The French Financial Market Authority (AMF) has published a blacklist of diamond investment businesses that it believes are operating illegally.
So, is it possible to invest in gemstones and earn a return on the investment as well?
AMF's blacklist is an indication that the matter is being treated seriously by French authorities, as seen by the existence of the list.
The answer is yes, but a genuine investment stone is not simple to come by and needs expert guidance on quality, certification, and provenance. It is critical for potential purchasers to see all of the gem's descriptive aspects on certified paperwork. For instance, a GIA certificate for a diamond, or paperwork from one of the respected gemological labs such as SSEF, Gübelin, AGL, Lotus, or GGTL for a colored gem.
According to Edahn Golan, a diamond business specialist, "for a diamond to be suitable for investment, both buyers and sellers must have a firm grasp of the diamond's worth at any given moment." This enables them to determine whether to purchase or sell. This transaction is possible only in a trading environment. This is not something that can occur in a business."
It is essential to realize that investing a stone does not necessarily imply a significant return on resale. As Emmanuel Piat, a Paris-based high-end gems trader, notes, "a beautiful stone will always sell, although at a loss, and in times of crisis, an excellent stone will always find a customer, even if it means accepting a loss."
Meanwhile, Ronny Totah, co-founder of GemGenève and a gems dealer specialized in genuine pearls and Kashmir sapphires, notes that "precious stones should be purchased for their beauty and, more importantly, for the joy they may bring." While it is true that certain stones have increased in value through time, what has occurred may not occur again." As a result, caution is advised.
How come gemstones are such a good investment?
Gems are very portable, simple to store, and always retain their fundamental value. Natural gemstones are constantly in short supply; in fact, many mines have already been exhausted. It's unsurprising that many diamonds' values have been constantly increasing.
Paraiba Tourmaline Containing Copper Hard assets such as land, gold, and gemstones have historically been favored above soft assets such as stocks, bonds, and even money in many regions of the globe. However, if you're contemplating gemstones as an investment, it's important to understand the distinctions between gemstones and hard assets such as gold.
If you possess gold jewelry, coins, or bars, you may sell them almost anywhere in the globe for cash. You just take your gold to a gold store or gold dealer, who will examine it, weigh it, and give you the market price. Gold offers superior liquidity to almost any other asset.
Natural sapphire blue On the other hand, gemstones are similar to real estate in that they may be difficult to sell when the time is right. Chances are you will always find a buyer, but the buyer will almost always be an opportunist looking for a bargain. For instance, take one of your favorite gemstones or pieces of jewelry to your neighborhood jeweler and inquire about the price he would pay for it. This will offer you an excellent indication of gemstones' liquidity.
On the other hand, gemstones are similar to real estate in that they may be difficult to sell when the time is right. Chances are you will always find a buyer, but the buyer will almost always be an opportunist looking for a bargain. For instance, take one of your favorite gems or pieces of jewelry to your neighborhood jeweler and inquire about the price he would pay for it. This will offer you an excellent indication of gemstones' liquidity.
If you're still on the fence about investing in gemstones, why not read the benefits of investing?
Consistent demand
For the foreseeable future, demand for precious gems is projected to remain steady. People have been fascinated by these magnificent stones for as long as the planet has existed. Gemstones have been a sought-after item from the ancient Egyptians through the Tudors, and throughout the Victorian period to the present day. Gems are a sign of riches and beauty, which makes them an attractive investment.
Non-volatile
As previously stated, gemstones are unaffected by market fluctuations. They are not subject to price swings, and hence a price depletion is improbable. Your gem's price may even be an investment. Polishing your stone or transforming it into jewelry are two certain methods to boost the value of your gems.
Physical item
Unlike stocks and shares or cryptocurrency, gemstones are a tangible item that you can physically touch and appreciate. Despite the fact that gemstones are a tangible item that you can handle and carry, if cared for properly and carefully, they do not deteriorate readily. They are not readily cracked or scratched and are rather sturdy. In contrast to precious metals, they are unlikely to be influenced by environmental circumstances. Silver, for example, may deteriorate over time when exposed to air.
