Buy Diamonds, Not Gold25 Aug 2011 10:16
Prices are rising and here's how to benefit.
In many ways, gold and diamonds are similar. They are both dug out of the ground, are rare and highly prized, and their main use is in making jewellery.
But unlike diamonds, gold is fungible: one lump of it is much the same as another. At some time in prehistory mankind started using it as a medium of exchange and store of value, and the habit has stuck to this day.
It's the 38% of gold bought for investment, rather than the 50% used in jewellery (or the 12% industrial use), that has been driving the price inexorably upwards. I'm neither bullish nor bearish on gold, but it is easy to see how a price which is driven largely by sentiment can reverse quickly.
If you want to invest in something where the economics are more predictable, you could do a lot worse than diamonds. Now I'm not advocating that you catch the ferry to Antwerp and come back with a pocket full of shiny rocks. That's beyond the scope of this article and way beyond my competence and knowledge. But diamond miners can be a proxy for the gems themselves.
http://www.fool.co.uk/news/investing/2011/08/23/buy-diamonds-not-gold.aspx?source=ufwflwlnk0000001