The world of financial investing is full of myriad alternatives, each presenting its unique blend of benefits and risks. The conventional route has always favored stocks, yet several savvy investors are turning to an unlikely contender – rocks. Contrary to their inconspicuous nature, rocks or gemstones represent an intriguing investment avenue. This narrative was aptly iterated in the GoNoGo Show 041824, enticing the world to contemplate, ‘Rocks over Stocks’.
Gemstones, classified under the umbrella of hard assets, have been treasured for their beauty, rarity, and intrinsic value since ancient times. Their worth does not deteriorate over time, making them a tangible, long-term investment. Unlike the fluctuating nature of stocks, which are dependent on macroeconomic factors and company performance, the value of precious rocks remains relatively stable. The predicament of the 2008 financial crisis demonstrated the volatility of stocks, causing catastrophic losses for investors globally. Comparatively, the gemstone market remained more robust, doubling its total global sales between 2005 to 2015.
Investing in gemstones offers the advantage of portfolio diversification. Stocks, bonds, and cash – the traditional staples of an investment basket – are highly correlated. In contrast, gemstones have low to zero correlation with these assets, helping reduce overall portfolio risk. Moreover, gemstones effectively act as a hedge against inflation. While stocks lose value due to inflationary pressures, the price of gemstones often increases, preserving the investor’s purchasing power.
Unlike stocks susceptible to short-term market trends and sentiment, gemstones encapsulate the concept of ‘buy and hold.’ Their value appreciates over time, thereby encouraging long-term holding. With the right knowledge, one can identify gemstones with good growth potential. For instance, colored gems such as emeralds, rubies, and sapphires have demonstrated an upward price trend over the last decade.
Despite these benefits, it’s essential to acknowledge certain challenges. Firstly, the gemstone market requires comprehensive knowledge including an understanding of the quality, grading, and pricing of gemstones. Secondly, it’s an illiquid market, that is, buying and selling are not as quick and convenient as trading stocks. Lastly, fraud is prevalent, making a thorough due diligence process vital before investing.
As we delve into the era of fintech and blockchain, the gemstone market is also leveraging these advancements. Blockchain technology is increasingly being employed to accurately track the origin and provenance of
