Gem sparkles in rush to diamonds

Diamonds are joining gold as a favourite safe haven.

Scared investors are spending millions on the sparkly lumps of carbon to spread out their wealth, helping miner Gem Diamonds today post a $79 million (£48 million) half-year profit, 10 times higher than the same time last year.

Gem's mines focus on producing the highest-quality diamonds, worth over $3000 a carat compared with the industry average of around $100.

Rocks worth $5 million and more are in demand from investors, said chief executive Clifford Elphick. "There's been a lot of interest in larger diamonds as everyone's got a bit frightened about the value of currencies," he said.

The dealers who sell Gem's stock, including Laurence Graff, have told Elphick the main customers are investors "who got burnt in the previous financial crisis and need to diversify". Many are in Asia. "The Hong Kong market has taken off in major way," Elphick added.

The profit surge was helped by rough diamond prices rising due to a lack of new mines. Gem, which stopped merger talks with Lucara Diamond of Canada in May, said its arrangement with Tiffany & Co to price fancy yellow diamonds from its Ellendale mine in Australia each month had pushed average prices up more than 50% since January.