Investing in coloured diamonds is a risky business

Online retail jeweller Diamond Manufacturers warns investors that putting their money in coloured diamonds is like taking their money to a casino.

Since March 2009 the diamond industry has experienced double-digit growth figures for rough diamonds combined with sharply slashed production figures as a result of the global financial crisis. 

This has led to a plethora of articles recommending investors to invest not only in mining companies and natural resources funds, but in buying loose diamonds of 5 to 20 carats.  Fancy coloured diamonds are regularly singled out in the press as particularly interesting investments.

Adrie van der Luijt, Press Officer for Diamondmanufacturers.co.uk, said: "You could be forgiven for thinking that this kind of advice aimed at investors is written by experts and that blue, pink, yellow or red hued diamonds are therefore an excellent investment opportunity.  This is non-sense advice, however, and real investors should take note."

"Of course, diamonds of 5 to 20 carats will command better premiums,  They are extremely difficult to resell, however, even for major diamond manufacturers and sight holders of the DTC."

The Diamond Trading Company (DTC) is the rough diamond sales and distribution arm of the De Beers Family of Companies.  The DTC is the world's largest supplier of rough diamonds, handling approximately 40% of the world's supply by value.

"It's a bit like buying a house for £200,000 that is now worth £1 million.  If there are no buyers for it, it might be worth 5 times more but if you can't sell it, it doesn't really matter."

He warned investors that natural colour diamonds (blue, pink, yellow and red) are very difficult to buy at a realistic price, because a slight difference in colour tint can sway prices dramatically.

"There are also far too many colour-treated diamonds being sold as natural colour diamonds.  Some treatments are so advanced that not even the latest tools can detect them.  Even some of the most knowledgeable firms have made mistakes purchasing these colour-treated diamonds."

"At Diamond Manufacturers we examine every single loose diamond individually and provide a valuation certificate backed up with a money back guarantee.  We know the inside-outs of every diamond we sell.  Although loose and coloured diamonds undoubtedly can make attractive investment opportunities, investors must be aware that the risk involved means it's like taking your money to a casino."