Diamonds Could Soon Be An Investor's Best Friend As Demand Rises And Supply Falls - Forbes
Orange Diamonds are Rare and Beautiful

Diamonds Are Becoming Favored Investment to Gold

Diamonds might become investors' new best friend. Investors are showing growing interest in diamonds, especially as gold has fallen out of favor.

Investment Diamond Exchange (IDX) opened a trading exchange last year, allowing private and institutional investors to buy certified rough and polished diamonds — as investments, not jewelry. And Chicago-based GemShares and the Nasdaq OMX Group are working to create GemShares Global Investment Grade Standard Diamond Basket Index, which could be used for an exchange-traded fund backed by diamonds to be created, Fortune magazine reports.

Chinese demand for the precious gems is helping drive demand, as Chinese men adopt the American custom of buying diamonds for their sweethearts. The one-child policy has led to a smaller ratio of women to men, giving new leverage to young women. Editor’s Note: Pastor Explains His Biblical Money Code for Investing "If you're a woman in China and you want a diamond ring, you can certainly find a man to get you one," Rick de los Reyes, portfolio manager for T. Rowe Price's Global Metals and Mining Strategy, tells Fortune. "You're pretty much in the driver's seat."

When considering diamonds as an investment, keep in mind that a good investment is one that you can easily sell when you are ready and that does not have a high selling fee. While many diamond "investors" think high color and clarity make better investments, the challenge is that there are fewer potential buyers for these expensive stones compared to color and clarity combinations that are more likely to be sought for engagement rings.

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