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Saturday, April 16, 2011

INVESTMENT

INVESTMENT EXTRA by IAN LYALL: Can diamonds be your best friend?



If the financial crisis increased the popularity of precious metals, then it had the opposite effect on the £45billion-a-year diamond jewellery market. In the immediate aftermath of the meltdown it flat-lined as the US and Japan reined back their spending.
The rebound in the market for rough stones began in 2009, but demand for polished diamonds remained subdued.
Only recently has the price of the finished product begun to pick up pace as the cutters of Surat - in the Indian state of Gujarat - New York and Tel Aviv exhaust their stockpiles.




Long-term bet: Supermodel Iman Bowie has the right idea - buying jewellery is probably the safest way to invest 
Now City broker Charles Stanley reckons we are on the cusp of what it calls a 'structural bull phase'. In plain English this means a sustained period of rising prices.
There is evidence to support this assertion. The world-recognised Rapaport diamond price index is up 16.3 per cent in the year to date, with the average price for polished stones ahead 6.6 per cent in March alone.

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Demand from the newly-minted middle classes of China and India is now the driving force behind the surge of diamond prices.
And it should be noted the two emerging economic superpowers have been largely unaffected by the financial distress seen in the West.
At the same time there is the small matter of supply, which is in decline.
It hit a peak in the 1980s with the industry sitting on up to 80 years worth of stones to a position where today it is below 20 years.
'Diamonds have very definitely come back into fashion,' says Paul Loudon, whose company Diamond-Corp owns the historic Lace mine in South Africa.
The former analyst adds: ' In response to the price collapse in 2008 all the major producers cut back production especially De Beers, the world leader. So supply is really tight.
'The demand side is driven by an almost insatiable appetite from China and India. For the foreseeable future that is likely to grow.'
But how does an investor make money from the diamond market? Well the short answer is with difficulty.
Buying and holding diamond jewellery is one obvious way, but there are few other means.
Exchange traded funds that specialise in gold are ten-a-penny. However you'll struggle to find an equivalent diamond market investment opportunity.
Probably the only reliable way of hitching your wagon to that 'bull cycle' is to buy into the companies that mine and explore for the stones.
If you want a piece of the big daddy De Beers, which dominates the market, then you might consider buying shares in Anglo American, which owns 45 per cent of the private company - founded by Cecil Rhodes and which today is chaired by the billionaire Nicky Oppenheimer.
However in doing so you are also acquiring a major exposure to the bulk commodities industry.
Otherwise there are around ten specialist diamond companies whose shares are quoted here in the UK.
For the more adventurous the Toronto and Australian exchanges are havens for these companies.
They split into two groups - those with producing mines and those searching for diamonds.
Buying shares in an exploration company is a high risk, high reward investment.
Some stones are recovered from mud and gravel and are known as alluvial diamonds.
Most, however, are embedded in kimberlite, a hard volcanic rock that is forced through the earth's crust in dense vertical formations called pipes.
And here's where it gets difficult. There are fewer than 3,000 kimberlites in the world, with only 300 containing any diamonds at all.
And of those 300, probably only 50 have stones in the economic concentrations needed to create a mine.
Even then it takes a major feat of mining engineering to get at the kimberlite and then get at the gems.
So the chances of success are slim. And beware, explorers will issue equity at 12-to-18-month intervals to replenish the coffers, and you as the investor must decide whether you buy the shares or risk being diluted out of sight.
That said, expect the shares to take off if the prospector strikes it lucky.
A safer bet is the company with a producing mine. But even then there are a few wrinkles to look out for when doing your research.
Make sure there is sufficient supply of the sparklers - for ten years or more.
And that enough of them are of gem quality to make the business viable and profitable.
OUR VERDICT: Investing in diamond companies is not for widows and orphans. In fact a purchase from the jewellers may be a safer - and more satisfying - long-term bet.
MAKE IT YOUR QUEST TO SEEK OUT OIL COMPANY
Nigel Hares has spent £3.3million building up his shareholding in EnQuest, the North Sea oil and gas company.
The chief operating officer bought the shares in two tranches.


