The Royal Currency
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- Published on Wednesday, 11 July 2012 15:24
- Written by Andrew Snyder, Editorial Director, Inside Investing Daily
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I am as unromantic as they get... so I'm told.
I don't mean to be prosaic, though. I try my best at the sappy stuff. I really do. But it never seems to work out.
For our latest anniversary... I took my bride to an NRA banquet. The tickets were free, so I splurged on a couple of glasses of wine. I thought it was a hit. She wasn't too thrilled.
For my wife's recent birthday... I assembled a bouquet of flowers from the various beds surrounding our property. Instead of buying a heartless bouquet ripped from an anonymous greenhouse, I put in the effort and delivered something with a local flair.
Again, I thought it was a hit. Her? Not so much. "It's the thought that counts," she said. The gift-givers kiss of death.
Now, that rock on her finger... that's a different story. That puppy was an investment.
I know it's cliché. But if diamonds are a girl's best friend... they're an investor's dream come true. In fact, my wife may just have a new investment or two in her future.
Talk about romantic!
The great part is the herd doesn't know how lucrative diamonds have been. All sorts of savvy investors are quietly raking in big gains from what I call the "currency of royalty."
With the fiat currency scam pilfering the pockets of ordinary investors, it makes perfect sense that diamonds are one of the hottest investments in the "unconventional economy."
It's like I tell my readers in their next monthly issue. Diamonds are quickly transforming from an individual investment to a commoditized asset.
In fact, what's happening is almost identical to what took place in the gold market 20 years ago.
Hedge funds are jumping into the action. We've seen the creation of several closed-end funds. And very soon we are likely to see a diamond-backed ETF. As I write, the good folks at the SEC are reviewing the idea (most likely they're checking to make sure the right Wall Street crooks get their share of the profits).
There is a reason so many of the investing world's savviest minds are shunning ordinary stocks and are turning to diamonds.
The world's hardest rock is a moneymaker.
What really has me excited is something that has happened only over the past year or so. Diamonds are breaking their traditional correlations and are becoming the new go-to safe haven.
In other words... diamonds are the new gold.
"Over the past decade, diamond prices have been highly correlated to gold prices. But, the past 24 months gold has been heavily influenced by global macro-economic uncertainty and inflationary risks," said Ansar Ali, the CEO of Elite Gems.
"Although these factors influence diamond prices, they do so to a lesser extent. Demand and supply have been the main drivers for diamond price movements."
Like the insider says, it's all about supply and demand.
For the past five years demand has risen while supply has shrunk. And very recently -- thanks to booming demand in Asia -- demand has eclipsed supply.
In other words, we've reached the tipping point... the point where the charts turn parabolic.
The problem lies in the fact that diamond mining is a tough business. It's expensive and risky. When times are good, the world's big miners can afford to take the risk.
But when times are tough and commodity prices are weak -- like right now -- the miners want out. In fact, Rio Tinto (RIO:NYSE) and BHP Billiton (BHP:NYSE) have recently announced their plans to shutter some of the largest diamonds mines on the planet.
With the low price of copper, silver and iron ore... they don't have the cash they need to pump into uncovering new diamond reserves.
It is great news for investors.
It means the power of the diamond industry is in the hands of just one, maybe two, key suppliers.
That is why in the next issue of Unconventional Wealth I break down the opportunities hidden in the "royal currency" market and show readers three very distinct ways to take advantage of what's happening in the diamond market.
If you like gold... you'll love diamonds. My wife sure does.
Heck, I may be a hopeless romantic after all.
From the Inside,
Aaron
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