The unprecedented global monetary and fiscal stimulus undertaken taken by China and Western Governments over the last seven years has made traditional stock market and bond options a precarious investment. This has allowed hard asset investments, like investing in precious metals and gemstones, to emerge as the preferred choice for a “low-risk” investment.
Unprecedented global monetary and fiscal stimulus over the last seven years has made traditional stock market and bond options a precarious investment.
In a challenging economic climate, when the tolerance for risk among investors for equities and bonds is declining, many investors will include hard assets – such as gemstone investments – to improve their portfolio’s long-term market performance; foremost by lowering their exposure to risk and increasing the value of investment returns. This is commonly done by allocating funds to assets that are currently in high demand, and have historically proven they will remain so in the future. For an increasing number of investors, this will mean investing in alternative investments in 2016.
It is well known that gemstones are slowly getting more difficult to find. And, when a drop in supply meets an increase in demand, investors can expect that the value of their gemstone investments will rise. The Government of China for one, has recognized this trend and has encouraged domestic state-owned and private companies to actively pursue mining deals throughout the world.
When a drop in supply meets an increase in demand, investors can expect that values will rise.
Africa is one region that has become increasingly popular with Chinese investors. In the last 10 years, the number of major African mining/mineral companies with headquarters in China increased from less than ten in 2006, to more than one hundred and twenty in 2015.
Why has Africa emerged as a priority destination for Chinese investment? Institutional and private investors in China are making their own investment in precious metals and precious gems. Botswana is the global leader in diamond production by value and in the Top 5 of other gemstone producers.
Contemporary investors in China and around the world see investing in gemstones as an alternative investment that can provide them with a degree of protection against risks like rising inflation, and has repeatedly proven to the investment community that they can preserve wealth during tough financial times.
Investors who pursued an alternative investment strategy are likely to have fared better through China’s January 2016 stock market drop, than those who did not.
The proof of this lies within the global economic downturn, and the decimation of financial markets nearly a decade ago. Since the introduction of the Global Financial Crisis, the values of precious gemstones – namely emeralds, rubies, sapphires, and diamonds – have remained above 2008 prices, clearly demonstrating their ability to store wealth. That said, those investors who pursued an alternative investing strategy that included investments like real estate, gemstones, and precious metals, are likely to have fared better through China’s January 2016 stock market drop, than those who did not.