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INVESTMENT
POTENTIAL
No one knows the future. And
increasingly as we advance into the New Millennium, more and more
people are confused as to what to expect in the months and years
ahead. As a Registered Investment Advisor from 1985 to 2005, I
could
not and will not guarantee or suggest that you will make money without
exception in
WCM Fancy Colored Diamonds. We are at a
very unique point in history where the global financial markets,
economies, and financial systems are at extremes never before
recorded. I strongly feel that the PRESERVATION OF WEALTH,
not the usual goal of maximizing capital gains as far as the eye
can see, should be a criterion for a sizeable portion of one's
investable funds. The end of the debt quagmire we are
currently in, especially in the United States, is probably a good 5 to 10 years away, since the
retrenchment of borrowing and debt repudiation that normally
accompany such a period has yet to occur to any significant
degree. Investor expectations have been outside of the norm
for some 25 years now, and it is time that most individuals reassess the
prospects for 10% plus capital gains in the majority of
traditional asset classes. It does not take a doomsayer to
realize that runaway credit expansion in addition to extreme
leverage in the financial markets has the potential to cause
sudden and negative effects in both the economy and the various
markets, asset and financial.
When you contemplate an asset that would serve you well as a STORE
OF VALUE in an emergency, you have to create a menu of
characteristics that will rank your researched candidate high or
low on the financial survival list. If an investor is still
uneducated or unconcerned about the current state of affairs, then
he or she is advised to alternatively view fancy colored diamonds strictly from
a jewelry, collectible, or estate planning viewpoint. You
can lead a horse to water, but you can't make it drink.
Let's look at some of the characteristics that make colored
diamonds an excellent store of value for one's implementation of a
Capital Preservation strategy:
| 1. High Value to Low
Weight & Size: This
may sound simplistic, but a 2 carat Fancy Intense Yellow
Diamond worth around $25,000 weighs less than 1/ 70th of an
ounce and occupies less space than a dime would in your
pocket. You can conceal $1 Million worth of
colored diamonds in an overcoat if you had to.
Hence, the superb portability of colored diamonds has made
them a medium for transporting wealth or emergency funds
across troubled borders for hundreds of years. |
| 2. Superb Durability:
Natural diamond is one of the hardest substances
known. Colored diamonds are not affected by
temperature, humidity, or shocks, and thus provide an asset
that will withstand storage or transport in normally
hostile conditions without adversely affecting the value
of the gem. Rock solid. |
| 3. Well-established
quality and valuation methods:
With the advent of colored diamond grading laboratories
such as GIA and EGL, the questions regarding the
quantification of a diamond's standing with respect to
sought-after qualities are answered in plain language for
everyone to read. Some subjectivity always enters the
valuation of any asset and even with professional grading
services, but having a respected lab's
expert opinion in hand and also that of a trained
gemologist, the owner of a colored diamond is well
positioned to obtain a determination of current market
value. No two colored diamonds are exactly alike,
but the well-established criteria used to determine their worth are. |
| 4. A history of steady
price appreciation: Since
colored diamonds are basically a by-product of clear,
white diamond production and are 10,000 times as rare,
since the Middle Ages man has come to recognize their
intrinsic value in the schema of worldly treasures.
But consumer demand has steadily increased for these
rarest of diamonds due to their beauty and uniqueness, and even if global mine production for
white diamonds explodes in the years ahead (unlikely due to
price maintenance organizations such as DeBeers), it is apparent that
burgeoning tangible asset demand is available to absorb all incremental supply. |
| 5. A highly private
asset: There is
currently no reporting of fancy colored diamond
transactions, just recording by the dealer/ broker of the
type and amount of payment made by a client for any gemstone
under new anti-terrorism and existing cash laundering
statutes. Transaction payment information can not be
used by any governmental agency for any purpose other than
to determine if the gem dealer or broker has sufficient
internal controls to monitor cash laundering under
existing and new regulations. Client lists and
contact information, deemed proprietary in the trade as
always, are
never released to any governmental agency either
voluntarily or under regulation. Fancy
colored diamonds also lend themselves to private
safekeeping, safe deposit boxes, and overseas storage
& safekeeping. |
| 6. Easy to conceal:
Since we live in a very turbulent world, security is an
ever increasing issue. My colored diamond sources have told me many stories of
clients wearing very expensive fancy colored diamonds that
the general public has perceived as merely colored
gemstones of nominal value. Most people usually
think of brilliant white diamonds when mention is made of
"diamonds". Once again, one does not have
to invest in outside depository services to safe-keep
their colored diamonds, since $100,000's of colored
diamonds can be stored in a plastic pipe on one's property
if need be. Whether you wear or store your fancy
colored diamond is strictly your personal decision. |
| 7. A multiple function
asset: Besides
being a radiant natural source of beauty, a colored
diamond can serve as a collectible item, a treasured
piece of jewelry, or an alternative asset, highly private,
used for estate planning purposes. It is functional
while being very aesthetically pleasing at the same time. |
The
following graphs are presented for information purposes
only. They are quite dramatic in the price appreciation they
depict, but one must notice that the time span shown is some 30
years of data. Slow and steady wins the race. Asset prices fluctuate over the short-term
and even the long-term, so a potential fancy colored diamond buyer
should always have reasonable expectations when acquiring these
very rare gems strictly for investment purposes. Over the
long term,
prices will likely firm at the historical rate of several percentage
points over the annual inflation rate,
and should the alternative investment value of fancy colored
diamonds become widely recognized, this rate is destined to increase along
with demand. In fact, since 2002, the entire spectrum of
fancy colored diamonds from browns to the rarest oranges and
purples have seen annual price increases from 10% to 35% with the
very rare pink diamond appreciating almost 100% in the last 15
months alone (as of March, 2006). Demand is excellent and increasing
rapidly for fancy
colored diamonds.
Please contact David W. Young at Wexford Capital Management (
877-855-9760 or deals@fancy-colored-diamonds.com
) with any questions you may have concerning the
merits of acquiring certified investment-quality fancy colored
diamonds. We feel it will be time well spent for your
financial future.
| All Prices are in
Thousands of Dollars per Carat. |
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2.0
Carat Fancy Yellow Diamond*
1970 thru 2001
( Courtesy of David Marcum ) |
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3.0 Carat Vivid
Yellow Radiant Diamond
1970 thru 2001
( Courtesy of David Marcum ) |
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2.0 Carat
Intense Pink Radiant Diamond
1970 thru 2001
( Courtesy of David Marcum ) |
*All stones assumed to
have good to excellent cut
proportions and to be VS2 or better for yellow
diamonds and SI1 or better for pink diamonds.
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