On April 4, 2017, history was made in the fancy colored diamond world. The Pink Star, now known as the CTF Pink Star, sold for $71.2 million dollars in less than 5 minutes.
In recent years, deals such as the sale of the Pink Star have been turning the heads of investors all around the world. Colored diamonds like the Pink Star get their hue from the existence of various impurities such as boron, nitrogen, and even hydrogen in their crystal lattice. These elements get trapped in the diamond’s formation for over millions of years and are now a part of the investing industry.
Normally when someone assumes an investment opportunity, they think of real estate, stocks, gold, and even antique cars. Colored diamonds however, is an investment thats being driven by investors hoping to stay on top of a hot market. From 2009 to 2016, pink diamonds have increased 180% according to the data provided by the Fancy Color Research Foundation. Over the same period, blue diamonds have been up 70% while yellow diamonds are up 90%.
Comparing Alternative Investments
Thanks to a flourishing economy, investors have been looking into arcane assets, typically not understood by many. Let’s take a minute and look at growth of other forms of alternative investments.
London-based property brother Knight Frank publishes an annual Wealth Report. This is what they had to say:
- Antique cars as a form on investment have increased 457% in the past decade
- Classic wine prices have increased by 267% in the past decade
- In the same period, colored diamonds have risen 111%
Don’t Be Fooled
If the above three data points are viewed from an outside perspective, the first instinct for an investor is to go after vintage cars and classic wine. But here’s why they might not be the most suitable investment.
- Wine can be a hit or miss
According to insight by Brian Martucci, he says, “you shouldn’t expect to pay less than $30 for a 750 ml bottle of investment-grade wine.” In terms of investment, where’s the growth?
In this instance, in order to make $1000 profit, you would have to invest in 20 ($30 investment-grade) wine bottles that grows at a rate of 267% in 10 years.
What if you went after a more expensive bottle? While you might be able to get lucky with a higher valued investment, it only takes one wine critic to make it worthless. Brian continues, “For instance, 2004 Chateau Sarget de Gruaud Larose, a red from St. Julien, France, has an excellent pedigree and was bottled with high hopes. However, famous wine critic Robert Parker characterized it as a “major disappointment,” and it now sells for about $35 per bottle”.