CXO Advisory recently reported on a research paper entitled Hard Assets: The Returns on Rare Diamonds and Gems, which looks at the return characteristics of different categories of diamonds and gems:
They concentrate on the upper end of gem quality for three categories: white diamonds, colored diamonds and other gems (emeralds, rubies and sapphires). They consider gem attributes such as weight, color, clarity, cut, location of sale, auction house, brand and certification as allowed by subsample sizes.
The findings are impressive:
- Since 2003, annualized gross real returns are 10%, 5.5% and 6.8% for white diamonds, colored diamonds and other gems, respectively. Corresponding annualized gross nominal returns are 12.6%, 8.0% and 9.5%.
- Returns may be slightly greater on average, but also more volatile, for higher-quality gems.
Here’s a graphical representation of the results, from the paper:
Sources:
“Return on Gems” CXO Advisory, 6/1. http://www.cxoadvisory.com/individual-investing/return-on-gems/
“Hard Assets: The Returns on Rare Diamonds and Gems” Luc Renneboog and Christophe Spaenjers. http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1845446
