Platinum or diamonds which is your best investment options in 2022
Since market factors mainly determine investment profitability, various instruments are desirable as investment classes at different times. Because trading is based on demand and supply, determining whether investment classes are viable depends on how the commodity’s market is faring. Prices tend to drop when there is too much supply of a given item compared to the demand for the same item. Due to their comparatively low daily price fluctuation, metals, particularly gold, have long been regarded as a safe investment.
While gold’s appeal among investors continues to rise, other metals such as diamond and platinum have also risen to prominence.
Continue reading to discover more about the benefits and drawbacks of these precious metals, and see for yourself how investing in digital gold may help you boost your portfolio’s profits.
Gold’s properties as a metal include its inability to rust or corrode, its malleability, and its more remarkable ability to conduct heat and electricity. Though it has limited industrial uses, it is mainly utilized as a money and jewellery foundation. Gold reserves are also used as a type of investment by central banks worldwide. Gold’s demand as an investment class, on the other hand, is influenced by sentiment rather than supply and demand considerations. Because the supply of new gold produced is far smaller than the amount of gold kept by individual hoarders, gold prices decrease when hoarders decide to sell.
The capacity of gold to function as insurance in the following conditions is what drives demand for it:
- When markets look unstable due to uncertain economic conditions or bank interest rates appear unappealing, gold is the safest investment option.
- Inflation leads equities and debt markets to fall, making gold the safest investment option due to its physical worth to investors.
- People have traditionally hoarded gold in times of war, and political unrest since the metal’s worth does not depreciate.
- Some individuals also choose to invest in gold over stocks and bonds since it is easier to buy gold than find the correct supplies to trade in. Despite these advantages, there are several disadvantages to investing in gold, including the lack of a dividend value, lesser capital gains, and storage challenges. Storing gold does not result in a rise in its value but holding shares that pay dividends.
Platinum is a valuable metal primarily mined in South Africa and Russia. It has grown in favour among investors, but the debate over whether it is as excellent an investment class as gold continues. Continue reading to learn about the benefits and drawbacks of gold and platinum investments, and then make your own decision:
- Platinum is readily liquified and may be exchanged for cash at any time.
- It has gradually increased in value, making it a safer investment class. While the weight of gold is significantly dependent on the US dollar, the value of platinum is not, making platinum a safer investment.
- A rise in platinum demand in the industrial sector will result in a price hike.
The platinum market is a relatively new concept in the financial world, making many individuals hesitant to put their money into it. Because of its high spot price, it can be rather unexpected.
When consumers want to invest intangible assets that they can utilize, diamonds become an appealing option. Diamond jewellery is one of the most popular methods for consumers to use their precious metal investment.
- Diamonds, unlike equities investments, allow customers to know precisely what they’re buying. It is a physical item whose worth is recognized all around the world. It has enormous value as a family heirloom that may be passed down from generation to generation as a precious metal.
- It’s a very liquid investing category. A diamond may be sold and converted into cash instantly whenever money is needed urgently.
- Diamond mine output declines as the world’s population grows, resulting in more demand and lower supply.
On the other hand, diamonds investment has dangers, such as purchasing from a shady firm or lacking certification. Purchasing diamonds from an untrustworthy source might have severe consequences regarding resale value.
Platinum: What it is, how to invest in it, and what the future holds
Indians have long enchanted precious stones and metals. While gold has grown in popularity over the years as an independent investment class, other metals have failed to capture the public’s attention beyond personal use.
The same applies to platinum, which is more sensitive to industrial cycles than gold. Despite its scarcity and limited availability due to high energy costs and a complicated extraction method, the precious metal continues to make waves in the financial world.
Market analysts forecast grey-white metal prices will exhibit abnormally significant movement shortly as the trend expands to the rest of the world as platinum jewellery catches favour in the West.
They believe it warrants a tactical, if not strategic, allocation in an individual’s portfolio and ranks it as the second-best investment bet among other metals. Here’s a handy guide to investing in this asset class and its possibilities.
