Loose diamonds are rapidly becoming one the most widely accepted methods of making rock-steady financial investments, not just in the United States but all over the world. A loose diamond is, very simply, one that has not been set into a piece of jewelry; generally such a diamond has already been cut, and awaits the day it will be set into a ring, necklace, or brooch. However, given the recent craze for investing in loose diamonds, some of these gems are destined to remain loose for the foreseeable future.

Why this sudden interest in loose diamonds? Simply because diamonds are, as the advertising slogan goes, forever. Colored or blue-white, in settings or loose, diamonds retain their value much better than most investments. The reason for this is complex, but it largely boils down to the fact that at least for now, diamonds are a commodity whose supply is fixed, and is rigidly controlled by governments and siteholders who want to retain as much power over them as possible. The currency of most countries is hardly a ticket to wealth — it can fluctuate widely in value, especially in developing nations. Even in relatively stable economies, like the U.S. and E.U., it often makes more sense to invest in items like loose diamonds than in cash or stocks. The idea is that loose diamonds will provide a good return in years to come, and in fact are known to appreciate in value 5-10 percent a year — a performance that equals many well-managed stock portfolios, and with much less effort necessary on the part of the loose diamond investors. In a country like Malaysia, which is known for its rising investments in loose diamonds, such investments make a great deal of sense as a hedge against inflation.

Of course, no one can predict whether loose diamonds will retain their value, but it’s a good bet that they will. The value of diamonds in general, and loose diamonds in particular, has been rising steadily for the past 20 years, despite consistent production and, hence, an increase in the total number of loose diamonds available for purchase. Loose diamonds have also held their value very well for two decades. While investing in loose diamonds is, in some respects, a gamble — just like any investment — it’s a good gamble. In any case, at the very least a loose diamond represents grand potential: it can stay as it is, it can be cut into two or more smaller diamonds, it may be set into a brooch or ring as a symbol of love…the possibilities are innumerable.

When investing in loose diamonds, your best bet is to select certified diamonds. They may cost a little more than their uncertified brethren, but these gems have been analyzed and graded by an accredited certification laboratory, and the certification offers solid evidence of their value. As with any gem, one thing you do have to worry about with loose diamonds is theft. If you keep diamonds in your home, they may be easily stolen (assuming your home isn’t a fortress), so the best place for your loose diamonds may be a bank vault. While it’s not recommended that you build your retirement plans around loose diamonds, given the volatility of any precious gem, it’s nice to know that they’ll very likely provide a comfortable nest egg for later in life.