The first was acquired at an average price of 140.62p for a total of £1.9million, while the second cost him £1.4million at 143.86p a share.
His shareholding in EnQuest is now worth close to £5million.
With 40 years experience of the oil industry, 22 of them with BP, it would be a brave investor that ignored this buy signal.
EnQuest has 26 production licences and earlier this month announced a tenfold increase in annual profits to £101million, alongside a significant hike to its production figures and reserves.


Diamond is the ultimate gemstone, having few weaknesses and many strengths. It is well known that Diamond is the hardest substance found in nature, but few people realize that Diamond is four times harder than the next hardest natural mineral, corundum (sapphire and ruby). But even as hard as it is, it is not impervious. Diamond has four directions of cleavage, meaning that if it receives a sharp blow in one of these directions it will cleave, or split. A skilled diamond setter and/or jeweler will prevent any of these directions from being in a position to be struck while mounted in a jewelry piece.


As a gemstone, Diamond's single flaw (perfect cleavage) is far outdistanced by the sum of its positive qualities. It has a broad color range, high refraction, high dispersion or fire, very low reactivity to chemicals, rarity, and of course, extreme hardness and durability. Diamond is the April Birthstone.

In terms of it's physical properties, diamond is the ultimate mineral in several ways:
Hardness: Diamond is a perfect "10", defining the top of the hardness scale, and by absolute measures four times harder than sapphire (which is #9 on that scale).

Clarity: Diamond is transparent over a larger range of wavelengths (from the ultraviolet into the far infrared) than is any other solid or liquid substance - nothing else even comes close.

Thermal Conductivity: Diamond conducts heat better than anything - five times better than the second best element, Silver!

Melting Point: Diamond has the highest melting point (3820 degrees Kelvin)

Lattice Density: The atoms of Diamond are packed closer together than are the atoms of any other substance

Tensile Strength: Diamond has the highest tensile strength of any material, at 2.8 gigapascals. However, that does not quite translate into the strongest rope or cable, as diamond has cleavage planes which support crack propagation. The strongest ropes can likely be made from another material, carbon nanotubes, as they should not suffer from the effects of cracks and break. Still, if a long, thin, perfect crystal of diamond could be manufactured, it would offer the highest possible pulling strength (in a straight line - don't try to tie it in a knot!)

Compressive Strength: Diamond was once thought to be the material most resistant to compression (the least compressible). It is the material that scientists use to create the greatest pressures when
testing matter. However, the rare metal Osmium has recently been shown to be even less compressible (although it is not as hard as diamond). Diamond has a bulk modulus (reciprocal of compressibility) of 443 GigaPascals (GPa). The bulk modulus of the metal osmium has recently been found to be 476 GPa, about 7% greater than diamond.
Diamond is a polymorph of the element carbon. Graphite is another polymorph. The two share the same chemistry, carbon, but have very different structures and properties. Diamond is hard, Graphite is soft (the "lead" of a pencil). Diamond is an excellent electrical insulator, Graphite is a good conductor of electricity. Diamond is the ultimate abrasive, Graphite is a very good lubricant. Diamond is transparent, Graphite is opaque. Diamond crystallizes in the Isometric system and graphite crystallizes in the hexagonal system. Somewhat of a surprise is that at surface temperatures and pressures, Graphite is the stable form of carbon. In fact, all diamonds at or near the surface of the Earth are currently undergoing a transformation into Graphite. This reaction, fortunately, is extremely slow.


Diamonds are found in kimberlite pipes (the cores of certain volcanoes originating beneath thick plates of the Earth's crust), and in alluvial deposits resulting from the erosion of those pipes. Nanodiamonds are also found as presolar grains in meteorites, and presumably in asteroids and comets.