- The item that can be collected
For starters, like gold, platinum prices in India are calculated by adding import charges, octroi, and other local taxes to worldwide costs. Prices are very subject to worldwide fluctuations, particularly the rupee-to-dollar exchange rate. Thus, even if platinum prices rise globally and everything else remains constant, an increase in the Indian rupee’s value versus the US dollar might result in platinum prices being unchanged domestically.
Platinum is a feasible investment choice due to the sizeable supply-demand mismatch. Only three million ounces of platinum are produced worldwide, less than a tenth of that of gold. There are four methods to invest in the global platinum market.
However, in India, you only have two choices: platinum bullion, coins, jewellery, or futures trading on a commodity exchange. Bullion and coins are available from various vendors, including banks and authorized dealers. Its purity ranges from 99.95 per cent to ten troy ounces, and it is typically sold in small amounts.
“Collectible artworks are usually sold for more than spot prices since they are collectables.”
If you’re buying a new coin, be sure it doesn’t have any dents or blemishes. Furthermore, platinum forward trading is dangerous since it requires large amounts of capital. On the Multi Commodity Exchange, you can buy Platinum Futures Contract (1 gram) (MCX).
Nevertheless, these contracts’ liquidity, rollover fees, and tracking faults should be considered. Only individuals with a large sum of money and a basic grasp of futures trading should consider this option.
You may also invest in platinum by purchasing Exchange Traded Funds (ETFs) and Notes (ETNs). Although this product is not now accessible in India, it is always available on the foreign market. An Indian investor can invest up to $200,000 abroad, according to Reserve Bank of India (RBI) guidelines. ETFs offer the advantage of owning metal without storing traditional bars or coins.
By contrast, ETNs, which are issued by banks and are based on indexes of ETFs, are not issued directly by the banks. “ETNs are typically used to follow the performance of a group of platinum futures contracts.” “It’s similar to a bond, but it doesn’t pay interest,” says Kapur. Apart from price risks, currency risk, particularly rupee appreciation risk, exists in such investments.
Platinum has gained popularity as an investment option in recent years, but portfolio managers advise that it should not account for more than 3-5 per cent of your portfolio. Furthermore, platinum jewellery should not be purchased as an investment. Platinum jewellery has a lower resale value since it is not 100 per cent pure, and the manufacturing costs are also fairly costly. “As an investment opportunity, platinum is second only to gold, followed by diamonds and silver.
The appeal of gold across millennia, and even amid the current economic crisis, “clearly re-establishes the idea that gold is the ultimate contingency reserve,” according to Sudip Bandyopadhyay, managing director and CEO of Mumbai-based financial services business Convexity Solutions. According to him, overseas ETFs are the most acceptable method to invest in platinum, while platinum bars and coins are the best alternatives on the local market.
- Future Aspects
Prices of platinum are expected to increase if demand increases slightly due to a worldwide demand-supply mismatch and supply concentrated in a few nations such as South Africa, Russia, and Canada.
Due to its more robust beta to the global economic cycle, Devendra Nevgi, founder and principal partner of Delta Global Partners, expects platinum to do well if the global economic recovery continues and a systemic sovereign crisis is avoided.
A short-term perspective on platinum prices will be provided by an emerging scenario of global risk aversion and debt crisis, he believes. The autocatalyst industry accounts for around half of the demand for grey-white metal, with the remainder coming from sectors such as chemicals, electrical, glass, petroleum, and jewellery. The buoyant market for autos in China and India also bodes well for platinum’s future.
Is Investing in Diamond Jewelry a Good Idea?
If you ask someone from the previous generation this question, they will frown. How can they be held responsible? For a long time, we thought that the best investment choice was yellow gold — solid yellow gold of the highest purity. Diamond rings, gemstone earrings, and other stone-studded jewellery are often fashioned of lower-carat gold, such as 18kt or 14kt. Naturally, it never piqued the interest of intelligent investors. On the other hand, they believed that investing in anything other than gold was a bad idea. However, individuals have evolved, and their financial habits have also altered.
