Diamonds and Gold

For wealthy private individuals and institutional investors, gold has traditionally been beyond question as a physical store of value. Over the past two decades, a second category of physical tangible assets has emerged: Natural Fancy Color Diamonds. This guide compares both asset classes on measurable criteria, without overstatement on either side.

Performance comparison since 2005

The most meaningful long-term comparison begins in 2005, the year in which the Fancy Color Research Foundation (FCRF) started systematic index measurement. Since then, the Fancy Color Diamond Index (FCDI) has delivered quarterly price data on hundreds of colour, size and intensity combinations.

Volatility and corrections

Gold recorded a price decline of more than 40 percent between 2012 and 2015. The FCDI remained largely stable during this period; pink diamonds even rose. No tangible asset delivers positive returns every year: from 2023 to 2025 the FCDI was slightly down (−2.2% in 2024), while gold posted strong gains.

Structural comparison: Gold vs. Fancy Color Diamonds

The following visualisation orders the key investment properties by practical relevance. It does not show which asset is generally better, but which asset is stronger in which situation.

The supply problem: Argyle and scarcity

One structural factor sets Fancy Color Diamonds fundamentally apart from gold: the supply side. The Argyle mine in Australia, which produced up to 90 percent of the world’s pink diamonds, was closed in October 2020 after 37 years. No comparable new deposit has been opened since.

Gold, by contrast, is mined every year in meaningful quantities — around 3,500 tonnes worldwide in 2023. Supply is responsive to price. For pink and blue diamonds this valve does not exist. Economists call this supply-side inelasticity: irrespective of price, supply cannot be raised in the short term.

Whether this scarcity translates into permanently higher prices depends on demand, which in turn depends on the economic cycle, fashion cycles and the behaviour of wealthy Asian and Western investors. Scarcity alone is no guarantee of price increases.

Risks of both asset classes

Risks for gold

• Strong reaction to US dollar strength and real interest rates
• Storage and insurance costs when held physically
• Currency risk for CHF investors due to USD-denominated valuation
• No yield component (no interest, no dividends)
• Political risk (historical gold confiscations, though rare)

Risks for Fancy Color Diamonds

• Moderate liquidity; a sale requires specialised channels and can take several months
• No centralised real-time quote as with gold; prices are communicated transparently through international diamond bourses (including Antwerp, Tel Aviv, Mumbai) and specialised providers
• Expertise is decisive; specialised advisory such as that provided by Welcome Future AG helps to avoid costly missteps due to lack of market knowledge
• Market demand risk; the preferences of the buyer base can change
• Certification quality; inferior certificates (not GIA/IGI/HRD) materially increase risk

Tax aspects in Switzerland

In Switzerland, capital gains from the sale of private assets are, as a rule, not subject to income tax. This applies to both gold and diamonds, provided no commercial trading is involved. Both assets are VAT-exempt at purchase if certain conditions are met. Precious metals (coins, bars) are explicitly exempt under VAT law; diamonds generally also fall outside VAT, as they can be classified as investment goods.

Important: Tax treatment depends on the individual case. This guide does not replace individual tax advice. For cross-border transactions, the rules of the relevant customs authorities apply.

Assessment: when does each asset fit?

The question “diamonds or gold?” cannot be answered in general terms. Investment objective, time horizon, liquidity needs and the investor’s expertise are decisive.

Gold is suitable when high liquidity takes priority, when the investor has a clear view of the macro environment (inflation, rates, USD weakness) and when a simply standardised investment without specific expert knowledge is preferred. Gold also serves as a quickly liquidatable safe haven.

Fancy Color Diamonds are suitable when a long-term horizon (5–15 years) is available, when value concentration in the smallest space is desired — for instance for international mobility — when low correlation with classical financial markets is sought, and when the investor is willing to acquire expertise or engage an experienced partner. For Swiss investors, they also offer protection against negative rates with marginal storage costs.

Conclusion

Anyone judging solely by nominal total return since 2005 finds gold (approx. +929%) ahead of the FCDI overall index (+203.4%) — with the important caveat that Pink Diamonds (+390.9%) and Blue Diamonds (+241.7%) clearly outperformed the broad middle of yellow natural diamonds. A blanket statement that diamonds are “better” or “worse” than gold is empirically untenable: the answer depends on selection, timing of entry and sales channel.

What is clearly documented, however: Fancy Color Diamonds offer unique structural properties — extreme value concentration, minimal storage costs, low correlation with financial markets and a rapidly diminishing supply of the very best natural pieces. These attributes make them a serious complement within a broadly diversified estate, not a replacement for traditional tangible assets.