Archive for October, 2014
This article was written by Michael Fox, owner of Fox Jewelry, a business dedicated to the sale of Masonic Rings, Masonic accessories and other fraternal jewelry.
Fox Jewelry offers the largest selection of Masonic Rings and other Masonic Jewelry anywhere.
While I typically limit my blog posts to articles that deal with Freemasonry and other articles of interest to our fellow Masons, I sometimes like to deviate from that topic and offer to my readers other articles that may be of interest to them.
It is for this reason that I would like to depart from my usual articles and provide some information on the potential value of diamonds in the future.
The value of diamonds as an investment is of important interest to the general public and investors, due to the fact that they are expensive gemstones that are often purchased in engagement rings and bands. The challenge of correctly appraising the value of a single gem quality diamond complicates the appraisal process. The end of the De Beer’s monopoly and new diamonds discoveries during the last half of the 20th century have reduced the resale value of diamonds.
Polished diamond prices vary widely depending upon a diamond’s carat, color, quality and cut. This is oftentimes referred to as the 4 C’s. In contrast to the pricing involved in precious metals, there isn’t any universal world price per gram for diamonds. The industry refers to the price guides such as Rapaport, and the Troy Diamond Report in assisting to assess the value of diamonds. These guides are published weekly, monthly or quarterly. Gemstone specialty organizations such as the GIA, HRD, and IGI, have varying standards which can be used to aid in diamond identification and pricing. These organizations focus on research and education, which they pass on to their members and the public.
Rough diamond prices have historically been affected by the mining companies that controlled the supply of diamonds, most notably by the De Beers Company. However, since the dismantling of the DeBeers cartel in 2001, the industry is now more fragmented. This has resulted in a higher percentage of diamond sales taking place in the form of auctions along with other methods of open-market sales.
Although it was originally not possible to produce diamonds artificially, techniques to achieve this have been around since the early 1950’s and have become routine in recent times. Modern techniques can produce diamonds of essentially any desired chemistry or size and can actually be made more perfect that naturally occurring stones. This is often times a telltale sign that a stone is a synthetic rather than a natural stone.
Synthetics are genuinely diamonds, although not naturally occurring. Although some manufacturers do label their synthetic diamonds with serial numbers, there is no promise that a given diamond is not really man made, although sometimes an unnatural composition can suggest a diamond that is actually synthetic.
It is undoubtedly less expensive to create diamonds through artificial synthesis than it is to mine them although the expense of synthesis is still very significant. The inability to guarantee that a diamond is naturally occurring could undermine the premium price still being charged by natural diamonds over synthetic stones. New technological advances have allowed some independent gem labs such as the Gemological Institute of America to issue a specific Synthetic Diamond Grading Report which identifies a diamond as laboratory grown.
One thing that makes diamond investing particularly attractive is their high value per unit of weight, which makes them easy to store and transport. A high-quality diamond weighing as little as 2 or 3 grams could be worth as much as 100 kilos of gold. This extremely condensed value and portability is very attractive when using diamonds as a form of emergency funding. People and populations displaced by war or naturally occurring disasters have used this portable asset successfully in moving their assets.
Diamonds are so hard to find that many of the traditional players have pretty much given up trying. Many have packed up their maps and drills and have given up trying. According to De Beers, who are the top supplier of diamonds, more than $7 billion dollars have been invested in diamond mining with only meager finds in the last few years.
The absence of new projects is putting pressure on an industry where supplies of accessible diamonds near the surface are almost depleted and the cost of going deeper into the earth is rising.
Diamonds are formed hundreds of kilometers beneath the crust of the earth in the molten rock of the earth’s mantle. Violent explosions within the earth’s mantle have forced the precious gems to move toward the surface, where they come to rest in carrot-shaped pipes known as kimberlites. Finding a kimberlite is no guarantee of finding diamonds. In the last 140 years, more than 6,000 pipes that have been tested. Only 60 have been worthwhile mining. A mere seven kimberlites have been super deposits. To make matters things more difficult, diamonds are hidden in some of the world’s least-hospitable places. With most of South Africa and Botswana almost fully explored, the last probable frontiers for exploration are the frozen Arctic of northern Russia and Canada or the jungles of the Congo.
In the last five years, rough-diamond prices have climbed 75 percent.
Intact kimberlites aren’t the only source of supply. About 10 percent to 15 percent of the world’s diamonds are from alluvial mining, where the stones are found in riverbeds or shorelines.
While alluvial gems are easier to mine, geologists often can’t tell how many stones there are. This makes it much more difficult to determine whether the reserves will last long enough to justify and evaluate an investment.
While below-ground supplies are diminishing, there are other sources. It is estimated that approximately $1 billion dollars per year are spent on recycled gems. There is also the prospect of synthetic, or man-made, diamonds becoming more widely used in jewelry. While they are easily made and can only be distinguished from natural stones using specialized machines, synthetics still have a stigma attached to them given the weight of marketing and promotion behind mined diamonds.
Most of the world’s super mines have been discovered. In all probability a big find is probably not going to happen.
The industry also has lost some of the financial resources needed to pursue expensive deposits. While De Beers continues to explore across southern Africa and India, many of the smaller producers have curtailed or canceled their efforts to find new sources of supply.
What all this has to say about the future value of the diamonds mined, the ones that are currently available in the market and the ones now held by you is up for you to decide.
In my opinion, natural stones are only going to become rarer and more valuable. Determining which stones are natural and which ones are synthetics is going to become more difficult. It is up to you to decide whether to, how to and when to purchase them for investment.
This article was written by Mike Fox, owner of Fox Jewelry. They are the leading marketer of Masonic Rings and have the largest of selection of Masonic Rings anywhere. We welcome your visit our online store at: Fox Jewelry. Feel free to contact us at 712-239-6155 or email us at: [email protected] or [email protected]. Fox Jewelry 3821 Chippewa Ct Sioux City, IA 51104 712-239-6155 Email address: [email protected] or [email protected] www.foxjewelry.net www.masonicrings.net www.masonicjewelryblog.net Follow us on Twitter: @MasonicRings Join us on Facebook: www.facebook.com/masonicringsbyfox