Why are diamonds so expensive? And are they really worth it? In times of economic meltdown, what will actually retain more wealth? The 2 carat brilliant-cut diamond or the 14k gold band it is affixed to?
De Beers and other major players in the diamond industry are now supporting the concept of diamonds as an investment alternative to Gold. But isn't that a bit 'rich' coming from a company that has made millions by selling us diamond rings?
While the outlook on gold consumption for jewelry, in particular, and for industrial use, is largely a function of global economic activity, with its historic roots of serving as a form of money, gold traditionally maintains its value as currencies depreciate.
Many people naturally think about gold at the slightest sign of economic weakness. How many who view diamonds in the same way?
Granted, diamonds are easily transportable like gold and represent an incredibly high-ratio of cost to price but price trends for diamonds have shown little resemblance to those exhibited for gold in the past few years.
It appears to us that the safe-haven mantle remains firmly in gold's grasp. So if you are just about to buy a diamond engagement ring, why not save a fortune, buy a cubic zirconia engagement ring instead and invest the rest in gold!
And right now might just be one of the last best chances you have to do so. After a multi-month consolidation period, gold looks set to rally again coming into August 2012. Don't get phased with talk of 'to QE or not to QE'. QE is just one possible trigger to a gold price that is just begging to be catapulted to the super-$2000 level!
Disclosure: I am long GOLD.