Rare, colored diamonds have provided long-term solid returns
Looking at rare colored investment diamonds stems from the longevity of historically fundamental appreciation of the value.
Three of the most traded categories of colored diamonds recognised for their investment appeal: yellow diamonds, blue diamonds, and pink diamonds. Since the early ’70s, natural blue diamonds have increased by approximately 100% every five years, pink diamonds have increased by 100% in price every 6-7 years, and fancy yellow diamonds have increased by 100% value every 8 to 10 years.
Below is a snapshot depicting the strong returns of these colored diamonds relative to other traditional asset classes since 2005-2023. It is also worth noting how all categories have appreciated over this 18-year period based on saturation of Color alone, the straight Fancy Pinks generated 397.8% with an annual return of 21.2%. Blues 251.2% with an annual return of 13.4% and the yellows 59.2% producing a lower annual return of 3.2%.*
*Source Fancy Color Research Foundation – Total appreciation since 2005
*CAGR – Source: Based on Eurostat/Black Rock/MSCI/Federal Reserve Data
Inflation Graph and Negative Impact of Cash -32.5% Since 2005-2023
Source: Based on Inflation eurozone in 2023: 2.9% according to Eurostat and Federal Reserve Data of euro zone price index. All Rights Reserved.
Graph Explanation: Liquid cash balances are always hurt by inflation. Europe is experiencing the highest inflation numbers it has seen in more than 40 years. More than ever, it is important to not hold cash in hand to avoid losing real purchasing power. In the chart above you can see how the inflation rate has evolved in the last decades. If we consider the last 18 years, the accumulated loss of value for cash balances is -32.5%.
Historical growth of Pink, Blue and Yellow Diamonds vs. the Dow Jones to 2023
All sizes and intensities in Pink, Blue and Yellow
Source: Courtesy of The Fancy Color Research Foundation. All Rights Reserved.
The raw data and numbers for buying and owning fancy color diamonds cannot even be compared with other traditional investments. The Dow Jones (+221.3%) over the same period returned less than the Pinks and Blues diamonds (see graph/chart above FCRF). Additionally funds that track European Stock Indices such as (MSCI) exhibited a compound annual growth rate (CAGR) of only 3.85% during the same time frame. This resulted in a total appreciation of merely 90% (See graph below where the iShares Core MSCI Europe ETF had a 90% cumulative return).
Growth of Hypothetical 10,000 EUR Since Inception
Source: Courtesy of MSCI. All Rights Reserved.
The European Union Property Index (Eurostat)
The European Union Property Index (Eurostat) Compound growth rate = 3.3% (Total appreciation over 18 years 79.5% see graph/chart below).
Source: Courtesy of Economics.com EuroStat. All Rights Reserved.
In this graph, we can see The European Union Property Index developed by Eurostat, which shows us a compounded average growth rate of 3.3% in the last 18 years. The result is a total appreciation of 79.5%.
As you can see these are significantly lower returns than those that diamonds offer. Properties in the European Union have gone up, but not as much as other solid investments like Investment Grade Diamonds.
Bonds – Hypothetical 10,000 EUR invested up to 31 Dec 2023
Bonds Compound growth rate = 1.85% (Total appreciation 39.11% see graph/chart below).
Source: Core Government Bonds ETF by BlackRock and own calculations based on Federal Reserve Data on European Central Bank interest rates. All Rights Reserved.
