Diamonds are an investor's best friend

diamondDiamonds are to take over from gold as the investors' bolthole as demand from developing economies pushes up the price, Belgian experts have predicted.

The Private Diamond Club of Antwerp claims the price of rough diamonds rose by 29% in 2011 and the price of cut diamonds is currently rising sharply.

It has highlighted an explosion of the demand in China and in India, mainly because of the fast development of the middle class and the growing number of millionaires boosting the markets for luxuries). Countries such as Brazil are expected to follow.

It claims the biggest diamond producer De Beers, is betting on a diamond shortage and might reduce production to extend the life of their diamond mines. The Private Diamond Club of Antwerp said the impact on the prices would be immediate, particularly for the upper quality stones that are mostly investment diamonds.

Investment rules

The club said investors need to think long-term. "The diamond is not a commodity for speculation on a short or middle term basis but a real value which is increasing on a long term basis according to offer and demand volumes".

It produced figures showing the price of cut diamonds had fluctuated over the past five years with a sudden drop in 2009 but was currently 25% up, with much of that growth in the past year or so. It produced a trend line graph showing average price rises over the past five years had been 4%.

It said: "A diamond investment does not provide an instant income but can add value to the original investment amount." It also pointed out: "The value of diamonds is not bound to that of the currencies: Diamonds are not used to guarantee currencies like gold does."

Easily transportable

It flagged up: "Diamond is a discreet and easily transportable investment. The value compared to the weight is very high since one carat of diamond corresponds to 0.20g. The value of a diamond can represent one or several golden bars."

And you don't need a specialist investment adviser charging you fees. "The investment in diamond does not require any special management. Placed in a safe for security reasons diamonds are durable, unchanging and available at any time," it said.