Diamonds: The Less Known Commodity: Olivut Resources

Everyone is talking about gold and silver these days, but nobody talks about diamonds. Let's have a little peek inside this sector.

There are many sorts of diamonds in different colors and different grades. The higher the grade, the more precious the gem is. Aside from being pretty, diamonds can also be used in industrial applications (Figure 1).

Figure 1: Diamonds in Industrial Applications

We live in the year 2012, and what is very important about 2012 is that we are at an inflection point. The diamond market is to be found in the developed world as Asian/emerging markets only have a 10%-30% stake in this market (Figure 2). This means that demand is going to keep growing in countries like China and India, while we won't have any new and significant discoveries. In fact, we haven't had any Tier 1 discoveries in over 17 years now. Tier 1 discoveries are very large and very high grade discoveries by the way.

Figure 2: Diamond Demand

As a result, we will get a huge supply and demand gap in the near future, starting from 2015 (Chart 1).

Chart 1: Production - Demand Curve Diamonds

This supply-demand gap will spark diamond prices and we can already see a recovery in diamond prices on chart 2. Consulting firms forecast a 3% to 10% price growth per annum in rough diamonds for the coming years due to China and India.

Chart 2: Diamond Price

So how do we play the positive fundamentals in the diamond market? We go after the biggest resource in the world and that can be found in Olivut Resources.

Find out more here.