Diamonds4profit sell diamonds as an investment, claiming to offer “lower risk vs higher yield balance”.
The company is currently running ads on Facebook. Ads for the sale of commodities are effectively unregulated, as UK law treats them as selling shiny stones even when they are being sold as an investment. (The only relevant regulator is the Advertising Standards Authority, which is virtually toothless.)
Who are Diamonds4Profit?
No details of who is behind the business are provided on Diamonds4profit’s website, and no corporate identity is disclosed. On Facebook, the contact email for Diamonds4profit is listed as “[email protected]”.
The registry information for diamonds4profit’s website shows it to have been registered in the name of a company called “Magna Cogitare Limited” in April 2020. This is despite the fact that no such company existed. There was a Magna Cogitare Ltd registered in the UK but it was dissolved in February 2020.
Interestingly, Magna Cogitare’s sole director and owner was a James Ian Hobson. Due to the lack of disclosure from Diamonds4Profit, whether Magna Cogitare’s James Hobson and Diamonds4Profit’s James are the same person is not definitive.
If an investment company is not upfront about details of its ownership, think very carefully before handing over any money.
How safe is the investment?
Diamonds4profit claims that diamonds offer “lower risk vs higher yield” and “provide a safe haven in a turbulent time for equities”.
This is baloney. Diamonds are a commodity and like all commodities will fluctuate in value. If they were guaranteed to go up in price, Diamonds4profit would hold on to them and pocket the profit instead of flogging them to random investors on Facebook.
What frequently happens when you buy diamonds from anonymous people on the Internet is that even assuming you receive the diamonds, and they are as described, they will be sold at such a high markup to their value that the chance of the diamonds going up enough in value to overcome the markup is virtually nil.
Anyone serious about investing in diamonds would employ a valuer, paid by themselves (not Diamonds4profit), to check that the diamonds were as valuable as the seller says – just as when buying a house as an investment, you would employ your own valuer and not simply assume that it’s worth as much as the seller and the estate agent says it is.
The worst case scenario is that you hand your money to Diamonds4profit and they disappear or go bust before fulfilling your order, leaving you with no diamonds and a total loss. This is not an accusation but an inherent risk when dealing with small obscure companies (especially anonymous ones).
Should I invest in Diamonds4profit?
This blog does not give financial advice. The following are statements of publicly available facts or widely accepted investment principles, not a personalised recommendation. Investors should consult a regulated independent financial adviser if they are in any doubt.
As with any investment in individual commodities, this investment is only suitable for sophisticated and/or high net worth investors who have a substantial existing portfolio and are prepared to risk 100% loss of their money.
Despite Diamond4profit’s claim to the contrary, handing money to anonymous people on the Internet in exchange for diamonds is much higher risk than a mainstream diversified stockmarket fund.
Before investing investors should ask themselves:
- How would I feel if the investment defaulted and I lost 100% of my money?
- Do I have a sufficiently large portfolio that the loss of 100% of my investment would not damage me financially?
- Have I paid a professional valuer working on my behalf to check the asset is worth what the seller says it is?
If you are looking for a “lower risk” investment, you should not invest in commodities bought from anonymous websites.