Cons of investing in Gemstones
As with any investment, it is important to consider the cons in order to make an educated choice about whether to invest or not. Bear in mind that just because investing entails risk does not indicate that the risks are not worthwhile.
Knowledge and comprehension are necessary.
Knowledge and understanding are essential
As is the case with the majority of investments, if you want to profit or maintain the value of your investment, you cannot enter it blindly. Before investing in gemstones, you should have a reasonable degree of understanding about them. Hundreds of reputable gemological institutions provide free information and guidance on gemstones. It is critical that you do research to prevent undervaluing or overvaluing a gemstone when selling or purchasing.
Concerns about security
Not only do fraudsters see gemstones as a fast way to get wealthy, but having an actual gem has additional hazards. Having a completely safe and secure location to keep your gem is something to consider seriously. Likewise, avoid publicizing the news of your purchase to every Tom, Dick, and Harry. You never know what others are thinking.
Even transporting your gem to a jeweler for appraisal exposes you to danger. If someone observes you visiting and exiting several jewelers, they may deduce that you are carrying a valuable gem.
Similarly, while investing, keeping a look out for fake or substandard gemstones is essential. It might be dangerous, but doing your study and speaking with reputable institutions will help you remain on course.
Probability of devaluation
If your gem is cut or polished improperly, it may lose value. If you purchase an uncut gem, ensure that the gem is cut by a reputable and well-known firm. Any errors or an uneven cut can significantly reduce the value of your investment.
Bear in mind that polishing and cutting are extra expenditures, and it is important to consider them in order to avoid losing money on your investment.
How Should Gemstones Be Chosen?
1. Authenticity
Beware: Not all gemstones are suited for investment, and buyers should exercise caution throughout the selection process and, if possible, seek professional advice before purchasing a purchase. Additionally, a certificate from a reputable gemological institution must be supplied before purchase to protect against fraud. Because this is an excellent chance for fraudsters to make a fast profit, it is important to be on the lookout for anything unusual and to inform the police if any wrongdoing is suspected.
2. Value And Growth
It's critical to understand why natural gemstones keep their value and even increase in value. The primary reasons are because they are stunning, uncommon, and highly sought for. Before purchasing a gemstone, one should always do research about its current worth, rarity, and other factors that may affect its future price.
Consider the tanzanite as an example of doing such a "investigation": It is presently regarded as a sound investment, owing to its value rising over the last several years, and, as the name implies, it is mined only in Tanzania. Due to the short size of the tanzanite mining region, roughly 7 km long by 2 km broad, it is expected that the mining yield of tanzanite would soon be consumed.
3. Individuality And Appeal
During periods of economic investment, a strong focus has been placed on investing in high-volatility markets such as bitcoin. Simultaneously, there has been a surge in demand for natural gemstones that have not been treated. As an example, consider the phenomenal increase in the value of high-quality, untreated Burmese rubies.
One reason individuals invest in gemstones may be because they are a counter-reaction to the shorting culture prevalent in share investing, which appeals to a broader audience due to the success tales of crypto millionaires, for example. We may argue that gemstones are the polar opposite of cryptos in that they are physical and nonvolatile — this provides a different level of security for the investor, as they can touch and appreciate something tangible and perhaps safeguard their riches for future generations.
Things to know before investing in gemstones
The key to investing is timing your purchases and sales. This implies that you should purchase your gems at a discount and then sell them when the price climbs. Occasionally, you will need to keep onto the gems for an extended period of time to maximize your earnings.
Additionally, a little decline in value is probable, but you can be confident that gemstones are always valuable and wanted, and hence the price will grow again.
If you come across a good offer on a large number of little gems, you may want to pass it up. Small gems are valued much less than a single huge stone.
It is recommended that you either spend considerable time studying about gems or have the gemstones you want to purchase examined by a gemologist. This is due to the fact that the colors might get confused. A stone that is green is not necessarily an emerald, and a stone that is red is not always a ruby. If you do not understand how to detect the difference, you risk losing your investment or earning significantly less than you anticipated.
Top 10 Investment Gemstones
While all gemstones are precious, some are unquestionably more desirable than others. The following ten are excellent investment gemstones to consider:
Gems have always been and will continue to be a sought-after item. Even during times of economic distress, the price of gems continues to climb. And there are always buyers..
