17.03.2017

Maurizio Spoldi explains the future of investment diamonds

by DSC Investment

Maurizio Spoldi, CEO of DSC, Diamond Service Company, is an expert in all fields related to diamonds, including the investments in natural gems.

Your company helps clients invest in diamonds. What is the first thing they should keep in mind?

There is no minimum investment, although I always suggest not to exceed 10 percent of one’s assets, because the secret behind all investments is diversification. I believe ten glasses, each containing a part of the whole, are better than one containing a large proportion.

400Is there a minimum sum to start investing?

More than a figure, an investor should consider that this is a medium to long term investment, not a very quick one. As an investment it should be considered in 4-5 years.

How long in the future can forecasts be made in the field of diamonds?

Not more than 5 years, because the value of diamonds is very slow in handling, and its revaluation is not constant nor within a year. On one year there could be absolutely no changes in the value, then suddenly 3-4 years worth of value can be retrieved within a few months.

Let’s get more into the topic of synthetic diamonds. What is their market share today?

We are only at the beginning, the synthetic was put on the market about two years ago and last year there was drum beating marketing on the American market as its reference market. As far as the data tell us, the response was excellent. Let's say its marketing plays on environmentalism, since it is not necessary to have extractions, thus nature is not affected to extract diamonds, nor conflicts are created or animated regarding diamonds as it might have happened in the past. Synthetic diamonds eliminate all these problems.

400Speaking of ethical problems, in what percentage Blood Diamonds affect the natural market?

At the moment it is very small, they do not go beyond 1 percent. Synthetic diamonds, however, clearly create other problems: it is no longer a natural material, there is no limitation in finding it. Synthetic diamonds open up a very high availability of products and, therefore, are absolutely not to be used in investments.

They will, however, help to give a significantly accelerated appreciation of the natural in the coming years. Today the gap is around 50 percent, meaning that, given two gems with the same features, with a the value of the natural at 100, the synthetic has an evaluation of 50. This gap is set to expand further: the extractions will continue to be more and more a problem, while the production as in all things will be increased and stronger, and it is probable that differences will be much more marked than at present.

That's why we can already predict in the medium to long term a strong revaluation of the natural diamonds.

So DSC does not deal with the sale of synthetic diamonds?

We do not bring synthetic diamonds in investment packages because it is not a product on which to invest.

Will there be other changes due to the synthetic?

There will be a greater transparency because, since the inclusion of synthetic diamonds, natural ones can only be conveyed through a trusted certificate: the human eye cannot tell the difference between synthetic and natural, sophisticated equipments are required. Therefore, every purchase in natural diamonds must be accompanied by appropriate certification.

Are there players who mix natural diamonds with synthetic ones, unbeknown to the client?

The Indian market tends to have a lack of transparency, and already in the last two years it has been melding these two situations proposing both gems as natural, thanks to the fact that the buyer cannot, on the spot, establish the quality of the diamond. There have already been a few lots of stones with 30 percent of synthetic diamonds mixed to natural ones. A certification was therefore immediately needed about lots as well: today these are all checked and certified, too, before being mounted, especially in the jewelry industry.

Will the image of the synthetic diamond ever replace that of the natural?

It can’t be replaced, but pearls are a good example. We lost touch with natural pearls years ago, and since then jewellers have been working mainly with cultured pearls or even synthetic ones. This simply created more difficulties for the consumer to be able to afford a string of natural pearls, because the prices reached levels which are not accessible by many people. However, the consumption of pearls overall increased, because on the other hand it must be said that treated synthetic products allow any target customer to own a string of pearls otherwise unaffordable. The synthetic diamonds, in my opinion, will take the market share of those stones that did not have the characteristics of a diamond and that, until now, had been considered its alter ego. As for the natural, it will remain a particular and unique market and I think that special moments will only be reserved to natural diamonds, that will always have a special flavor. Even more so since the advent of synthetic.

Now there is a problem with mining: both De Beers and Alrosa know very well that current mines still have 5 to 10 years maximum exploitation, later the costs to reach

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Maurizio Spoldi, CEO at DSC

 


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