Financial destiny

¨By developing your discipline and your courage, you can refuse to let other people´s mood swings govern your financial destiny. In the end, how your investment behave is much less important than how you behave¨

Benjamin Graham

Every investment is about making money, investment by definition is ¨putting money into something with the expectation of profit¨, sometimes the investment works sometimes is doesn’t.

However this is a misconception, when your investment is only ¨expected¨ to make profit it’s a gamble, not much intelligence is needed for that.

When your money is ¨supposed¨ to gain profit based on someone else mood it’s no longer an investment, it’s at best a speculation.

 Just like no one considers buying a lottery tickets an investment, so too an ¨investment¨ with a speculation factor it´s not an investment.

Investing in Diamonds is not just a good investment, it´s an act of discipline and financial behavior.

The Case for Diamond Investors

There is no question that Diamond investment is now one of the smartest investments possible.

I want to tell you a short story that happened to me a few weeks ago; one of my clients, after a short presentation and some thinking time, decided to buy an investment Diamond, this client was very special to me because he is the owner of a known bank in the area and has many investing groups.    

The next morning he deposited the money in my account and told me that he is going on a business trip and that in 3 weeks he´ll be back to pick up his Diamond.

After 3 and half weeks he sent me an E-mail apologizing for not making it back on time and that as soon as he can he´ll let me know when he is coming back, on the mean time he wrote ¨hold on to the Diamond¨.

The weeks went on, finally after 4 weeks I get an Email from him that in 2 days he is coming to pick it up.

Before I continue the story I should probably let you know that the Diamond I got him as an investment was 1 of 3 of its kind available in the market, the funny thing was that the day he came it there was NON in the market, in other words, he become the owner of an Investment Diamond that has no offer and lots of demand.

Which brings me to the point I wanted to make, Investing in Diamonds is not just about the ¨4 c´s¨ (Color, Cut, Clarity and Carat), it´s about knowing the market and its people, there are a lot of great quality Diamond out there, but there are a lot of them, not many Diamonds can be considered ¨Investment Diamonds¨.

The end of the story was that when the client came to pick it up I offered to buy it back from him at 2% more then what I sold it to him, to which he answer with a smile ¨I don’t know a lot about Diamond and much less about investment Diamonds, but I do know something about good investment, next time I buy an Investment Diamond from you, hold it for as long as you want¨, and then he took his Diamond and left with a big smile on his face.

Today he called me back….

Why invest in Diamonds

Why invest in Diamonds

Let’s define first what the qualities of a good investment are.

An investment that retain its value unaffected by stock market crashes, inflation, or anything that cause currency to devalue.

An investment that offers you some privacy from your finances being scrutinized, There is no paper trail when you own 100 percent of the asset.

An investment that requires no ongoing maintenance.

An investment that no one person or organization has a monopoly on.

An investment which is easily transported and has an international value.

And surprisingly (or not) Diamonds qualified for all of the above.

By looking at the historical price of Diamonds in the last year, you can see that their strength is very clear, and nothing seems to affect them, some diamonds did change, however they are not the investment type (this point will be discussed more soon).

Secondly it offers you peace and tranquility, that your money is safe.

Investment Diamonds are not like regular jewelry diamonds, they require no maintenance, there is no warring risk, and they don’t take a lot of space.

Many potential investors make a fair argument about investing in Diamonds claiming that it’s relatively a new market that has no strong investment background.

There are many different approaches as to why it is that way.

First of all, since the diamond industry began people always bought diamonds as a family fund, maybe it wasn’t call investment but a family fund is a type of investment.

Second of all in order for a diamond to be a good investment, it has to be bought in a good price (like any other good investment), it can’t be an investment when one man or one organization owns 100% of that market, you can’t have your invested money depending on one man’s bad day.

So as the diamond industry began, it was in a way a one man show, which is the first sign of a bad investment, DeBeers owned all the Diamond mines, and the price was what they said.

Second of all until the diamond made his way to the store, it pass 3 or 4 hands and hence lost its investment value (and nonetheless almost everyone how purchase a diamond, considered it as an investment).

Now a day the diamond industry is extremely far from being a one man show, new diamonds mines are discovered every year in different countries and different condition, more competition exists and they all want to sell.

Why invest at all???

Why can’t we just leave the money in the bank and let the people that “understand money” take care of it? After all just like we worked hard to make that money they work hard learning what to do with it.