1. Tsavorite Garnet
Tsavorite garnet is an East African green gem with a greater refraction than emerald, which makes it more appealing to many. It comes in a variety of shades ranging from dark green to mint green and is usually untreated. By virtue of its rarity, it is an excellent investment.
2. Alexandrite
Alexandrite is a mineral that may be found in Russia, Brazil, and Tanzania. This gem is remarkable for its ability to change hues, which adds to its beauty and uniqueness.
3. Emerald
This emerald green gem is both lovely and elegant. The emerald market has witnessed considerable volatility as a consequence of debates regarding artificial resin treatments, but good untreated emeralds remain a sound investment.
Colombian emeralds, particularly those in enormous sizes, remain the most precious, followed by the finest Brazilian emeralds. Zambia also produces some high-quality emeralds. Untreated emeralds are required for investment purposes.
4. Spessartite Garnet
If you like the notion of selling stunning, vibrant gems, Spessartite Garnets are a terrific choice. Mandarin Garnets are among the best specimens, and their amazing bright orange color makes them very uncommon. They are mostly from Nigeria and Namibia.
5. Imperial Topaz
The rarest kind of topaz originates in the Brazilian state of Minas Gerais. They are known as imperial topaz and vary in hue from pinkish-red to pink and violet, as well as orange to golden-orange. All of them that have not been exposed to heat are desirable, but those that include pink and red are now the most valued. If you are fortunate enough to come across a pure red natural topaz, you have discovered the most precious of them.
While it may seem that gemstones are solely for the wealthy, the fact is that anybody may invest in gemstones. With time, patience, and understanding, your investment gems may significantly improve your financial status.
6. Spinel
Because spinels are less often discussed than other gems, you may be shocked to hear that many renowned rubies are really spinels. This contains a number of the Crown Jewels of the United Kingdom.
If you're looking to invest in spinels, aim for deep orange, crimson, or hot pink varieties. At the moment, the best investment spinels are red Burmese spinel and Tanzanian spinel that is called neon pink-red.
7. Paraiba Tourmaline
Paraiba tourmaline was discovered in 1989 in Paraiba, Brazil, but has since been detected in Mozambique and Nigeria. Its neon light gives it a bright and sophisticated appearance. Brazilian forms often provide the most valuable investment gems.
8. Tanzanite
Tanzanite was discovered in 1967 in Tanzania. It is a beautiful and unusual hue that is generated from zoisite. It falls midway between blue, violet, and purple. Due to the fact that it is currently solely found in Tanzania, it is regarded to be even rarer than diamonds.
9. Blue Sapphire
Blue sapphires are often regarded as the second most desirable colored gemstone for investment. While blue sapphires remain the most popular, other colors like as yellow and pink are gaining favor. Investing in any of these should provide a profit in the future. They were first discovered in Kashmir, but have since been imported from Burma, Madagascar, and Ceylon.
10. Ruby
Rubies are regarded as the premier investment gem, owing to their scarcity. Tanzania, Mozambique, Burma, and Madagascar are also well-known for their fine unheated rubies.
There are, of course, other gemstones to consider, but these 10 are an excellent place to begin.
How to maximize the return on your investment?
While nothing is definite, there are several actions you may take to increase the value of your gemstone investments.
Employ a gemologist
This cannot be overstated. Your first gemstone purchase will determine the success or failure of your investment. You want to ensure that you are receiving a decent deal on expensive gems. This is something that a gemologist can do.
Take every opportunity to educate yourself
The more educated you are, the more informed your selections are going to be.
Maintain patience
Obtaining the optimal return on your investment may take time - years, in some cases. Attempt to retain them for as long as possible.
Sell your business via the appropriate avenues
Auction houses are often excellent locations to sell your gemstones. Buyers there are often serious about their purchases, and discussions are uncommon.
Conclusion
When purchasing a gemstone, it is important to evaluate which gemological institute certified it and whether or not it is likely to increase in value. Selecting a gemstone to invest in is simple; however, finding the gemstone is another matter together. Ascertain that you are not spending more than the investment can return when the time comes to sell.
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