And the next best thing: invest in mining firms

FOR investors who do not want to buy actual diamonds, another way to access this trend is by buying shares in diamond mining companies or investing in funds that own them.

The BlackRock Gold & General fund invests in Petra Diamonds, which has mines in South Africa, Tanzania and Botswana. FTSE 100 company Anglo American has an 85 per cent stake in diamond giant De Beers. Funds that invest in the diamonds business include Baring Global Mining, JOHCM UK Growth and Schroder Recovery.

With many precious commodities, such as gold, investors can plough money in through a tracker fund which simply follows the trade price of the chosen product – though there is not one following diamonds.

Charl Malan, senior analyst at investment manager VanEck, says: ‘Diamond prices are driven by supply and demand.

‘Supply is set to fall and, if the world continues its economic recovery, demand will increase. Diamonds differ from gold in that they do better when times are good.’

But investing in diamonds, whether actual stones or company shares, is incredibly risky so investors should only ever put a small proportion of their money in them.

Darius McDermott, managing director at London-based broker Chelsea Financial Services, says: ‘Investing in diamond-related companies comes with high risk as they are operating in some dangerous areas.

‘Buying diamonds is the obvious way of investing, but investors need to consider whether they would be able to store them safely.’