Do you intend to turn precious jewellery into a viable investment option? If so, you can include diamonds in your investing portfolio. Diamonds, according to industry insiders, provide high returns. Most notably, they have seen a consistent price increase in recent years. However, they offer their own set of advantages and disadvantages, just like any other type of investment. To get the most out of your assets as an investor, you should know them. Before you buy diamond jewellery, here’s everything you need to know.
The Benefits of Investing in Diamond Jewellery
The usage of diamond jewellery as an investment instrument has risen dramatically in recent years. Compared to gold, it is an attractive investment option for various reasons.
Size: Its size is the first and most evident advantage over gold. Diamonds, unlike gold bullions, do not take up a lot of space. Since ancient times, valuable jewels have been utilized as an excellent form of money transmission. Compared to gold jewellery of the same size, a diamond trinket costs double or triple the price, no matter how little. This implies that diamond jewellery, such as bangles and necklaces, are suitable investment possibilities.
Storage: With a compact size comes a lot of storage. So much so that even a modest safe may hold a diamond worth hundreds of thousands of rupees. Diamond jewellery is also an investment that can be seen, maintained, and worn. As a result, many people believe it is a more secure investment than stocks and other digital assets.
Durability: Diamond is another virtue that has been given to them by nature. It is the most challenging task on the face of the planet. You may rest assured that it will not be harmed. You don’t have to be concerned about diamond jewellery fading if you take proper care of it. This means you may wear and enjoy your purchase for as long as possible.
Diamond jewellery, however, is a more transportable and enduring investment than other tangible goods. Diamond jewellery as an investment has financial rewards in addition to the physical features and psychology.
What Are the Benefits and Drawbacks of Diamond Jewelry Investing?
Aside from the perks, there are also drawbacks and hazards associated with diamond jewellery as an investment.
Price transparency is lacking: First, there is a lack of price transparency. While several commodities, such as gold, have a widely watched price index, diamonds do not, and the market determines diamond prices based on demand and supply.
Lack of traceability: The second risk of purchasing diamonds as an investment is a lack of trustworthiness. Buying diamond jewellery is much easier than selling it. Some companies will acquire them, but the price will be less than what you purchased for them.
Long-term benefits: Can you guess which of the disadvantages of investing in diamond jewellery is the most difficult to overcome? To receive the rewards, you must have patience. Diamond jewellery isn’t the best choice if you’re seeking a rapid return or a short-term investment. You can include them in your long-term investment portfolio if you are willing to wait for the profits.
Precautions to Take Before Investing in Diamonds
Diamond jewellery is an excellent investment. However, it should only account for a modest fraction of your overall investment portfolio. It is a perfect pick for your alternative investments category, and you may gain from them as long as you understand the fundamentals of investing in them.
Learn the fundamentals: The first step is to grasp the four Cs: clarity, cut, carat, and colour. The number of flaws in a diamond determines its clarity grade. A diamond’s brilliance is determined by its cut; hence, the more good the amount, the more excellent its shine. The weight of a diamond is measured in carats.
Set a budget: Decide how much money you wish to invest once you’ve grasped the principles of diamonds. Remember that diamond jewellery should not be your only investment but rather a component. You will indeed need a significantly more significant sum at first. However, when you decide to buy diamond jewellery, make sure that it does not exceed your budget.
Make your purchase: After you’ve decided on a budget, check pricing at various web merchants. The next stage is to invest in certified diamonds exclusively. The Gemological Institute of America (GIA) is a gemological laboratory with rigorous accreditation standards. As a result, the most popular gemstones are GIA-certified diamonds. It is vital to have a certified diamond when buying or selling a diamond.
Investing in Diamond Jewelry: Common Mistakes to Avoid
Most investors make the initial error of expecting too much in a short period. Always keep in mind that diamond jewellery isn’t a quick-money scheme. Diamonds are long-term investments that improve in value over time. Diamond prices fluctuate, much like other tangible commodities.
