Investment Strategies

Investment Diamonds To Deliver Sparkling Returns Next Year

Wendy Spires Group Deputy Editor London 20 December 2011


Investment diamonds have delivered impressive returns this year, significantly outstripping gold, and the precious stones look set to continue to show gains of 10-15 per cent next year, according to Saul Singer, partner at Fusion Alternatives Investment Management.

Singer notes that investment diamonds are up 20 per cent year-to-date, rising almost 30 per cent in the first seven months of the year before easing off slightly amid the macroeconomic concerns which have dominated Q2. These rises compare to a 10 per cent fall in global equities and the overall commodities market. Even gold, that traditional safe haven asset, is currently only up 15 per cent compared to diamonds’ 20 per cent year-to-date price hike, Singer points out.

Investment diamonds’ ascent this year has been fuelled by increased demand from China and the Far East, while production levels have remained static – and Singer believes that this will remain the case in the medium term.

“At the very upper end of the diamond market, demand remains very strong, supporting the record price levels being fetched on the international auction market for special and magnificent diamonds.  Diamond market fundamentals remain very robust with the upward price trend expected to continue through 2012 underpinned by demand outstripping supply,” he said.

“The major risk to rising diamond prices is further macroeconomic turbulence in traditional diamond consuming markets such as the US, However the strong demand from emerging diamond markets such as China is set to offset this risk. Our models point to continued price increase in investment diamonds, with a projected rise of 10-15 percent in 2012.”

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