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Diamonds Forever Comments

Kelly Summers   |   April 24, 2008
Lately, we�ve been talking much about the weakening dollar, increasing oil, strong gold and precious metals; and nobody mentioned diamonds. Diamonds and other gems in times of deteriorating economy usually act just like precious metals, i.e. tend to grow in price.

Constantly increasing diamond prices will continue such trend throughout 2008. In March, there was a jump in diamond price of 8.6% compared to March 2007, and increase of 2% compared to February 2008, according to Diamond Index by marketing agency IDEX Online. These figures are record high since the index was first published in 2004.

The index growth is driven by increase of diamond prices of various sizes. The most recent jump was caused by a sharp rise in diamond price of 3 carats and over. This is a new trend compared to that of previous months, when the index was climbing due to price increase of 2-carat diamonds and larger.

According to some experts, the following five factors drive diamond prices up:

  • A strong demand in most markets apart from U.S. and Japanese.
  • A constant growth of production, delivery and retail costs.
  • Depreciation of U.S. dollar against other major currencies.
  • Increasing prices of commodities and natural resources, part of funds of which is invested in diamond market.
  • Instability of the stock market, which forces more investors invest in gold, precious metals and gems.

The above-mentioned diamond exchange IDEX Online is the actual place where you can buy and sell diamonds the same way as stocks. It also allows investors to follow prices, learn the news, quotes, communicate with other diamond traders, etc.

There is also a simpler and cheaper way to put money in precious stones market � by investing in diamond mining companies. For instance, a Canadian company Harry Winston Diamond Corporation (NYSE:HWD) has been engaged in mining and retailing diamonds worldwide for 28 years. The company has good financial showings and is currently traded slightly above its 52-week low, at about $25 per share.

You might as well look through the whole sector of Nonmetallic Mineral Mining and pick other companies engaged in diamond mining and retail. And don�t forget that share price of these public companies is affected not only by diamond prices, but also by market conditions, which are currently not in a good shape.
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