Indonesia curbing nickel supply to support locals, Eramet says
The French miner was this year given a sales quota by the Asian nation that was 29% less than it expected.
The emergence of diamond hedge funds and ETF’s could see precious gems usurp gold and silver’s place in the spot light as safe harbor investments.
The Financial Times writes that the SEC is currently reviewing New York’s IndexIQ’s push for the first diamond-backed exchange-traded fund, while Harry Winston (NYSE:HWD), the world’s largest listed diamond company, is working on a $250m fund in collaboration with a Swiss asset manager Diamond Asset Advisors for the purchase of wholesale diamonds for vault storage.
Peter Laib, chairman of Diamond Asset Advisors, touts the appeal of diamonds as less volatile investment options which are resistant to speculation or short selling, and claims the fund could provide annual returns as high as 12%.
Diamonds have risen along a stunning trajectory over the past decade, with one-carat diamonds gaining 88.9% and three-carat diamond surging 238%.
Laib imputes the price surges to supply constraints, with few mines expected to come on line in the next ten years.
Another factor is the depletion of diamond inventories sold off by De Beers to deal with debt following its privatization in 2001. The De Beers sales put pressure on prices, yet following the exhaustion of stockpiles prices have steadily gained.
Despite a diamond market which “is now liquid and transparent” following the decline of erstwhile monopoly power De Beers, there are still major impediments to the emergence of diamonds as a safe harbor investment option on par with silver or gold.
These include the fact that diamonds are individual gemstones and lack the fluid fungibility of precious metals. Each diamond is a unique object with different facts and a varying price, which makes it difficult to apply indexed values to diamonds as whole.
2 Comments
PrimeValues.org
Yes, they could rival them – in case of the rich they could be great hard assets. The problem is with the grading, the re-selling.
They’re easy to hide, but also easy to fake. And therefore it’s an extremely delicate issue to invest in them…
Ami Elstein
Diamonds are indeed an exciting
commodity, and the Waldman Diamond Company has already set up an accessible
diamond index for investors on the internet (Investment Diamond
Exchange). This enables private investors to buy and sell individual
polished stones, tracking the value of their diamonds so they can decide when
to realize their investment. Investors may find this more attractive than an
ETF because it enables them to own a number of certified diamonds outright, and
not just shares in a collection of stones. What’s more, because they are
offered as a commodity, diamond prices on Waldman’s investment diamond platform
are typically 30 to 50 percent lower than the average retail price of polished
diamonds.