E-diamonds better investment alternative to gold. Read why?
Surat : Buying diamond might have a different reason so far but now it is possible to buy them for investment purpose too. Anyone can buy e-diamonds via the Indian Commodities Exchange (ICEX) Ltd as derivative contracts. It is SAFE as ICEX is a Sebi-registered commodities exchange.
What is ICEX?
Similar to other exchanges in India, people can buy or sell diamond contracts at the wholesale market rate (ex-Surat) rather than the retail price of it in the markets. People can hold the diamonds in e-form. The contract units begin with 1 cent (100 cents make 1 carat). The shape, carat, colour, clarity, cut and other specifications will be mentioned as part of the contract.
It has a maximum limit of order one individual can place. Investments can be done in a systematic investment plan (SIP) form too.
Advantages of diamond investment
It eliminates the trust issues with the local jeweller as this is an exchange-based platform to buy diamonds, which means the price discovery undergoes a process.
The diamonds are certified by International Institute of Diamond Grading and Research which is a De Beers Group company and hence, there is verification of the value of the diamond you take delivery for.
Selling back diamonds is an easy process too. One can sell them back to the exchange.
Disadvantages of diamond investment
Diamonds are available in various configurations whereas this exchange has only a specified configuration for each of the three underlying contracts of 30 cents, 50 cents and 1 carat diamonds.
Like gold if you are buying diamonds for jewellery, once you receive the stones from these contracts, you will still have to go to a jeweller to make what you want.
If you are buying them as an investment, one must first understand whether the commodity is rare enough to warrant a stable price rise through the years.
It is a complete market risk investment.