Despite the financial meltdown, luxury assets such as wine and art are drawing strong interest from rich buyers, some looking at the goods as investments, The Wall Street Journal says in an on-line article from Hong-Kong posted in the run-up to the New Year. Now, promoters of diamonds are hoping to add the precious stones to the investment mix.

Record sales at recent auctions, set by Asian bidders, is spurring talk of a surge in high-end diamond demand. Several investment funds focusing solely on diamonds have been launched or are in the works and are hoping to take advantage.

Asian bidders, especially from mainland China, represent a growing presence at auctions, says Patti Wong, chairwoman of Sotheby's Asia. At a Sotheby's auction in New York City earlier this month, five of the top 10 buyers were Asian.

The most expensive item - a 30.48 carat oval diamond - went to a buyer from mainland China for approximately $4.11 million. At a Christie's auction in Hong Kong this month, a colored diamond, called "The Vivid Pink," sold for $10.8 million, setting a record for a gemstone of its kind.

It's unclear if the buyers were after the rocks for investment purposes or simply to enjoy. But proponents are hoping to turn diamonds - traditionally seen as ornaments - into wealth-accumulating vehicles.

The advent of online venues for trading polished white diamonds has improved price transparency needed to enhance liquidity and make possible the launch of diamond investment funds, says Saul Singer, principal of London-based Fusion Alternatives, a money manager specializing in diamond investing. (Polished white diamonds are the most commonly traded for investment purposes and serve as a sort of diamond benchmark.)

Fusion plans to start an investment fund, either as a listed vehicle on the London Stock Exchange's Alternative Investment Market for small companies or as a private equity-type fund. In March, Cayman Islands-based KPR Capital Ltd. created an open-ended diamond fund for investors willing to put up a minimum $250,000 in capital.

But investors should be cautious if they think diamonds will necessarily hold their value or appreciate. While Mr. Singer says increased demand in China and elsewhere has limited supply of some types of stones, he acknowledges that the diamond supply is dominated by a small, tight-knit group of diamond producers who carefully control supply, at times shutting down mines.

Others also caution buyers against acquiring diamonds solely for investment purposes. Ms. Wong of Sotheby's says that polished white diamonds may hold their value, but that trading in these gems for investment purposes remains unproven, as the retail trade is much larger. Diamond trading for investment purposes hovers between $500 million and $750 million annually compared to about $20 billion overall, according to Fusion's data.