People frequently commit the second error of overpaying. Buying low and selling high is the first investment rule, and diamonds are no exception. When it comes to diamonds, though, bargaining is rarely an option. Avoid spending too much by doing your homework.
The final blunder to avoid is purchasing the incorrect diamond when the certification comes into play. Whether buying an engagement ring or a pendant, be sure the diamond is certified.
If you do your study, diamond jewellery as an investment has potential. They’re lovely investment choices if you’re not buying them for resale right away. They diversify your financial portfolio while providing you with access to some of the world’s finest gems. Think about the benefits, drawbacks, and guidelines to keep ahead of the game.
What Would Indians Prefer for investment?
Our culture has a long history with jewellery. When they have the opportunity, Indians wear jewellery to beautify their bodies. Many Indians wear heavy jewellery and accessories even in everyday life, let alone during social gatherings or functions!
From the outset, gold and silver have played a significant part in Indian families. In the country, this valuable metal has been deemed ‘auspicious.’ In India, it is revered by numerous civilizations. It is said to bring riches and good fortune to the person who wears it.
However, the situation is not the same in the global market! Diamonds and platinum, among other precious metals, are assigned additional weight. Platinum is more expensive than gold since it is a more uncommon metal. On the market, there are diamonds of all varieties and values. In the global market, platinum and diamond jewellery are more popular and valuable.
Platinum and some gems are far more expensive in India than gold and silver. Gold and silver are still in high demand. This is because it is regarded as a more secure investment. In India, need is always greater than supply. Speculations aren’t always unfavourable.
Platinum, on the other hand, while being a rarer metal than gold, is not seen as reliable in India. Its costs in India are more significant than gold, yet it is an equally excellent investment. People who recognize its worth are likewise hesitant to buy it. It is mainly utilized in the industrial sector.
Despite the fact that diamonds are used more than platinum in India, they do not have the same status as they have in Western countries. Diamonds are said to be a girl’s best friend. However, Indian females would choose to respect gold and silver above diamonds.
From the crowd, gold or silver jewellery is immediately discernible. With platinum and diamond, however, this is not the case. Diamonds and platinum can readily be confused for one other. Even when individuals pay a more excellent price for these precious metals, the intended impression cannot be achieved.
People are known to overpay for platinum since platinum comes with more extraordinary manufacturing expenses. It is a more durable metal. Making jewellery out of metal is a challenging task.
Cutting, polishing, and finishing a diamond is similarly challenging.
Making charges for gold and silver is less expensive in comparison. In general, a manufacturing fee of 3% to 11% of the total gold present is charged, a waste charge of 3% to 14% is charged, and a tax of 3% to 14% is levied. The amount of gold in the jewellery may easily be used to calculate its price.
Platinum and diamond are exclusively used in India’s metropolitan areas, particularly the metropolises. This might be considered an emerging mode of investing in India. Its target market is mainly comprised of a youthful, flourishing generation.
Gold and silver, on the other hand, are not the same. Gold and silver are in everyone’s possession. Gold and silver are in everyone’s control. The urge to acquire gold and silver is nearly universal, whether one is old or young, affluent or poor, a rural or a city inhabitant.
For the time being, it may be inferred that Indians prefer gold and silver to diamonds and platinum. However, in the not-too-distant future, the tables may be turned. In the foreseeable future, this may not be the case.
According to Sanjeev Agarwal, CEO of Gitanjali Export Corporations Ltd, “In comparison to pure gold jewelry, demand for diamond-studded gold jewelry has grown. Because gold and silver costs are rising, more people are turning to diamond and platinum jewelry.”
The situations may alter in the near future. The weakening of the US and European economies are to blame for gold’s remarkable price climb. Gold prices will stabilize after the economies of these countries have stabilized. Silver prices will stabilize in lockstep with gold prices since they are intertwined.
Diamond prices, on the other side, might climb. This is due to the fact that they will be in high demand in the near future. In the country, platinum prices have mostly stayed stable. They’ll stay the same for the foreseeable future.