While people living in the Western world enjoyed more than half a century of peace and prosperity during the Victorian era of the late 1800s, the diamond market began to boom.
The British crown’s imperial connection to India and South Africa — where the majority of the world’s diamonds were being mined — renewed public interest in the precious gem, namely as a badge of power and prestige.
The South African Diamond Rush of 1871, coupled with brilliant marketing strategies by De Beers and other successful mining companies, secured the precious stone as a fashion-forward yet sensible hard asset, one that could be shared with future generations.
The End of an Era (and a Monopoly)
By the turn of the 20th century, De Beers had managed to successfully corner and control the world’s thriving diamond market, most notably (and controversially) prices.
Yet as the century entered its second half, diamond mines began popping up outside of India and South Africa when the precious gem was discovered in places like Canada, Russia and Australia.
The expanding diamond supply made it increasingly difficult for De Beers to corner the market and fix prices and by 2001, amid a firestorm of negative publicity, the De Beers monopoly came to an end.
Diamond production was quickly divided between multiple companies, including Alrosa, Rio Tinto, De Beers and various others, while Asian demand drained De Beers diamond stockpiles between 2000-2004.
Diamond Growth in the New Millennium
In early August 2012, the US Patent and Trademark Office approved a patent for classifying investment-grade diamonds for commercial trading and investing — ushering in a new age, where diamonds fall into a publicly traded asset class.
Consequently, a physically backed diamond ETF from GemShares is expected to be available on the NASDAQ by 2014.
In a recent interview in Hard Assets Investor, Kris Schellhas of the Investment Diamond Exchange discussed the internationally-recognized exchange and the implications of a diamond ETF.
Although purchasing an ETF means investors only own a share of a trust backed by physical diamonds, Schellhas points out the perks of owning the stone, along with its anticipated growth.
“Diamond prices are currently being supported by the rising incomes of middle-class populations in emerging markets like China, India, Russia and Brazil,” said Schellhas. “In the US, diamond demand is growing at approximately 3 percent a year.”
“Meanwhile, in countries like China and India, demand is expanding at an incredible rate and really driving unprecedented demand for diamonds. These countries not only view diamonds as jewelry, but a lot of the people purchase them as a source of wealth, too. In China alone, diamond demand has a compound annual growth rate of 32 percent since 2005.”
The Future of Diamond Bullion Investment
In a June 7 interview in Forbes Magazine, Stornoway Diamond Corp CEO Matt Monson said the notion of diamonds as an investment has been around for years — namely in China — and that wealthy individuals have long considered diamonds a viable hard asset, on par with fine art and good wine.
According to Monson, although diamond investment comes with some pitfalls (no set values, for one), the prospect of diamond ETFs combined with the growth of China’s middle class, points to a bright future for diamonds.
“Nominal diamond prices have increased 8-9 percent a year, and on a real basis, about 3-4 percent per year since 2003,” said Monson, “and similar growth is expected in the future, simply because of GDP growth and flat supply.”
In Short: Why Invest in Diamonds Today?
As confidence in the economy continues to be shaky at best, diamonds make a simple, natural addition to any investment portfolio.
As the old American Proverb goes, “a diamond on a dunghill is a precious diamond still.”
Indeed, each stone’s high value compared to its weight makes it incredibly portable — even more so than precious metals. Diamond bullion melee could help you make a quick escape in an emergency. The gem also provides a hedge against inflation and a long term store of value, a great alternative to owning gold and silver alone.
What do you think?
Are you interested in diversifying with diamond bullion melee? Why or why not?
Let us know in the comments below or on Facebook and Twitter.
Diamond is something which may secure one’s future, and so stabilize the present. For the investors wanted to invest in diamond may earn a good profit out of that.
Der’s coal in dem der hills!!! Coal makes dem der diamonds!!! Whooooooo Hooooooooooo!!!!!!! *starts playing banjo*
Just like Gold & Silver……. if you don’t hold it, you don’t own it. Just another way to scam the people. avoid ETF’s.