This week, I'd like to talk about diamonds.
I've been thinking about them a lot after I saw this quote, earlier in the week:
"It is estimated that by 2016, China will account for 16 per cent of the diamond market" - Financial Times
With many different types of collectibles, 'traditionally minded' investors sometimes raise their eyebrows when you discuss their potential as investible assets.
This isn't the case with diamonds.
What I mean is, imagine you're stood in a room filled with traditional investors. I'd bet you that many of them will already have considered diamonds as lucrative investments.
Here's another quote from that Financial Times article:
"Diamonds rose in popularity during the 19th century because they aren't traded as regular commodities, their prices remain comparatively stable, thus making the precious gemstones a relatively safe investment."
As you can see from this quote, the case for 'diamonds as investments' goes back centuries.
Factors behind the viability of diamonds include their size - and value-per-unit - and ease of transport around the globe.
The FT article states: "A relatively high-quality diamond with a low gram weight could be worth more than a high kilo-weight of gold."
But collectors are already wise to the immense appeal of diamonds...
Hence auction successes like Sotheby's November 15 sale of a Fancy Vivid Yellow diamond. It brought a record breaking 11.28m Swiss francs ($12,827,300) in Geneva.
An impressive sale. But the appeal of diamonds for collectors doesn't end there. As ever, collectors have an opportunity to see things differently. Like in this upcoming Christie's sale, for instance...
 The legendary Elizabeth Taylor: diamonds are forever - and her |
Going under the hammer is a 16th century pearl necklace, once worn by the Queen of Spain for a Velazquez portrait. Better still, it was later gifted by the legendary actor Richard Burton to Elizabeth Taylor on Valentine's day.
In other words, such sales give collectors a chance to combine the joy of owning rare gems like pearls and diamonds with the enjoyment of celebrity provenance.
What's more, thanks to the strong legacy of a star like Liz Taylor, her jewellery items - which are easily portable, tangible assets - will always find potential future buyers across the globe.
Which is probably why these singular pieces are set to bring between $30-50m in total when they auction at Christie's, next month.
Christie's event could be a great marriage between collecting and (in the FT's words) the "relatively safe investment" that diamonds can offer.
And the perfect marriages don't end there...
The population of the BRIC countries (Brazil, Russia, India, China) is set to double in the next 40 years, accompanied by a huge increase in disposable income.
The impact of this is already being felt in Asia, in particular, with increasing numbers of World Record auction sales.
And with China set to "account for 16 per cent of the diamond market" as early as 2016, the future is set to be bright for collectible diamonds and other jewellery.
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Paul
Paul Fraser
