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Archive for November 14th, 2007

Diamond Investing Part One

Wednesday, November 14th, 2007

Diamond Investing - Part OneDiamond Investing has a lot to do with the price of diamonds and can be a profitable business. Take all the diamond dealers around the world. Each one is making a profit by investing in diamonds.

However for the ordinary person diamond investing has some draw backs Firstly to be a diamond dealer takes a lot of expertise, experience and knowledge as well as the ability to break into the diamond dealers market.

In addition there is the well embedded perception, first introduced by DeBeers marketing and then buoyed up and continued by the various diamond markets around that, “Diamonds are forever.” i.e. one does not resell ones diamonds but keeps them forever. This has reduced the secondary market, that market in which one buys and sells diamonds, to a tight enclosed predominantly diamond dealers market.

Consequently, for the ordinary person to buy and sell a diamond, there is little if any profit in doing so, in fact one is much more likely to make a loss.

Having said that, there are ways in which one can turn a profit by investing in diamonds, if one is smart and is prepared to do some homework and also understand that diamonds, like any other investment, always carry risk.

There are two basic ways to invest in diamonds.

Buy to keep and buy to sell again.

There are also other factors to take into account.

What diamonds to buy. Does one make a hard investment or a soft investment? Hard means buying real physical diamonds you can hold in your hand. Soft means investing in companies that mine or deal in diamonds.

If buying hard diamonds, what factors need to be taken into consideration? The same for soft.

Taking these in turn. Buying diamonds to sell or keep would depend to some degree upon your reasons and investment strategy. What is the reason for investing in diamonds. To save or conserve assets or to turn a quick or medium profit?

Long term the value of diamonds will depend largely upon two things,. The hoarding of diamonds by such companies such as De Beers or Argyle Diamonds (the two biggest producers in the world currently) and the supply of diamonds from the ground. In fact more deposits are being found so there is little likelihood of their being a world wide short supply due to mining. Only recently Canada, which is relatively untapped have began to show some interesting deposits.

So as regards the price of diamonds, the shorter term value of diamonds does not change very much. Currently the value seems to raise buy around 5 percent a year. Not a large return in investment terms. And the draw back to buying diamonds from dealers is that you will pay retail and they do not buy back at retail but usually around 30 percent under wholesale which can be 50 percent of the retail.

End of Part 1

To see Part 2 go to Diamond Investing - Part Two

Diamond Investing Part Two

Wednesday, November 14th, 2007

Diamond Investing - Part TwoWhen it comes to the price of diamonds, polished and rough diamonds do not have all of the desirable attributes of investment vehicles, including liquidity, homogeneity and fungibility so a grading and certification by recognized laboratories goes some way to redressing this. Weight and cutting proportions are important factors which can be precisely measured and which can make a big difference to the value of a diamond. These, plus colour and clarity, grades need to be determined by gemologists.

Most diamonds are sold by dealers retail and this encompasses a high mark up or premium. The difference between retail and wholesale can be up to 100 percent . This means that dealers are not going to be buying back diamonds over the price they have sold them but for considerably less in fact.

This means that if you want to buy to keep or buy and sell diamonds you will have to [purchase them at wholesale prices or less.

This is not very easy except that it is possible with a lot of searching and browsing. Auctions probably offer the best chance of this although it is likely that auctions, such as eBay for example, will have many poor quality diamonds and the price you pay will depend on factors such as perceived need and want for a particular diamond resulting in more energetic bidding.

Diamonds are not going to increase in price on the basis of increased rarity or even through the maintenance of existing monopolies simply because there is a surplus of diamonds and the existing monopolies are going to continue in order to keep the current price of diamonds maintained.

The larger stones are more likely to increase in value however with auctions, such as Sotheby’s and the ilk,. But this demands a high capital cost and is mostly out of the range of most people.

Probably the best way to invest in diamonds is simply buying stocks in selected diamond companies or mines. Which ones to invest in will depend on current conditions, the state and operating management of the mine in question and other general market factors. It will require some considerable study

And contrary to popular belief, diamonds are not forever. They very gradually revert to graphite, at a rate dependent primarily on temperature.

Currently and historically, the wholesale diamond price has been controlled by De Beers Group, with an estimated 45 to 50% of the market. The Australia’s Argyle Diamond Mine (owned by the Rio Tinto Mining Group) is the largest producer of diamonds by volume. Botswana is currently the largest producer of diamonds with mines operated by Debswana, a joint venture between De Beers and the Botswana government. However, over the last decade other producers have developed new mines, in Russia and Canada for example, challenging De Beers’ dominance (historically De Beers market share has been 80%). De Beers raised diamond prices three times in 2004 by a total of 14%.

