New Approach Makes Investing in Emerald Much More Affordable

Gemfields, a London-based gemstone and mining company, reported recently that their revenues have more than doubled; in the past year. The company is a leading producer of the world’s emerald supply with an approximate 20 percent market share and is looking forward to substantial market growth in the years to come.

Earlier this month, Gemfields announced that their Kagem emerald mine in Zambia has the potential to produce 1 billion carats of emerald and beryl generating a value of close to $900 million over the course of the next twenty years. Needless to say, shareholders of the company are more than happy over the recent announcements, knowing that they put Gemfields in a strong growth position moving forward; into the future. The company’s stock rose 11 percent on the news of the announcement, currently valuing Gemfields stock in the neighborhood of £135 million.

Analysts say that Gemfields has created the world’s first integrated pipeline, that will bring emeralds directly from the mine into the international market; allowing consumers to trace the origin of each precious gemstone. At this stage, the company is focusing their marketing efforts on promoting Zambian emeralds, that are less costly than the established Colombian gems. With this approach, Gemfields is looking to open a new market to consumers seeking an investment in emerald, that is more affordable.

These recent developments will certainly solidify Gemfields strong position in the colored gemstone marketplace. I feel that  the company has utilized their strengths in hard assets and marketing savvy, to put themselves in a leading position in an industry that grows steadily, as demand increases for a dwindling and/or limited supply of precious gems and gemstone investment opportunities.

Reasons to Invest in Hard Assets Like Investing in Diamonds

There are a lot of good reasons for private investors to invest in hard assets, especially in times of economic uncertainty. Hard assets can offer benefits that traditional investments cannot. For an investor who has a traditional portfolio filled with stocks and bonds, the addition of hard asset investments, can help to diversity an otherwise risky investment portfolio.

With hard asset investments there is also the opportunity for very competitive investment returns, when compared to traditional investing strategies; like stocks and bonds. As well, investing in hard assets has demonstrated that it can protect investments against inflation and economic uncertainty. For example, in the United States a certified deposit pays a rate of 2 percent interest, per year. This is far from the rate of inflation.

If included in the alternative investment portion of an investment portfolio, an investing strategy that includes hard assets, will dramatically improve an investor's risk-reward profile. And luckily for investors, there are many different approaches, which will allow them to invest in profitable hard assets. For example, there are many great reasons to invest in diamonds, other precious gemstones, certified coins; as well as gold, silver, platinum, and other rare metals.

Precious Gemstones Protect Against Inflation and Deflation

The primary influence of gemstone values today, is the fact that gemstones have reasserted themselves as the best form of money, the international community has been able to agree upon; in 5,000 years. For those who are cynical of investing in gemstones, this could be hard to believe, let alone accept. Nevertheless, precious gemstones have clearly demonstrated to the investment community, that their values can increase over time, in either an economy dominated by either inflation or deflation.

Investors must keep in mind, that what high inflation really means, is that the value of a currency is collapsing. All goods do not suddenly become more valuable, but rather the money we use to pay for these goods, begins to lose it's value. In most instances, high inflation is caused by excessive money-printing. So, it could be said that the reason why precious metal and gemstone investing has soared in value during high inflation, is because of the realization that paper money is neither rare, nor a store of value. In contrast, gemstone investments have demonstrated that they can consistently hold their value, resist the negative effects of inflation and protect an investment against an unforeseen drop in value.

With a gemstones standard, paper money must be at least partially redeemable in real bullion or gemstones. This requirement protects a currency in times of deflation — because people know that no matter how badly an economy sags that their money is backed by a dependable hard asset. With gemstone backing, currency is a secured asset. Without something like gemstones backing them, all paper currencies are nothing but unsecured IOU.  In other words, what happens is that there is a crisis of confidence with respect to paper currency, with the consequence being that people want to rid themselves of paper money, in favor of real money; like investing in diamonds and other precious gemstones.

Today, for the first time in history, the entire world is operating with purely fiat currencies. For those unfamiliar with the term, this means currency that only has value through a declaration (or fiat) by some government that it has some value. With that being said, anyone sitting with unsecured assets is going to be severely tempted to dump those assets, when a fear of insolvency arises. More specifically, it’s time to analyze how gemstone investments will react in the near future, as the inevitable bankruptcy of the United States and the never-ending political uncertainty in Europe becomes painfully obvious; to more and more private investors.