Diamonds sparkle as gold loses glitter

MUMBAI: Diamond as an investment assets is picking up pace in India. Although the pace is slow, this rise in investor interest is being fuelled by a combination of factors: rarity of a diamond, rapidly growing demand for this precious gem while supply is becoming a constraint, transparency, reliable certification, added security features and import duty differential with gold.

Consider this: Since July last, when the price of gold touched an all-time high of Rs 33,500 per 10 grams in the Mumbai market, the yellow metal has given a negative return of 10% to about Rs 30,000 now. In comparison, the price of diamond as measured by Solitaire Diamond, a leading player in the market, has gone up by over 10% for most of the good quality diamonds. Comparable over performance for diamonds are seen across various time horizons, data showed.

As an investible asset, diamond's biggest competitor is gold, and lately the rare gem has been scoring over the yellow metal on this front on several counts. "Diamond is the rarest and the purest piece of nature that can only be cut and polished but not mixed or merged with something else. Also it cannot be melted and reshaped (maintaining the same weight)," said Jignesh Mehta, co-founder, Divine Solitaires.