The Mineral Diamond
Diamond - the Ultimate Gemstone
Diamond Mining Around the World
The History and Lore of Diamonds
Buyer Beware - Imitation Diamonds
Diamond - the April Birthstone
For natural diamond mineral specimens, see our diamond specimens page.
PHYSICAL CHARACTERISTICS:
Color is variable and tends toward pale yellows, browns, grays, and also white, blue, black, reddish, greenish and colorless.
Luster is adamantine to waxy.
Transparency crystals are transparent to translucent in rough crystals.
Crystal System is isometric; 4/m bar 3 2/m
Crystal Habits include isometric forms such as cubes and octahedrons, twinning is also seen.
Hardness is 10
Specific Gravity is 3.5 (above average)
Cleavage is perfect in 4 directions forming octahedrons.
Fracture is conchoidal.
Streak is white.
Associated Minerals are limited to those found in kimberlite rock, an ultramafic igneous rock composed mostly of olivine.
Other Characteristics: refractive index is 2.4 ( very high), dispersion is 0.044, fluorescent.
Notable Occurrences include South Africa and other localities throughout Africa, India, Brazil, Russia, Australia, and Arkansas.
Best Field Indicator is extreme hardness.

Thursday, April 7, 2011

diamond bazar





The name diamond is derived from the ancient Greek (adámas), "proper", "unalterable", "unbreakable, untamed", from ἀ- (a-), "un-" + δαμάω (damáō), "I overpower, I tame".[3] Diamonds are thought to have been first recognized and mined in India, where significant alluvial deposits of the stone could be found many centuries ago along the rivers Penner, Krishna and Godavari. Diamonds have been known in India for at least 3,000 years but most likely 6,000 years.





Diamonds have been treasured as gemstones since their use as religious icons in ancient India. Their usage in engraving tools also dates to early human history.The popularity of diamonds has risen since the 19th century because of increased supply, improved cutting and polishing techniques, growth in the world economy, and innovative and successful advertising campaigns.


In 1772, Antoine Lavoisier used a lens to concentrate the rays of the sun on a diamond in an atmosphere of oxygen, and showed that the only product of the combustion was carbon dioxide, proving that diamond is composed of carbon. Later in 1797, Smithson Tennant repeated and expanded that experiment. By demonstrating that burning diamond and graphite releases the same amount of gas he established the chemical equivalence of these substances.

The most familiar use of diamonds today is as gemstones used for adornment, a use which dates back into antiquity. The dispersion of white light into spectral colors is the primary gemological characteristic of gem diamonds. In the 20th century, experts in gemology have developed methods of grading diamonds and other gemstones based on the characteristics most important to their value as a gem. Four characteristics, known informally as the four Cs, are now commonly used as the basic descriptors of diamonds: these are carat, cut, color, and clarity. A large, flawless diamond is known as a paragon.

In mineralogy, diamond is an allotrope of carbon, where the carbon atoms are arranged in a variation of the face-centered cubic crystal structure called a diamond lattice. Diamond is less stable than graphite, but the conversion rate from diamond to graphite is negligible at ambient conditions. Diamond is renowned as a material with superlative physical qualities, most of which originate from the strong covalent bonding between its atoms. In particular, diamond has the highest hardness and thermal conductivity of any bulk material. Those properties determine the major industrial application of diamond in cutting and polishing tools.

Diamond has remarkable optical characteristics. Because of its extremely rigid lattice, it can be contaminated by very few types of impurities, such as boron and nitrogen. Combined with wide transparency, this results in the clear, colorless appearance of most natural diamonds. Small amounts of defects or impurities (about one per million of lattice atoms) color diamond blue (boron), yellow (nitrogen), brown (lattice defects), green (radiation exposure), purple, pink, orange or red. Diamond also has relatively high optical dispersion (ability to disperse light of different colors), which results in its characteristic luster. Excellent optical and mechanical properties, combined with efficient marketing, make diamond the most popular gemstone.

Most natural diamonds are formed at high-pressure high-temperature conditions existing at depths of 140 to 190 kilometers (87 to 120 mi) in the Earth mantle. Carbon-containing minerals provide the carbon source, and the growth occurs over periods from 1 billion to 3.3 billion years (25% to 75% of the age of the Earth). Diamonds are brought close to the Earth surface through deep volcanic eruptions by a magma, which cools into igneous rocks known as kimberlites and lamproites. Diamonds can also be produced synthetically in a high-pressure high-temperature process which approximately simulates the conditions in the Earth mantle. An alternative, and completely different growth technique is chemical vapor deposition (CVD). Several non-diamond materials, which include cubic zirconia and silicon carbide and are often called diamond simulants, resemble diamond in appearance and many properties. Special gemological techniques have been specially developed to distinguish natural and synthetic diamonds and diamond simulants.