Should I invest in gemstones instead of diamonds?

Any good financial advisor will tell you that a balanced portfolio is the way to go to maintain some level of stability in any economy. That is why it is always a good idea to have precious metals and gemstones. That said, diamonds and other stones cannot be publicly traded like you do stocks and bonds. Investing in diamonds is certainly a valuable way to build a strong financial future, but there are many things you need to know before you consider making them part of your investment strategy.

The first thing to consider is the amount of money you have to invest. Keep in mind that gemstones are a long-term investment and therefore not a way to make a quick buck. Any money you invest today will be tied up for many years.

While diamonds are the first thing that comes to mind when investing in gemstones, they are not your only option. For the most part, there are massive conglomerates that control the global diamond trade. Familiar gems that are not controlled in this way are rubies, emeralds, and sapphires. Lesser known stones that are also available for investing include Alexandrite, opals, tsavorite and South Sea pearls.

Before you invest in diamonds, you need to understand how they are valued. Carat is the weight of the diamond and is one of the 4 C’s, the other three being Clarity, Cut and Color. Diamonds that are beautifully cut and visibly yellow are valuable, but not as valuable as heavier, flawless diamonds that are bluish-white. You could potentially be looking at a $50,000 difference on a diamond of the same weight.

While blue white diamonds are among the most valuable, there are exceptions, which would be colored diamonds known as fantasies, which are rarer than white diamonds. Although it was only 5 carats, the Moussaieff Red Diamond sold for $7 million. Some of the colors you will find in fancy diamonds are vibrant blue, pink, purple, green and bright yellow.

When valuing colored gemstones, the rarity of the stone is taken into account, as well as depth of color, carat, clarity, and cut. Rubies are approximately 1,000 times more valuable per carat than amethyst. A common mistake that is made is to believe that the color tells you what stone it is. Many people would identify a blue stone as a sapphire, but it could also be a beryl, topaz, zircon, spinel, or iolite, which are valued differently. Sapphires also come in a wide variety of colors other than blue.

When buying gemstones, always go to a reputable dealer. You will find all kinds of people selling stones online, but there is a distinct possibility of being scammed, unless of course you are a certified gemologist trained to appraise stones.

Once you have the gems, keep them locked up in a safe place, a safe deposit box at a bank being your best option. Gemstones are small and can easily fit in your pocket, which is a lot of money to carry around. Gemstones removed from a piece of jewelry become much more difficult to identify, so leave them as they are if you can.

Buying at retail is not a good investment, so avoid jewelry stores and look for loose gems at wholesale prices when investing.