Tuesday 26 October 2021
Is It Safe To Invest In Gold & Diamond Amid COVID-19 Pandemic?
November 26, 2020 | By - Neelam Motwani

Is It Safe To Invest In Gold & Diamond Amid COVID-19 Pandemic?

When it comes to gold and diamond, money can buy happiness. Jokes apart, both are considered auspicious metal and stone for investment. India and UAE are the world’s largest investment market of gold and diamond, as owning them is deeply entrenched in the culture and heritage of the two nations. 

However, the COVID-19 pandemic has raised questions in the minds of investors if it was safe to invest in such assets? The gold market saw a brief plunge at the start of 2020 when COVID-19 was declared a serious pandemic by the World Health Organization (WHO). Investors around the world kept their eyes and fingers on shorts news, to analyse the treanding pattern of commodities. 

The demand for gold and diamond witnessed an upswing across the world from the second quarter of 2020. With the growing prices amid pandemic, the market picked up again as gold and diamond played an integral part in the economic revival.

Diamond, on the other hand, leads to a different graphic representation altogether. Stone-studded jewellery such as diamond rings and earrings are always supported by the lower caratage of 18kt or 14kt gold. 

Gold & Diamond

 

Diamonds, in general, never caught the eyes of the wise group of investors for more than a decade. Nonetheless, the investment pattern has changed in recent times when people started appreciating jewellery made of white stones such as diamonds.

Gold And Diamond In Your Investment Portfolio

Gold has always been considered low-risk and safe investment for ages, especially during the uncertain times when people change their pattern from ‘buying’ to ‘selling’ their precious metals. Experts believe that every wise investor must include gold in their safe investment portfolio, as it is driven by the need such as weddings and other rituals that contribute to bringing the nation’s economy to a standstill. COVID-19 pandemic, without a doubt, played a major role in the recent trade patterns in the gold prices. 

 

Gold & Diamond

Including diamond in your portfolio also brings good returns as diamond has witnessed appreciating price in recent years. But, if you are a wise investor, you might already be penning down the pros and cons and ups and lows on the price graph of both portfolios. Let’s check out some of the important factors to consider before you invest in both.

Factors To Kep In Mind When Buying Gold

Whether you are a frequent buyer of gold or planning to initiate an investment portfolio in gold, there are numerous ways to transact in the yellow metal. From buying a gold coin or a gold bar, experts recommend the ideal allocation of 10% of the same in your portfolio. What’s the gain, if you ask? The investors must wait for that 10% investment to hike to 15%, considering the current economic climate which is quite unpredictable as of now.

 

Gold & Diamond

Once the price hikes to 15%, that is when you call it a wise and profitable investment. This strategy is called the “15% rule for investment”. However, just this strategy will not help you with profitable returns. Following are some factors that affect your selection in gold:

  • Gold Purity

Denoted in carat (Kt), gold is available in various levels of purity, which generally couches between 14kt to 24kt. The purity of gold directly impacts the price of gold where 24kt is considered as the purest form of gold. However, as much as it sounds exciting to buy 24kt gold, it is not suitable to make jewellery with this purity, and thus, is generally fused with another alloy impacting the price of ornament you wish to buy.

If you are not a frequent buyer of gold, asking for a 24kt bracelet in a jewellery store will definitely turn some heads with a wicked look. Most of the jewellery buyers, thus, settle for 22kt (92% gold) 18kt (75% gold) options. However, buying a gold bar or coin will definitely serve the purpose of safely investing in the yellow metal, depending on the purpose of your purchase.

  • Hallmark Certification

Buying gold from anywhere and everywhere will have a major impact on your portfolio, as it does not assure the purity of the metal. If you are a wise investor with different portfolios of equity and funds, you require certification as the ownership proof of the same. It works the same way for gold, which is ideally known as Hallmark certification that defines the purity and ownership of the metal. The certificate in India is issued by BIS  (Bureau of Indian standards) that implies the purity of gold.

Factors To Keep In Mind When Buying Diamonds

A lot of debate was witnessed among the investors if diamond is a safe portfolio for better returns. The recent trends favour diamond investment, as it is increasing rapidly. However, there are several factors that affect the purchase of studded diamond for better return of investment. How about you pen some of them down?

Gold & Diamond

  • Size of the Stone

The obvious advantage that diamond holds over gold is the size of the same. Unlike gold bullions, diamonds are known for not taking too much room. A diamond trinket, irrespective of the size, costs double or more the price of yellow metal of the same size. What does that mean for an investor? Ornaments such as diamond necklace and bangles make a safer option for the buyer for a strong investment portfolio.

  • Storability

Diamond is popular for the amusing storability. You can wear them, yet you can keep diamonds worth thousands and millions of dollars even in a small safety case. And thus, many people consider it a safer investment with good resale than stocks or digital portfolios.

 

  • Durability

Diamonds are known for their durability as it is one of the hardest and strongest stones on the planet. With great durability, diamonds can be ensured too, in case you are worried about losing them. Diamonds are also known for inflation-proof, unlike yellow metal.

As the country strikes inflation during COVID-19 pandemic, yellow metal witnessed de-escalation in the buying portal, yet diamond stayed strong with no change in the trade price.

Conclusion

To answer your question: It is safe to invest in diamond and gold in the current times. However, the trade decision will vary whether to ‘BUY’ or ‘SELL’ depending on the price variation of the same. 

A tip to remember in such investment portfolios is to keep watching and analyzing the market and follow ‘The 15% rule’. You must allocate 10% of your investment capacity in gold and diamond, and wait for the 15% return for a worthy profit. To keep yourself updated on the gold price and valuation, keep following AlShorts, for shorts news in 30 seconds. 
 

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