The decade to come will be the years of the diamond

Diamonds are a girl's best friend, but they may also be a friend to investors looking for a safe haven from market storms.

�If you look back 20 years, there was no diamond acquisition culture in China. But today in Beijing, Shanghai, and Guangzhou, there is an obvious launch pad. 40% of brides in those cities are getting diamond engagement rings. It was zero 15 years ago." Gareth Penny, CEO DeBeers

The decade to come will be the years of the diamond. According to a report by top consultancy Bath and Company diamond demand is going to fast outgrow production. Demand will be particularly driven by India and China due to a doubling of the middle class in these countries.

"The appetite for high-quality diamonds in China and India is growing," notes Gerhard Prinsloo, the author of the report." In terms of market share, India and China will represent 30% by 2020, equal to that of the United States. Supply should only increase by 2.8% per year, leading to a "structural shortage"!"

Production and demand was equal at 135m carats in 2010. Current demand is 175 million carats. The demand for diamonds will reach 247 million carats in 2020. On the supply side, there have been no new discoveries of large diamond mines.

The supply and demand situation offers a scenario which points to higher diamond prices.