|
Investing
Insights and Perspectives
The fact that diamonds are universally quoted in US dollars creates an interesting investment profile for the industry since movement in the currency itself can greatly affect the market. In early 2008 the rapid fall in the dollar helped push up commodity prices, including the rarest polished diamonds, to all-time highs. It got to a point where diamantaires lost confidence in the dollar and preferred to keep their wealth in diamonds, as long as the diamond prices were rising. Now with the dollar strengthening we are seeing a significant drop in diamond prices, also due to a weakening economic situation. The increased speculation that took place in the market in 2008 also had a great effect. As prices continued to rise, the more that speculators moved in. Once the economy started to suffer and the dollar recovered, the market was bound for a price correction. Many in the industry were wary of the increased speculation in the market and were warning prospective investors as early as March 2008.
|
"Let us not be too particular. It is better to have old second-hand diamonds than none at all.” Mark Twain
|
| Although there has historically been a demand for diamonds that exceeds supply, causing substantial increases in value, there is no guarantee that this will be the case in the future. Demand for diamonds of a particular type may be affected by regional or world trends and tastes. | |
