Diamonds Shine As Investment In 2011

Dec 20 2011 | 9:04am ET

Are diamonds an investor’s best friend?

According to Saul Singer of Fusion Alternatives, a boutique investment advisory and trading firm specializing in investment-grade polished diamonds, diamond prices are up 20% YTD, having spiked almost 30% in the first seven months.

Singer, a partner at Fusion, attributes the rise in diamond prices in 2011 to flat production combined with increased demand, particularly from China and the Far East. In a recent statement, Singer said he expects this dynamic to continue in the mid-term.

The major risk to rising diamond prices, according to Singer, is “further macro-economic turbulence in traditional diamond consuming markets such as the United States, however the strong demand from emerging diamond markets such as China is set to offset this risk.” His firm expects diamond prices to rise another 10-15% in 2012.

According to Reuters, Asian buying is driving a boom in diamonds, with China set to become the world’s top diamond buyer. In fact, one of the biggest IPOs in Hong Kong this year was launched by a jewelry retailer, which raised $2 billion to finance its expansion in the region. Part of this can be attributed to Western wedding traditions invading the East—brides-to-be in China and India are increasingly receiving diamond engagement rings.


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