Extremely rare colour diamonds can be effective safe haven investments in the global economic and political uncertainty after Britain’s vote to leave the EU, a senior fund manager said.
Philip Baldwin, managing director of Sciens Diamond Management BV, said in an interview that investments in such gems were not directly correlated to any other financial or commodity markets, and demand for the stones was driven by their rarity.
“Colour diamonds are considered a safe haven,” he said.
“Colour diamonds are a hedge against inflation, currency risk, market fluctuations and political uncertainty.”
Along with Mahyar Makhzani, Baldwin runs the Curacao-based Sciens Coloured Diamond Fund II, a closed-end fund now closed to new investors. Entry level to the fund was USD$1 million.
The fund, whose diamonds include a small collection of extremely rare red stones, rose in value by approximately 5 percent in the second quarter of 2016, he said.
Diamond investment funds, open to professional investors many of whom are offshore, may acquire diamonds, which may be re-polished to improve colour and clarity, and may arrange collections to boost value.
Diamonds can be loaned to jewellers who may later buy stones from a fund.
Prices of vivid and intense colour diamonds have risen by 10-12 percent a year on average since 1959, Baldwin said.
He said colour diamonds were likely to appeal to investors due to continuing uncertain political and economic conditions after Britain’s shock vote to leave the EU, and as the U.S. election campaign unfolds.
Red diamond 1.20 cts. Argyle mine – Picture: Sciens Diamond Management BV