In short, diamonds are a problematic investment. While it is easy to buy a diamond, it is not easy to sell one unless one is already an established diamond merchant.

There are firms that offer “investment-grade” diamonds for sale to the public but a prudent investor will ask for a written promise to rebuy the diamonds at or near the purchase price within a specified period and if such a guarantee in writing is declined then would not make the purchase.

Diamonds are basically not an investment item for the ordinary person. Stocks and shares really offer the only investment in diamonds worth looking at. Diamonds are really to wear and for use in industry.

Diagem Receives the GIA Grading Report on its 3.07 Carat Pink Diamond

Wednesday, November 14th, 2007

heart shaped pink diamondDiagem Inc. (”Diagem” or “the Company”)(TSX VENTURE:DGE) has received from the Gemological Institute of America (”GIA”) the grading report (the “GIA Report”) on its cut and polished 3.07 carat heart-shaped diamond. The GIA Report stated that the diamond colour is a Fancy Orangey-Pink with an even distribution and a clarity grade of SI2 (Slightly Included 2). The GIA graded both the polish and symmetry of the diamond as Very Good.

The GIA laboratory determined the 3.07 carat diamond to be a rare type IIa pink diamond. Reportedly less than 2% of all gem diamonds fall into the type II category. Type II diamonds contain little if any nitrogen, often have relatively few inclusions and are noted for their mostly homogenous color in the rough.

Denis Francoeur, CEO of Diagem Inc, stated “The grading report from the GIA is additional evidence that the Juina area, and more specifically the Chapadao cluster, is capable of producing extremely rare and valuable diamonds”.

The diamond was originally a rough 9.32 carat diamond when recovered by artisanal miners less than three kilometres downstream from Diagem’s Chapadao cluster of kimberlites that were discovered in late 2006. Diagem purchased the diamond to demonstrate the potential of Chapadao kimberlites. The Company has also documented the recovery of other pink diamonds by artisanal miners in the area surrounding the Chapadao cluster.

The GIA report indicates that, unlike many other coloured diamonds, the color in the Type II pink diamonds can not only be caused by impurities, but it may also be a result of the diamond’s exposure to heat and pressure during transportation into the Earth’s crust. This corroborates the observations of Dr. Felix Kaminsky, 2001, in a publication entitled “Super Deep Diamonds from the Juina area, Mato Grosso State, Brazil”.

This press release has been reviewed by Mousseau Tremblay, Ph.D., P. Eng., Diagem’s Chairman and a qualified person under National Instrument 43-101.

About Diagem

Diagem Inc. is a publicly listed Canadian exploration mining company focused on primary diamondiferous resources in the Juina Diamond Province of Mato Grosso, Brazil, where it controls a large portfolio of mineral properties. The Company has one advanced development stage project and recently discovered two clusters of kimberlite pipes believed to be the main sources of Juina’s historical alluvial diamond production.

Forward-looking statements: Except for statements of historical fact, all statements in this news release, without limitation, regarding new projects, acquisitions, future plans and objectives are forward-looking statements which involve risks and uncertainties. There can be no assurance that such statements will prove to be accurate; actual results and future events could differ materially from those anticipated in such statements.

SOURCE: Diagem Inc.

Diagem Inc. Denis Francoeur CEO 514-866-6001 (ext 265) Diagem Inc. Paul Einarson CFO 514-866-6001 (ext 251) Nicole Blanchard Investor Relations 450-973-6600 www.diagem.com

Diamond Christmas Tree

Wednesday, November 14th, 2007

Diamond Christmas TreeIf you have a spare 1.8 million dollars to spurge out this Christmas there is a 400 diamond Christmas Tree ready and available for sale.

The Takashimaya Department Store in Tokyo, Japan is offering this 40 centimeters, or 16 inches in height, tree for a symbolic 200.7 million yen from Wednesday as part of its end of year sales campaign.

The tree is actually a small tower of preserved roses and a cute big red teddy bear but also features 100 carats of diamonds from South Africa and Australia. The tree is based upon a design by the well known Parisian flower boutique, Claude Quinquad.

The Department store commented, ” The smaller diamond pieces “sparkle charmingly like morning dew on petals, while two-carat and three-carat pieces mesmerize admirers with their noble glow.”

Many unusual objects have been made from Diamonds including Faberge style eggs and bras made of all diamonds and white gold.

This Diamond Christmas Tree is sure to attract much interest and is available at the Takashimaya Department Store in Tokyo for anyone with a generous shopping list!

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