Fancy Colored Diamonds at 30% Plus Below Retail






No one knows the future.  And increasingly as we advance into the New Millennium, more and more people are confused as to what to expect in the months and years ahead.  As a former Registered Investment Advisor from 1985 to 2005, I could not and will not guarantee or suggest that you will make money without exception in WCM Fancy Colored Diamonds.  We are at a very unique point in history where the global financial markets, economies, and financial systems are at extremes never before recorded.  I strongly feel that the PRESERVATION OF WEALTH, not the usual goal of maximizing capital gains as far as the eye can see, should be a criterion for a sizeable portion of one's investable funds.  The end of the debt quagmire we are currently in, especially in the United States, is probably a good 5 to 10 years away, since the retrenchment of borrowing and debt repudiation that normally accompany such a period has yet to occur to any significant degree.  Investor expectations have been outside of the norm for some 25 years now, and it is time that most individuals reassess the prospects for 10% plus capital gains in the majority of traditional asset classes.  It does not take a doomsayer to realize that runaway credit expansion in addition to extreme leverage in the financial markets has the potential to cause sudden and negative effects in both the economy and the various markets, asset and financial.

When you contemplate an asset that would serve you well as a STORE OF VALUE in an emergency, you have to create a menu of characteristics that will rank your researched candidate high or low on the financial survival list.  If an investor is still uneducated or unconcerned about the current state of affairs, then he or she is advised to alternatively view fancy colored diamonds strictly from a jewelry, collectible, or estate planning viewpoint.  You can lead a horse to water, but you can't make it drink.  Let's look at some of the characteristics that make colored diamonds an excellent store of value for one's implementation of a Capital Preservation strategy:

1.  High Value to Low Weight & Size:  This may sound simplistic, but a 2 carat Fancy Intense Yellow Diamond worth around $25,000 weighs less than 1/ 70th of an ounce and occupies less space than a dime would in your pocket.  You can conceal $1 Million worth of colored diamonds in an overcoat if you had to.  Hence, the superb portability of colored diamonds has made them a medium for transporting wealth or emergency funds across troubled borders for hundreds of years.
2.  Superb Durability:  Natural diamond is one of the hardest substances known.  Colored diamonds are not affected by temperature, humidity, or shocks, and thus provide an asset that will withstand storage or transport in normally hostile conditions without adversely affecting the value of the gem.  Rock solid.
3.  Well-established quality and valuation methods:  With the advent of colored diamond grading laboratories such as GIA and EGL, the questions regarding the quantification of a diamond's standing with respect to sought-after qualities are answered in plain language for everyone to read.  Some subjectivity always enters the valuation of any asset and even with professional grading services, but having a respected lab's expert opinion in hand and also that of a trained gemologist, the owner of a colored diamond is well positioned to obtain a determination of current market value.  No two colored diamonds are exactly alike, but the well-established criteria used to determine their worth are.
4.  A history of steady price appreciation:  Since colored diamonds are basically a by-product of clear, white diamond production and are 10,000 times as rare, since the Middle Ages man has come to recognize their intrinsic value in the schema of worldly treasures.  But consumer demand has steadily increased for these rarest of diamonds due to their beauty and uniqueness, and even if global mine production for white diamonds explodes in the years ahead (unlikely due to price maintenance organizations such as DeBeers), it is apparent that burgeoning tangible asset demand is available to absorb all incremental supply.
5.  A highly private asset:  There is currently no reporting of fancy colored diamond transactions, just recording by the dealer/ broker of the type and amount of payment made by a client for any gemstone under new anti-terrorism and existing cash laundering statutes.  Transaction payment information can not be used by any governmental agency for any purpose other than to determine if the gem dealer or broker has sufficient internal controls to monitor cash laundering under existing and new regulations.  Client lists and contact information, deemed proprietary in the trade as always, are never released to any governmental agency either voluntarily or under regulation.  Fancy colored diamonds also lend themselves to private safekeeping, safe deposit boxes, and overseas storage & safekeeping.
6.  Easy to conceal:  Since we live in a very turbulent world, security is an ever increasing issue.  My colored diamond sources have told me many stories of clients wearing very expensive fancy colored diamonds that the general public has perceived as merely colored gemstones of nominal value.  Most people usually think of brilliant white diamonds when mention is made of "diamonds".  Once again, one does not have to invest in outside depository services to safe-keep their colored diamonds, since $100,000's of colored diamonds can be stored in a plastic pipe on one's property if need be.  Whether you wear or store your fancy colored diamond is strictly your personal decision.
7.  A multiple function asset:  Besides being a radiant natural source of beauty, a colored diamond can serve as a collectible item, a treasured piece of jewelry, or an alternative asset, highly private, used for estate planning purposes.  It is functional while being very aesthetically pleasing at the same time.

The following graphs are presented for information purposes only.  They are quite dramatic in the price appreciation they depict, but one must notice that the time span shown is some 30 years of data.  Slow and steady wins the race.  Asset prices fluctuate over the short-term and even the long-term, so a potential fancy colored diamond buyer should always have reasonable expectations when acquiring these very rare gems strictly for investment purposes.  Over the long term, prices will likely firm at the historical rate of several percentage points over the annual inflation rate, and should the alternative investment value of fancy colored diamonds become widely recognized, this rate is destined to increase along with demand.  In fact, since 2002, the entire spectrum of fancy colored diamonds from browns to the rarest oranges and purples have seen annual price increases from 10% to 35% with the very rare pink diamond appreciating almost 100% in the last 15 months alone (as of March, 2006).  Demand is excellent and increasing rapidly for fancy colored diamonds.

Please contact David W. Young at Wexford Capital Management ( 877-855-9760 or ) with any questions you may have concerning the merits of acquiring certified investment-quality fancy colored diamonds.  We feel it will be time well spent for your financial future.

All Prices are in Thousands of Dollars per Carat.
2 Carat Fancy Yellow Diamond Price Graph, 1970 through 2001

2.0 Carat Fancy Yellow Diamond*
1970 thru 2001

( Courtesy of David Marcum )

3 Carat Vivid Yellow Radiant Cut Diamond Price Graph, 1970 through 2001

3.0 Carat Vivid Yellow Radiant Diamond
1970 thru 2001

( Courtesy of David Marcum )

2 Carat Intense Pink Radiant Cut Diamond Price Graph, 1970 through 2001

2.0 Carat Intense Pink Radiant Diamond
1970 thru 2001

( Courtesy of David Marcum )

*All stones assumed to have good to excellent cut 
proportions and to be VS2 or better for yellow 
diamonds and SI1 or better for pink diamonds.