SUSIE GHARIB: When you think about investments, stocks and bonds probably
come to mind most. But diamonds have out-dazzled both of them in recent
years. Diamonds have been surging in value, due to higher demand and
tighter supplies. But as Erika Miller explains, be prepared to dig deep
for sparkling returns.
ERIKA MILLER: Perhaps you are in a pink mood this Valentines Day or maybe
you are more of a traditional white kind of gal. Me, I couldn`t take my
eyes off the bling in this ring. Every piece of jewelry sold at Leviev is
one of a kind.
LISA KLEIN, EXEC. VICE PRESIDENT, LEVIEV: Whether it`s a 15-carat “D”
flawless, a 50-carat “D” flawless, or a 100-carat “D” flawless, these
stones are incredibly rare, due to their size, due to their color, due to
their cut. And especially when the three are combined, it makes them even
MILLER: Of course, you`ll have to pay accordingly, sometimes upwards
of $20 million an item. Let`s face it, only a small percentage of the
population can afford to shop here. But the customers who do buy these
diamonds view them as more than something beautiful to wear — they`re also
an investment. Five-carat diamonds have surged about 65 percent in the
past decade. That`s more than the Dow Jones Industrial Average and most
MARTIN RAPAPORT, PUBLISHER, RAPAPORT DIAMOND REPORT: Diamond prices
have done very well over the past decade, because we`ve seen a tremendous
expansion in India and China and other developing countries. Yesterday`s
suppliers have become tomorrow`s consumers.
MILLER: So, although gold may have been the sparkling investment of
the past decade, some think diamonds could outshine the yellow metal in the
coming years. BMO Capital Markets predicts the price of rough, uncut
diamonds will rise by 9 percent this year, with smaller gains in the next
several years. Unfortunately, diamonds are not an easy investment. There
are not any mutual funds or ETFs that invest solely in diamonds. Unlike
gold, they are not traded on a commodities exchange. And a word of caution
before you run out and buy diamonds at your local jeweler.
RAPAPORT: One should not buy diamonds as an investment unless they
know how they are going to resell them, because the bid ask price is huge. A consumer or a regular investor who is not in the diamond industry — buying a diamond as an investment is a bad idea.
MILLER: But that isn`t stopping the ultra-rich from shelling out
millions for beautiful jewelry. Quite the opposite. Leviev says political
and economic turmoil often increases the appeal of rock-hard assets.
KLEIN: It`s something tangible. It`s something that you have in your
safe, in your vault, in the bank, wherever that stone is. So that`s
something that gives our clients a sense of security.
MILLER: Not to mention something extraordinarily beautiful to wear
on your finger. Erika Miller, NIGHTLY BUSINESS REPORT, New York.