Evaluating Market Risk for Gemstones

Gemstone Market Risk and Macroeconomic Factors

As a gemstone investor, you need to understand global politics and economic trends, such as the following. 

Economic Growth

If the overall global economy is healthy and major economies are expanding, then demand for gemstones is likely to be stronger. This means you’ll have more buyers for your gemstones.

Changes in Interest Rates

Global monetary policies inevitably impact local interest rates. If you plan to finance your investment with debt, these rates will dictate how costly it will be for you to borrow the purchase price of a gemstone.

Emerging Market Risk

Depending on where you invest in the gemstone supply chain, you may need to be aware of emerging market risks. These are political risks associated with governments of emerging economies (or developing or least developed countries). If these countries experience government instability or corruption, that may pose some risks for your investment.

Liquidity Risk

How quickly can you turn your gemstone into cash? That may depend on the level of liquidity in the broader global economy.

Inflation

Gemstone values tend to increase with the rate of inflation. So, you need to understand this important metric. This means you should assume that…