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De Beers' 1947 slogan, “A diamond is forever", revolutionized the industry. The ad campaign established diamonds as the most romantic purchase, and the status is still paying off. However, what about their value as investments? Are diamonds really forever? asked experts to share investing lessons from diamonds' two-decade-long price stagnation and whether modern-day assets like cryptocurrencies will meet the same fate.
Radhika Gupta, MD and CEO at Edelweiss Asset Management Ltd The key thing is that some asset classes can structurally be in decline and not deliver returns for over 20 years. Commodities are a clear example of this. Their prices depend heavily on supply and demand, and there’s no inherent reason for them to grow over time.
Also Read: For instance, the diamond market has been disrupted by lab-grown diamonds, which have reduced demand and impacted the value of natural diamonds. This shows how changes in market dynamics or technological advancements can lead to prolonged price stagnation or even decline. Unlike equities, commodities don’t have a natural growth trajectory.
They are not "LONG-ONLY" asset classes because they don’t create value through advancement or profits. Equities, on the other hand, are different. In a growing economy, companies drive growth through innovation, expansion, and productivity.
This creates long-term value for shareholders, making equities more reliable for wealth creation over time. While commodities can have a role in a portfolio for diversification or as a short-term hedge against inflation, they are unlikely to deliver steady, long-term growth. Investors should be cautious and understand the limitations of commodities.
Relying on them as the primary driver of wealth may lead to disappointing results. To achieve long-term financial goals, it’s important to focus on asset classes like equities that have the potential to grow consistently over time. Building a balanced portfolio with a focus on growth-oriented investments can help ensure sustainable wealth creation and financial security in the long run.
Deepak Shenoy, founder and CEO at Capitalmind Financial Services Pvt. Ltd The price of diamonds has always been suspicious because you could never sell them meaningfully. published an article about some really expensive diamonds that were purchased and then attempted to be sold, a case where someone bought to sell them, and they couldn't.
The article interviewed many people who tried to sell diamonds back to the companies that sold them. Even the companies were hesitant to buy those back. Also Read: Jewellers in India buy diamonds back, but they don't give the money for them.
They allow you to exchange them for other jewellery. The jewellery shops in India that mostly offer this price guarantee usually try to force you to buy something else or give you store credit rather than cash. Now, synthetic diamonds look almost exactly the same, including imperfections, at 1/10th the price.
So, they're becoming very popular. China is very big on lab-grown diamonds, and India is also going very big. All the big guys have mentioned that they will do lab-grown, so prices will come down.
While diamonds can be forever, you don’t need to pay the same price. The diamond index doesn’t give you a clear picture because there are not that many transactions on selling. Mostly, these are prices dictated by the big players who are giving you buying prices, not selling prices, and there are not enough trades for the selling price to emerge.
If you pay $10,000 for a diamond and the cost of figuring out whether it's real or not is about $100,000, then it makes no sense to differentiate real from fake. This is why wealth is not sold in diamonds. No rich person ever has it as a meaningful asset.
Even the banks in India will give you loans on the weight of the gold, not as much on the weight of the diamond, because they know you can't sell them, not just diamonds but also rubies, emeralds, and any stones like that. Investors can learn the following lessons from these stagnant prices: Firstly, if people tell you something is an investment, question it because it's an investment only when other people will buy it from you. You have to check whether there's a verifiable market for it.
Also Read: Just because something is rare does not mean it will automatically have value. You have to be sure that other people value it. Diamonds are not very rare anymore because the supply is no longer constrained.
The selling market does not exist or is very, very rare. You should buy these things because you look good in them, not because they will be worth more one day. It’s like buying a fancy car.
There are good chances that someday you'll be able to sell it for higher than its original value, in some cases, but it's not necessary that that's the case. You buy the car to enjoy its driving, not because you want to sell it for a higher price. A diamond is not a must-have.
It's nice to have. Gold is better because it can't be created in a lab yet. Abhishek Kumar, Sebi RIA, founder and chief investment advisor at SahajMoney Even in the old days, people preferred gold over diamonds.
Even in the case of fire, a diamond being carbon gets burned down. There is nothing left when such disasters happen. But gold, even if it melts, remains gold.
Diamonds have more glamour value but they never had investment value. Moreover, only a few players control the diamond market. For a long time, mining companies like De Beers controlled the price by regulating the supply of diamonds in the market.
Now, lab-grown diamonds are glutting the market with supply at a fraction of the cost. These days, people prefer artificial lab-grown diamonds. It is very difficult to differentiate between artificial and real diamonds.
Lab-grown diamonds are one-tenth the price of natural diamonds. This can also happen with gold, but it's much easier with diamonds. You can’t manufacture fake gold easily, all that you need to require lab-grown diamonds is pressure and carbon, that's it.
Using high-tech machines, you can put high pressure on carbon that can get you lab-grown diamonds. This lets the companies control the supply; the more diamonds come into the market, the more the prices decrease. Gone are those days when only rich people could afford diamonds.
Lab-grown diamonds are similar to natural diamonds but are affordable. They are taking away market share in the lower-carat segment. Diamonds also come with a higher tick value.
We can clearly see diamonds are not a good hedge against inflation as the price has remained constant for the past 20 years. Any asset which has the potential to give higher returns will come with lots of volatility. You can hold on to your diamonds without expecting any returns.
Will cryptocurrencies go the diamonds' way? Ashish Singhal, co-founder, CoinSwitch While Willow’s (Google's quantum chip) capabilities are impressive, they do not yet pose an immediate threat to Bitcoin's or the broader crypto ecosystem's cryptographic foundations. These systems require immense computational power to breach, far exceeding what Willow or even the most advanced computational technologies today can achieve. Breaking Bitcoin’s 256-bit encryption would require a quantum computer with around 1,500 to 3,000 stable qubits.
This is significantly beyond the capabilities of today’s quantum machines, which are not only smaller but also struggle with error rates and qubit stability. Quantum technology is still nascent, and practical quantum computing capable of breaking current encryption remains a distant possibility. The development of quantum-resistant cryptography and ongoing research is essential to prepare for future challenges that quantum computing might bring.
Also Read: The Bitcoin core, along with other major crypto protocols, is continually upgraded by global networks of skilled developers operating in decentralized, open-source environments. The development of quantum-resistant cryptography and ongoing research is essential to prepare for future challenges that quantum computing might bring. Quantum computing poses a long-term threat to all forms of cryptography currently in use, not just within the blockchain.
This includes the security frameworks that protect confidential communications, banking transactions, and online identities. The quantum threat is a universal concern in the digital security domain, prompting preemptive developments in quantum-resistant cryptography to safeguard sensitive data against future quantum attacks..
