Diamonds are likely to become even dearer in future. Average prices for rough diamonds are up by 10% year-on-year, as Steve Hawkes notes in The Times.
Global demand is expected to climb by an annual 5%, thanks to increasingly wealthy consumers in developing countries, notably China, India and Russia, while supply is tight.
Stockpiles have slumped by 75% since 2000, according to Canada’s National Bank Financial, while there has been no major discovery in the past 15 years and no large sources of supply are scheduled to come onstream.
Given this squeeze, Philip Kenny of Firestone Diamonds reckons “we could see another five years of strong rising diamond prices”, while Sergey Vybornov of Russia’s Alrosa, the world’s number-two miner, expects prices to hit “unprecedented levels”.
Given that investing in small explorers can be risky, investors keen to cash in on higher diamond prices should explore Canada’s Aber Diamond (TSX:ABZ), says Wirtschaftswoche. Uniquely, the group concentrates on both mining and retailing. It owns 40% of Canada’s Diavik diamond mine and also owns the US-based luxury diamond jewellery retailer, Harry Winston. Aber, which recently announced record quarterly sales, is deemed a buy by UBS.