So let’s start with the basics.

There are 2 terms which are comely mixed, however essentially they are very different, Currency and Money.

Currency is simply a demand note, in other words a certificate of deposit or claim right on the real value, a currency does not have value in and of itself, rather it is a medium whereby you can transfer value from one asset to another, the paper simply represent value that is stored somewhere else.

Money is a stored value, something that has a real value by itself and doesn’t just represent value.

So if our currency was a currency that represented a real value, you would have a good argument by leaving it in the bank and letting the bankers do their job.

However this is not the case, sadly currency is not real any more, the only way the currency can restore its value is if the value of the paper rises up so much that the actual currency (the bills) becomes money, but that’s far from happening.

History shows us that those who held on to real money, instead of currency, reaped the rewards many times over.

Holding real money instead of currency is in other words riding a horse which runs faster the inflation, not losing the rise doesn’t just do it, to survive you have to win.

Treated Diamonds

Treated Diamonds.

Treated Diamonds started when the Diamonds industry started, many color and clarity treatments were done to ¨improve¨ Diamonds defects in order to increase their value and attractiveness.

The Color Enhancement originally started with a simple coat (a thin layer of chemicals or plastic) that enhance the Diamond color, With time an technology advances a new color enhancement started called Irradiation, which is a permanent color change ( using radiation).

Now a days the most common color treatment is HPHT which stands for High Pressure High Temperature, in the 1990s scientists discovered that using High Pressure combined with High Temperature (similar conditions to the Diamond formation) can result in making certain low color Diamonds Pink, Blue, Green and Yellow, and most commonly Broun to Colorless.

With time a few clarity enhancement techniques started to appear in the market the most common once being LD and fracture filling.

LD stands for Laser Drilling, which is a treatment used to remove dark inclusions, by making a hole from the Diamond surface to the dark inclusion in order to burn it, the treatment leaves a tiny drill hole (can be spotted with a loup, a tub is seen from the Diamond surface to the center, or by looking at the facets carefully searching for an opening in one of them).

LD can be done in any part of the Diamond, however the most common once are inserted from the Diamonds Table all the way to the dark carbon.

Fracture filling is a treatment done by injecting molten glass substance into a visible fracture in a Diamond, this treatment is very effective for the Diamond clarity, however many routine cleaning methods can damage the treatment.

 Treated Diamonds MUST be sold with disclosure of the treatment, it is illegal to sell treated Diamonds without it.

 Buying treated diamond is like buying gold filled jewelry, it looks good but not recommended.

Treated Diamonds are never ever ever an investment in any way.  

2010 going to 2011

The year of 2010 started with some anxiety, the prices of rough diamonds dropped, the supply went down a lot and it didn’t look to promising, the demand slowed due to the weak economic status of many people.

Surprisingly as the year went on more movement was happening than expected, some new Asian markets opened and the USA market didn’t disappoint either, the year of 2010 can be summaries as a great year of recovery.

Looking for the positive side of the strong economic problem, we can point out that some very interesting markets where discovered, some markets that no one ever gave any attention are now taking a big part in the Diamond industry.

 Another interesting thing that toke place after the economic problem is that the diamond dealers the survived can now face almost anything, they became much stronger and all the small competition was erased, the people that are now in the market are very very strong.

Diamond simulants.

Diamond simulants are a an imitation of a natural Diamond.
Simulants can be natural or made in a lab, and a successful one can be very attractive.
Diamond simulants take a big part in the jewelry industry, for 2 main reasons;
1) Cost of production.
2) Quantity of production.
There are many Diamond simulants in the market this days, and new lines of Synthetic Diamonds ( same chemical composition as a natural Diamond, but grown in a lab)
There are many ways to recognize simulants but don't think that after reading a little online you can detect one, however there are 2 tests that 99% of all simulants fail.
1) Diamond is the strongest natural gem, that hardness makes it possible to obtain extremely sharp facet junction, a simulant on the other hand has a rounded facet junction, and generally shows visible scratches and abrasions.

 look carefully at the facet junction, in a real natural diamond the facet junction is much sharper and better connected.

2) Most Diamond simulants are doubly refractive.

The lines that you see in this syntactic moissanite are a resolute of the light interaction with the simulant.
Diamonds have a very high Refractive index, which is "A measure of the change in the speed and angle of light as it passes from one material to another".
In a natural Diamond the light beam never bends, in most simulants it does.