DIAMONDS aren’t just a girl’s best friend they’re attracting investors as well.
Not into diamond exploration companies, but into sparklers that have already been found diamonds you can buy in shops and now online from BHP.
Jewellers report that demand for diamonds is soaring at the expense of gold.

Certainly the ailing dollar has boosted the value of diamonds but, from an investor’s point of view, best of all has been the GST.

The problem in the past for diamonds as an investment, as distinct from being part of a jewellery piece where indeed they are forever, has been that you paid retail prices on a wholesale good. Because of the 32 per cent sales tax, a newly acquired diamond would lose one-third of its value the moment you signed your Bankcard docket.
Thanks to the GST, which has had the bonus of cutting the price of diamond jewellery by up to 8pc, what you pay in the shop is close to the same value as when you walk out.

There’s still the retailer’s margin, but even that is changing. Worths Diamonds by Appointment in Sydney is the first to sell diamonds straight to the public. Prices, which begin about $3,000, are capped at 10 per cent above world wholesale prices.

And BHP’s new online site cuts out six middlemen between the mine and the shop.

As BHP’s Lindsey Hughson points out, 80pc of the value of a piece of diamond jewellery is the stone itself.
So why not just buy the diamond? You can always have a jeweller adorn it later.

Although diamonds are coming into their own as an investment, with the benchmark one carat GVVS1 (a good grade one white diamond) appreciating by 35 to 40pc in a year in Australian dollars, they have come off a low base.

All right, low is relative - Nicole Kidman’s sparkler necklace in the movie Moulin Rouge is worth $1.8 million but for most of the 90s diamond prices struggled to keep up with inflation. Gold, by the way, the supposed hedge against inflation, went full-throttle backwards.

“More and more are buying diamonds as an investment where it used to be in gold,” said Nic Cerrone, of Cerrone Jewellery. “Women are addicted but even men are buying now.

“The GST has made us more competitive. Australia is now the cheapest place in the world to buy diamonds.”
Worths’ David Kirwan holds no illusions.

“If all the diamonds in the world’s markets were released at once, there’d be more than enough to give every American a cupful,” he said.
“Most stock is rubbish,” he added, because they have only been cut for size or weight.
A good diamond, however, is worth, er, a goldmine.

Fortunately diamond shares are much cheaper, if less dazzling.
For shares from 3¢ to about 30¢ there’s Astro Mining (ARO), Quantum Resources (QUR), Diamond Rose (DRN), Kimberley Diamond Company (KIM), Cluff Resources Pacific (CFR), Striker Resources (SKR), Dioro Exploration (DIO), Australian Kimberley Diamonds (AKD), Rimfire Pacific Mining (RIM), Carnegie (CNM) and Prima Resources (PRR).

Sparklers for sale online
BHP will sidestep jewellers and the de Beers cartel to sell 1,300 diamonds from its majority-owned Canadian mine direct online.
Its new www.aurias.com website will sell diamonds which will be laser inscribed to ensure authenticity, visible only under a microscope.
There is a three-month money back guarantee.

Prices range from $858 for a 0.28 carat diamond to $34,837 for 1.56 carats.
The website says buyers should look for the 4Cs: cut, colour, clarity and carat.
But leading jeweller Nic Cerrone adds 3Ps: precision, proportion and professionalism of the cut by the jeweller.