Look to the East for the Future of Diamonds

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Sean Brodrick takes a closer look at diamonds and advises on the future of this natural resource. In this issue of Money and Markets, Mr. Brodrick examines the demand for diamonds and where it is expected to grow over the years.

Sean Brodrick takes a closer look at diamonds and advises on the future of this natural resource. Mr. Brodrick examines the demand for diamonds and where it is expected to grow over the years.

The price of polished diamonds is rising at a rate of about 10 percent year over year, and the falling dollar could accelerate that surge. However, most diamond mining and exploration stocks haven't joined the rally in natural resource stocks over the past 12 months. These two facts could mean there is potential for significant upside in diamond stocks.

Diamond stockpiles are down 7.5 percent since 2000, according to a July report from Canada's National Bank Financial. And according to RBC Capital Markets, no new mines are scheduled to start production in the next three to five years.

That supply squeeze is driving prices up. Prices of five-carat polished diamonds jumped 8.4 percent in the first half of this year and quadrupled the advance of the year-earlier period, according to National Bank Financial.

Meanwhile, demand is getting stronger. According to Harry Winston Corporation, the global luxury diamond sales leader, worldwide diamond jewelry sales rose 25 percent to about US$70 billion in 2006 from $55 billion in 2004.

The U.S. is the world's biggest consumer of diamonds, accounting for roughly half of world retail diamond sales. And annual incomes in India and China, the two fastest-growing diamond markets, are rising as much as 18 percent a year.

Looking ahead, the supply/demand gap in diamonds is expected to widen starting in 2008.

"This is mainly due to that rising demand in China and India. According to De Beers, the size of the diamond consuming market in India and China is expected to post a compounded annual growth rate of 7 percent. The diamond-consuming market in these two Asian countries alone is expected to double from 33 million consumers today to 65 million consumers by 2015," Mr. Brodrick says.

To read this issue online, please visit:

Sean Brodrick joined Weiss Research in 2000 as an analyst, bringing more than 25 years experience as a journalist and financial analyst to the position. He is Weiss Research's small-caps specialist, especially in natural resources, and is the editor of the company's Red-Hot Canadian Small-Caps, as well as a regular contributor to its daily e-letter, Money and Markets.

Previously, Mr. Brodrick was the investment director of The Sovereign Society, the world's leading publisher of offshore asset protection strategies and global investment opportunities.

Recognized for his expertise on Canadian and Australian investment opportunities, Mr. Brodrick has been featured on many financial talk shows, including CNBC Squawk Box and Bloomberg Market Line. He is a weekly guest on Market Matters Radio, a contributing columnist to MarketWatch.com and a frequent commentator on one of Canada's premiere financial websites, HoweStreet.com. His report, "70 Days to Empty," has garnered acclaim for its analysis of the forces pushing America toward its next oil crisis and was described by

The Daily Reckoning as "the most important report you're likely to read this year," while his knowledge of uranium has helped investors earn solid gains on the commodity.

Mr. Brodrick holds a B.A. degree from the University of Maine.

Money and Markets (http://www.moneyandmarkets.com) is a free daily investment newsletter from Dr. Martin Weiss and Weiss Research analysts offering the latest investing news and financial insights for the stock market, including tips and advice on investing in gold, energy and oil. Weiss Research, Inc. is located in Jupiter, Florida. For more information about our editors, or to set up an interview, please contact Jennifer Moran at 561-627-3300 or visit http://www.moneyandmarkets.com.

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