The threat of military strikes against Iran - and the inflationary fallout which would probably result - is fuelling demand for investment grade diamonds, ratcheting it up further from the levels seen due to the uncertain global economic backdrop, according to Saul Singer of Fusion Alternatives Investment Management.

Singer notes that demand for very high-end investment diamonds has significantly increased in the Gulf States – a region which already has a strong tradition of such investments – and also cites the recent volatility in the gold and precious metals markets as having further boosted demand.

After the meteoric rise of gold last year, it has fallen below the $1,700 price barrier for the first time in six weeks, and its correction could see the precious metal go down to $1,500 per ounce level, he says. As a result, previous “gold bugs” are looking to other tangible alternative investment asset classes, like diamonds.

Singer predicts a significant uptick in investment diamond purchases due to their current attractive valuations and positive prospects. “Investment diamond prices are down around ten percent on the level they were at six months ago, while the overall medium-to-longer term projections point to an annual price growth rate of 12-14 per cent,” he says. Therefore, in his view, savvy investors could be poised to pile in.

Year-to-date, the global diamond trading markets have remained relatively sluggish amid uncertain market sentiment. That said, January saw the unveiling of the "Tsarevana Swan" - a piece which made the Guinness Book of World Records for "the most diamonds set in one ring wearable on the human finger." The ring, which weighs 44.72 grams and contains a total of 10.48 carats of diamonds, is priced at an eye-watering $1.3 million.