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Opinion

Diamonds are an investor’s best friend

Stuck for a yield-enhancing idea in these low interest rate times? Want an asset that provides consistent returns and offers a hedge against market and political crises? One fund manager reckons it has a gem of an idea.

According to Sciens Capital, investors could do worse than invest in coloured diamonds, especially given the volatility in the gold market. The fund, which invests in the stones, claims that coloured diamonds “offer an advantage over gold and an improved hedge as the demand far exceeds the supply, so prices remain stable in volatile markets”.

Certain categories of coloured diamonds have not fallen in price on a wholesale level in 35 years, with their value increasing on average between 10% and 15% a year. “We have always stated that it is a better investment than gold and the current volatility in the gold market is proof of that,” says Philip Baldwin, co-founder of Sciens Diamond Management. “Coloured diamonds have outperformed gold as a hedge, particularly in periods of moderate to low inflation.”

Coloured diamonds are rare, with red the most exceptional, followed by green and blue. The downside is that they are very hard to sell.

Still, it’s a chance to bring a bit of sparkle to these austere times.

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