Fast Money

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Fast Money

Dirty Trade: Diamonds

In the Fast Money Dirty Trade, Eric Bolling takes a look at one precious commodity that gets shinier everyday thanks in part to Japanese demand.(Japan is the home to Mkimoto jewelry and half of Tiffany's International sales.) Diamonds are the dirty trade.

Eric says demand for diamonds is outstripping supply buy the billions.  China, India and Russia are showing an insatiable appetite for diamonds as their economies grow.  Production is down and demand is up with prices expected to rise 30-45% over the next 5 years.  As Eric says “Bling is back!”

Eric explains that DeBeers is responsible for 40% of the world’s diamond trade (no conflict diamonds.) and 45% of DeBeers is owned by Anglo America plc (AAUK). He says the stock is one fire and it’s a great trade.

Dylan asks why are diamond prices rising?

Eric says it’s the increased amount of wealth, globally. Consumers are demanding larger diamonds, it's that simple. However, he cautions that there’s a glut of smaller diamonds. Investors don’t want to own the small ones, says Bolling. It’s the large ones where you’ll find the fast money.

Questions? Comments?

Trader disclosure:
On MAR 19, 2007, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders Bolling Owns (CVX), Gold, Silver, Soybeans, is Short Corn. Strazzini owns (CHK), (EWG), (STM) GE is the parent company of CNBC.