Sharon Sussman has a Bachelors Degree in Psychology from Touro College and is now Director of Products at Brilliance.com. She has been involved in the loose diamond and jewelry industry for 10 years.

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