Diamond History
Diamonds have been used to store wealth for centuries, with their history as a valuable commodity dating back to ancient times. However, the modern diamond market and its role in wealth preservation began to take shape in the 19th century.
The discovery of diamonds in South Africa in 1866 marked a significant turning point in the diamond industry. This discovery led to the establishment of De Beers Consolidated Mines Limited in 1888 by Cecil Rhodes. By 1900, De Beers controlled an estimated 90% of the world's production of rough diamonds, solidifying diamonds as a major store of wealth.
Before the South African discoveries, Brazil dominated the diamond market for over 150 years, starting in the early 1700s. Before that, India was the primary source of diamonds, with its diamond supplies beginning to decline in the early 18th century.
The use of diamonds as a wealth preservation tool gained further momentum in the 20th century, particularly after World War II. De Beers' marketing campaigns, including the famous "A Diamond is Forever" slogan, helped establish diamonds as a symbol of lasting value and a means of storing wealth.
While diamonds have been prized for thousands of years, their systematic use as a major store of wealth on a global scale has been most prominent over the past 150 years, coinciding with the development of the modern diamond market.
The wealthy have historically used diamonds as a discreet and portable means of storing and transferring wealth, often leveraging their unique characteristics to shield assets. Diamonds are compact, durable, and highly valuable, making them an ideal vehicle for preserving wealth in a form that is easy to conceal and transport. High-value diamonds can be stored in secure locations or moved across borders with relative ease compared to other tangible assets like real estate or gold.
Additionally, diamonds are often purchased through private transactions, which can provide a level of anonymity that appeals to those seeking to keep their wealth hidden. This discretion is further enhanced when diamonds are held in private collections or passed down through generations without formal documentation, making them difficult to trace.
In some cases, the ultra-wealthy may use diamonds as part of broader estate planning strategies, transferring wealth in a way that minimizes tax liabilities. For example, diamonds can be gifted to heirs or stored in offshore accounts, bypassing certain regulatory or tax frameworks. These practices highlight how diamonds’ unique qualities make them attractive for those looking to preserve and protect their wealth discreetly throughout history.
Looking to the Future
While some of the above remain true, there are many ways diamonds are used today to legitimately store and transfer wealth:
Safe, Long-Term Investments Diamonds are a safe investment and have increased in value steadily since 2005, backed by 3rd party data via Fancy Color Research Foundation. We recommend that our clients hold their diamond investments for a minimum of 5-10 years to maximize their ROI. Diamonds are considered to be an asset, commodity, and currency that can be saved, retrieved, and exchanged in the future without deteriorating in value.
As a Donation to Minimize Tax Liability Diamonds, like Fine Art, can be donated to a family foundation, a charitable organization, or a museum to minimize tax liability. FCD Invest has exclusive relationships with all necessary key points of contact through years of cultivating relationships, including attorneys, appraisers, museums, charities, tax experts, and more.
Inflation Protection Diamonds are considered an inflation hedge and are categorized as an alternative investment and commodity (like gold). This means that their prices rise along with (and even outpace) the rate of inflation.
A Diamond-Buying Business Instead of owning assets personally, which are taxed at full fair market value, you can own your diamonds through an entity. The LLC or LP is a tax reduction tool in that the majority of the shares are non-voting. Though the family or trust may own all shares, the non-voting shares are allowed a discount, usually 20%-40%, due to non-voting status. As you may keep the voting share, you can keep all rights, access to the assets, and all control. It does require some additional accounting, but this allows our clients to retain control while providing asset insulation.
Insurance Coverage No matter your legacy strategy, the key is to plan ahead. If you will incur taxes on passing down your wealth through capital gains or gifting, you can always utilize a life insurance policy to cover all costs to ensure the burden does not fall on your loved ones who are receiving your family heirlooms.
Collateral Loose diamonds and diamonds set in jewelry can be used as collateral for loans to fund projects, business ventures, or personal expenses.
Each of our clients requires a unique strategy based on their individual needs. We are always happy to discuss our thoughts based on your wealth preservation goals.
Please email FCD Invest at info@fcdinvest.diamonds to discuss your personalized long-term investment strategy.
For more information on Fancy Color Diamonds as an investment, please visit our Fancy Color Diamond information page linked here.
Comments