As gold prices make the headlines on an almost daily basis recently, the 40% surge in uncut diamond prices has been almost a secret, until now… and investors are cashing in, reports Nasdaq.com

Although diamond retail sales have fallen from $74 billion last year to $65 billion this year, prices for rough diamonds have risen more than 40% since February.

With the economic climate forcing luxury purchases to the bottom of the public’s buying list, ironically, it is exactly this that has caused uncut diamond prices to soar.

In reaction to the financial crisis, privately held De Beers Group, BHP Billiton, Rio Tinto, and Russian miner Alrosa all slashed production this year. However, these four diamond miners control over 90% of global production and as a result, prices have been naturally influenced through a Byzantine system of closed sales, secret long-term contracts and a few auctions leading to enormous profits.

The results speak for themselves, with BHP shares tripling over the last year and Rio Tinto shares up four fold. As RBC forecasts further major reductions in global diamond mine production, it is obvious that such companies have little incentive to drive down diamond prices when actually, they are literally, raking in the cash.