Global jewellery industry calls for immediate action on gender equality

The global jewellery industry has called for collective and immediate action on gender equality, a crucial building block in developing a strong and responsible supply chain that contributes to achieving UN Sustainable Development Goal 5.

Today

Dubai IE promotes Gold & Jewellery sector in JCK Las Vegas

Dubai Industries & Exports (Dubai IE), the export promotion and industrial development agency of Dubai Economy, showcased the capabilities and potential of the gold & jewellery sector in Dubai for the first time at JCK that concluded in Las Vegas...

Today

US Holiday jewelry sales expected to skyrocket

According to Mastercard SpendingPulse, US jewelers can expect revenue from jewelry sales in the US between November 1 and December 24 will grow 59% compared to the same period last year.

17 september 2021

Australia becomes world’s biggest producer of gold for first time

Australia has become the world’s biggest producer of gold for the first time, having played second fiddle to China for the last decade. Australia unearthed 157 tons of gold in the first half of the year, pipping China by four tonnes.

17 september 2021

Nigerian minister mulls death penalty for gold smuggling – report

Nigeria’s deputy minister in charge of mines and steel development has called for the death penalty for gold smuggling in the West African country.

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Are diamonds the new gold for individual investors?

28 april 2012

“Diamonds are a girl’s best friend.” From Carol Channing to Marilyn Monroe to "Moulin Rouge" the iconic song has endured as a symbol of wealth for more than half a century, writes Matthew J. Belvedere on CNBC.com.

But should diamonds be an investor’s new BFF?

Of course, investors and couples alike can buy diamonds on the retail market, but there’s a movement to create a way for individual investors to buy diamonds like gold.

The Securities and Exchange Commission is looking over a proposal for the first-ever diamond-backed exchange-traded fund.

Tom Lydon, president of Global Trends Investments and editor of ETF Trends, thinks there would be a demand for a diamond ETF, but the problem will be pricing. “When you look at these ETF providers trying to get into the space to a degree it’s the tail wagging the dog. They’re trying to force the industry to have standardized pricing” he said.

The diamond industry likes “the fact that pricing is not always clear. That’s basically how they make their money,” Lydon told CNBC’s Street Signs.

“Gold is liquid. It trades on the futures market. But when you get to diamonds it’s a whole different story. Diamonds aren’t created equal. There are so many sizes, shapes, qualities,” he said.

A report in The New York Times explains how the diamond ETF would work.

It would buy one-carat diamonds and store them in a vault in Antwerp, Belgium, providing daily values with an as-yet-unnamed index. The fund is backed by a New York company, IndexIQ, that has brought 14 other exchange-traded funds to market in the last five years.

Wall Street waded into the diamond trade in the late 1970s and early 1980s, when inflation was exploding and investors were looking for hard assets. But when rates sank, so did the value of diamonds and the diamonds-as-an-investment proposition.

Citi analyst Oliver Chen, who covers the diamond industry, regards the proposed diamond ETF with caution. “Diamonds for end-use tend to be 98 percent consumer versus gold at 50 percent. So there could be a lot of volatility on those supply and demand characteristics.

“Within the context of the diamond market, De Beers and [Russia’s] Alrosa still have chunky market shares. On a combined basis that’s 60 percent. So it’s a relatively non-fragmented market, which is a unique characteristic in contrast to gold,” Chen told CNBC.

And it may get even more non-fragmented.

The Sunday Times in the U.K. reports that legendary investment group KKR wants to create the third-largest diamond company behind De Beers and Alrosa by combining the diamond operations of BHP Billiton and Rio Tinto.

Chen is, however, bullish on diamonds, projecting that prices will increase 6 percent annually for the next decade. He likes Toronto-based Harry Winston recommending it as a "buy" with a price target of $17 a share over the next 52 weeks.

Meanwhile, Harry Winston is looking to tap hedge funds, pensions, and other institutional investors by teaming up with a Swiss asset manager to create a $250 million fund to buy diamonds.

According to Chen, the difference between this investment fund and the proposed IndexIQ diamond ETF is the Harry Winston vehicle will only be open to qualified investors, will be capped at $250 million and will be a closed-end fund. 

Chen also thinks that Harry Winston’s luxury retail business is attractive as the company builds more salons globally in emerging markets such as China.

“Only 31 percent of Chinese brides wear rings versus about 80 percent for brides in the U.S. and Japan,” Chen pointed out.