Blog

Feb 3, 2016

Investing in Natural Fancy Color Diamonds Alert

By   Nicole Snitman, GIA, D.G.   |   Tags: , , ,   |   Category: Investing, The Guildhall Color Diamond Advisor

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For years Guildhall Diamonds Inc. has been touting Natural Fancy Color Diamonds as one of the “best kept investing secrets”.  However, with mass media attention, color diamond associations and firms such as ours spreading the word, more and more Canadians are comfortably adopting the concept of Natural Fancy Color Diamonds as an asset class which they can reliably invest in for the long-term – making it less of a secret and more of a desire.

Our mandate at Guildhall has always been to seek out only the finest Investment-Grade Natural Fancy Color diamonds for all to experience and not just reserved for the ultra-wealthy. To reach a variety of investors, we specifically brought our clients smaller carat weights in Fancy color grades (i.e. 1 carat Fancy Yellow).  This strategic decision has continued to allow us to accommodate all investing levels so that everyone can obtain what we believe to be the ultimate luxury asset and one of the most beautiful and solid investment vehicles around.

These efforts have undoubtedly created a market right here in Canada as a much needed investing alternative over traditional markets which can be unpredictable at best.  With so much public awareness these exceptional diamonds are officially on their way to becoming a mainstream investment and we can no longer call them “one of the best kept secrets”.  Most importantly, this level of awareness has also brought with it what looks like competition from the outside, but when you look closely you will find that there are a number of color diamond companies acting on an unlevelled playing field – which is the precise reason we are issuing this important consumer alert.

Guildhall has earned a reputation of excellence within the diamond community and amongst happy clients positioning us as a leader when it comes to Investment-Grade Natural Fancy Color diamonds.  Our success has invariably created a market, but it has also given rise to a cluster of dishonourable, transient companies right here in our own backyard that have used our terminology, pictures and wording to appear legitimate.  Unfortunately there are many diamond companies out there that are predicated upon greed and who feel they can enter this market without a solid understanding and appreciation for the complete rarity, beauty and value of these treasures and are subsequently “scamming” unsuspecting investors – offering inferior color diamonds with grossly inflated prices and the ultimate con – switching clients into diamonds that are not even available, taking them for a ride and swindling them out of large sums of money.

The London Diamond Bourse recently published consumer advice to prevent the public from becoming “victims of “boiler-room” scams claiming to sell highly lucrative investment diamonds.”

According to the London Diamond Bourse “Consumer Advice – Investment Diamonds”

Over the last few years, the incidences of people being missold diamonds and precious stones have risen. In virtually all cases, the sale of such stones are part of a sophisticated “Boiler House” scam where either the stones do not exist or are being sold at hugely inflated prices – it is not uncommon for prices in excess of 15 times the correct value being charged.   The customer is often persuaded to house the non existent diamonds in a Swiss bank vault in order that the sale is not subject to UK VAT.

 In a more recent development, there are now companies offering to help those affected by offering recovery services to attempt to recoup previously sold diamonds or monies. These offers can often be an extension of the scam. The companies in question will likely seek an upfront payment or require the purchase of other diamonds, or other alternative investment products before they will act. In such a cases members of the public would be advised to treat such companies with suspicion.

Not only has this deplorable mentality and deceit hurt innocent people, but it is potentially damaging for an industry that was founded upon integrity and fairness. The diamond industry has some of the most devoted and honourable diamond enthusiasts and experts who have worked tirelessly to preserve the integrity and reputation of the very small and elite Natural Fancy Color Diamond trade.  Guildhall is among these industry champions providing information to protect the public looking for Natural Fancy Color diamonds; specifically for investment.  Our aim is to ensure that those looking such diamonds, only own only the highest quality and most beautiful diamonds with glorious brilliance and fire bringing maximum profit potential for each diamond within its distinct color grade.

Our Color Diamond Buyer’s Guide for instance outlines the 10 steps that every color diamond buyer should be aware of in order to make an informed and educated investment.  The guide originally written in 2014 was one of the first guides written in the industry.  The intention was and still is to help novice investors navigate the color diamond pitfalls so that they could make sound decisions and try to avoid ways in which these unsavory companies could take advantage as we saw the beginnings of these unsavory business practices beginning in 2013.

In addition to this guide, which you can order for free at Guildhall, here are a few more tips.

Essential Things to Look Out For:

GIA Grading Report
You must be able to see the diamond’s GIA Grading Report and it must be a full report showing the diamond specifications and plot. If a GIA report is not provided online, please request it and if you do not understand the report, ask that the person “selling” you a diamond explain it to you in depth.

Viewing Diamonds:

Make sure that you have an opportunity to see the diamond in person.  A professional diamond specialist will take great pride in showing you the diamond, teaching you how to view it properly and will want you to see all of the beauty that they see and will therefore take the time to carefully show you a diamond, pointing out all of the value and specifically the color in the diamond.  (This is where the true value of the diamond is held.)

Note, if you are considering a diamond from a remote location where you are unable to view the diamond in person, the company should send you pictures and/or video along with the GIA Grading Report.  In some cases your diamond dealer will make arrangements to travel to meet you in person or arrange for you to fly in to view the diamond.

If travel arrangements are not offered or necessary, equally important is the offer of a “full money back guarantee”, in writing to ensure that you will not be stuck with a diamond should you finally get to view it in person and want to return it.

 Reputable Associations:

Check to see that the company you are working with is a member of the Better Business Board and the following Natural Fancy Color Diamond Associations:

Fancy Color Research Foundation (FCRF)

Natural Color Diamond Association (NCDIA)

Having GIA Alumni on staff is also something you should require. Any company who has invested their time and resources to get accreditation shows knowledge and credibility – a definite measure against unscrupulous intent.

Re-Sale:

If a company is unwilling to assist you in the re-sale of your diamond, take this as a definite warning sign.

Guildhall will gladly help customers to resell a diamond originally purchased with us.  In some cases, we may even buy the diamond back from you with profit because we are so confident in the quality of the diamond we know that it will sell to another buyer.

Education:

A trustworthy company will want to empower you to know as much as you can about Natural Fancy Color diamonds.  Though no one is expecting you to become an expert with every facet (pun intended) about a diamond’s atomic structure, passing on knowledge and keeping you knowledgeable is of paramount concern to them.  This is transparency at its finest and this demonstrates pure intentions.  And never underestimate passion.  A company who believes in their diamonds so much will naturally show you their love and appreciation for the diamond and this will go a long way in letting you know you have found the real deal. You will know when you are being sold on a diamond as opposed to when you are being told about the value of the diamond.

Part of this education is to understand what constitutes an Investment-Grade Natural Fancy Color diamond particularly because each color grade constitutes different requirements.

For more information on these requirements, please speak to your Guildhall Diamond Specialist. 1-866-274-9570

At Guildhall it is always regrettable when we hear of people who have purchased diamonds from unethical companies and is especially frustrating when we have worked so hard to find the finest diamonds and bring them to our clients at the best prices only to hear of those who have paid more for poor quality, cut and color.  The only advice we can give is to try and get your money back for the diamond and become more educated on what to look for in a Natural Fancy Color Diamond.

Reading alerts such as these will help to keep you informed. In addition, we offer free seminars, general industry information and updates, reports and we are always available by phone or in person for individual and group consultations.

Please get in touch by speaking to one of our seasoned Diamond Specialists at Guildhall Diamonds Inc. so that you can acquire the most beautiful diamond that will grow in value over the long term.

buyers guideTo get your complimentary copy of The Color Diamond Buyer’s Guide” either in print or in PDF format click here or call 1-866-274-9570