All three—gold, silver, and diamonds—are unpredictable in the short and medium term, but generally out-perform inflation over long time periods. They’ve been doing so for centuries. But diamonds have three distinct advantages over gold and silver.
1. Less Volatile
While diamonds can be as good a hedge as metals against currencies over the long term, they tend to be less volatile in the short term. With diamonds, you’re less likely to wake up each morning, and nervously check prices. They simply don’t change that fast. The chart below illustrates this.
Chances are you don’t, and can’t easily, store gold bullion in your home. Most likely it’s kept in a warehouse somewhere, perhaps hundreds of miles from where you live. You’re entrusting it to a third party which for many is a good option. You can do the same with diamonds. But diamonds are also suitable for self custody. Keep them in your home, safe deposit box, or anywhere you consider safe.
Diamonds are the most portable form of physical wealth. Not only can you easily transport them on your person (a million dollars of diamonds could easily fit in a shirt pocket), diamonds can be sent inexpensively anywhere around the world, such as between warehouse facilities located in free trade zones…on multiple continents. This means you can always keep them close to you, or choose to spread out your diamond assets in different jurisdictions around the world. It’s your choice. Afterwards you can move them around easily and inexpensively, as your needs change.
When do diamonds make sense in terms of economic conditions?
Here’s one way to think about traditional investment options vs. economic developments. Where we are on this chart today, and where you think we’re going, could influence your preferred mix of portfolio assets: