IF you think the idea of investing in diamonds is a bit cliched, think again.

The sparkling stones still attract bigger investment interest than arguably any other collectable.

Since they are sold primarily by weight and quality with internationally accepted grading, the value of diamonds is consistent, no matter where they are traded.

In the context of blue-chip investments, diamonds let buyers scale their purchases to suit the moment, with reasonable certainty prices will remain steady whatever the turn of world events.

In times of economic depression, war or political unrest, diamonds are portable, compact and an excellent hedge, while other forms of investment may prove very complicated.

Easier to move around than a collection of vintage cars or a dozen old master paintings, there are central diamond markets in every major city capable of buying and selling for relatively fixed margins at the standard international price.

Diamonds are mined in a handful of centres across four continents.

Tightly controlled by international networks of dealers arranged as "bourses", rough stones mainly travel to London for sorting and classification.

While the simple grading covers 20 or so qualities, there are more than 5000 detailed categories into which each particular stone may fit.

After sorting, rough stones are directed to cutting centres in Antwerp where nearly 85 per cent of the total rough diamond trade takes place. After this, stones move on to diamond manufacturing centres in Israel, Belgium Real Estate News, India and New York. Similar centres operate in South Africa, Botswana, Russia, China, Sri Lanka, Thailand, Vietnam, and Mauritius.

The very best diamonds - in size and quality - may never be set in jewellery, but simply traded as loose stones, while the majority of stones cut into small sizes end up as ear and engagement rings, brooches and necklaces.

A significant drawcard for collectors, most of whom are (surprisingly) established male businesspeople, is the broad value range of diamonds.

The bigger the stone and better the quality, the higher the price, but even modestly sized diamonds of fine quality command steep prices.

Serious investors only look for stones of high clarity with few inclusions, or those with interesting antique histories.

All the rest, and there are a great many, are sold to jewellers and private collectors less attuned to international trade values.

Beyond this very large market for second-rate diamonds, there's an even larger market for imitations such as Fabulite and Cubic Zirconia.

Fabulite is the marketing name for an extraordinary man-made gem with the rather unappealing name of strontium titanate.

Fabulite has a colour dispersion value about 10 times as high as diamond and produces a fiery sparkle superior to most similarly scaled diamonds.

It became popular in the 1950s and is still available today.

More expensive than other recently invented imitation stones, Fabulite tends to reflect more colour than real diamonds but the distinction is so subtle that most amateur buyers will be easily fooled.

Under a spectroscope the distinction is much easier to see.

Cubic Zirconia is another synthetic stone often found pretending to be a diamond, but again with far more colour play than the real thing.

It has a melting point of 2750 degrees Celsius, and requires considerable skill.

The Cubic Zirconia appeared in the market reasonably recently and is often seen in cheap jewellery store sales masquerading as diamond.

The more reputable dealers will clarify the difference, albeit often in very small print. Another common imitation of real diamond is produced by laminating various cheaper stones together, sometimes with a piece of clear quartz at the bottom and top, sandwiching a thin piece of coloured glass or a thin mineral sample which, when cut and polished together, appears to be one natural piece.

A faceted top and bottom will reflect the thin slice of colour throughout the entire stone.

The only way to easily see it is to look "edge-on" right at the joint.

Gemstone dealers and high-end collectors rarely look at imitation stones but work within the various diamond bourses, or markets, trading top quality stones in the same way as stock brokers manage funds of stocks and shares.

If the top end of the market offers little in the way of big profit potential for investors with modest budgets, the estate jewellery trade can still turn up impressive bargains. Old stones cut in antique patterns, often dirty and unloved, can slip through auction sales and jewellery dealers at a fraction of their real value.

Diamonds, like anything, can be upgraded to suit modern fashions, including not just resetting in lighter modern styles, but recutting to improve their refractive qualities.

In Australia, the big city markets are well covered by a clique of knowledgeable dealers.

However, it's still quite possible to strike a bargain if you arm yourself with knowledge, the right information and a good quality jeweller's loupe.

A pocket scale is useful to help estimate size and weight - and an estimate is usually the best one can do if the stone is fixed in a setting and the property of someone else. The test of a successful buy will come when the stone is removed and properly tested after your purchase, so don't jump in without undertaking a good deal of research.

Bonham's in Sydney has regular estate auctions, often linked to chains of pawn shops selling off unclaimed stock, and it is well worth watching for quality diamonds.

Bonham's has achieved prices of nearly $100,000 for single loose stones several times over the past 18 months at its Sydney rooms.

While in each case the buyers were rather unglamorous looking older men, perhaps the stones went into something lovely for their niece.

The most expensive diamond sold at auction is "The Star of the Season" whichachieved $16.5 million in May 1995. It is one of over 2000 important diamonds owned by Sheikh Ahmed Hassan Fitaihi of Saudi Arabia.