Why Diamonds could be a better investment than Gold

Why Diamonds could be a better investment than Gold

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Did you really spare a glance for diamond jewellery during the recent gold buying rush on Akshaya Tritiya 2016? If by any chance you are the one planning to invest in precious and expensive jewellery this year, diamond could be a good alternative for good returns.
Industry players believe diamond could be a good replacement to gold as an investment option with likelihood of steady price appreciation that has been witnessed in recent years.
“The price of diamond has been seen to be going in an upward trend. I think it will give steady returns of 7-8 per cent annually in the medium term,” says Vijay Jain, CEO and Director – ORRA Fine Jewellery.
Mr. Jain shared his experience by sharing the facts of his own company- ORRA, he added that over half of sales of ORRA Fine Jewellery consists of diamond, while the remaining is gold, while the overall industry’s sales of diamond is around 15 per cent. He also included that unlike gold, prices of diamond are not prone to volatility.
Jignesh Mehta, MD Divine Solitaires agrees. “Diamond has emerged as a very good alternative to gold and has given annual returns of around 12 per cent over the past few years,” Mehta said. Divine Solitaires has 116 stores in 15 cities in India. He explained that if you invested Rs 10,000 in diamonds in 2010 would have become Rs 18,000 (an 80 per cent gain) whereas the same amount in gold would have become Rs 15,500 (55 per cent gain).

Mehta points out that the starting price of diamond jewellery are compared with expenses to be incurred to buy gold. “Diamond starts from Rs 15,000 for a single unit. At current levels 5 gram of gold is more expensive,” he said. Gold prices have been ruling above Rs 30,000 per 10 grams in the domestic market.
Mr. Mehta said that in his stores the entry price for a diamond item is Rs 8,000-12,000 while the average of diamond jewellery is around Rs 25,000.
Diamond sales during Akshaya Tritiya was higher by 14-15 per cent over the previous year. “The overall demand for diamond jewellery is up. For the year, sales of diamond has been up by around 10 per cent,” Mr.Jain said.
Jignesh Mehta said that diamond jewellery is also adequately liquid. “Liquidity is not an issue with diamond. You can get 90 percent of the prevailing price any time. Since prices are moving up one can easily recoup the original investment.”

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