Still thinking about that perfect Christmas gift for someone special? Still mulling over a good investment going forward?

Two distinct questions with two totally different answers, right? Maybe not… Diamonds could be the answer to both.

For centuries, diamonds have served as a preserver of wealth, along with gold and silver. And like precious metals, diamonds are also portable and usually liquid.

Along with being a special gift, diamonds can be a great portfolio diversification tool. Especially now that the outlook for diamonds is rather rosy, according to the consultancy Bain & Company.

A Sparkling Outlook

Bain says in a recent report that demand for diamonds is strongly increasing in the top three markets for diamond jewelry – the United States, China, and India – at a high single-digit rate for 2014.

China is quickly catching up to the United States as the No. 1 importer, as giving diamond engagement rings becomes a part of mainstream Chinese culture. Such a practice was practically unknown a mere decade ago.

China alone now accounts for 15% of the global diamond market, from less than 3% in 2003. Most experts believe the combination of the Chinese and Indian markets will equal U.S. diamond demand in the next decade or so.

Against this backdrop, there's a rather limited supply growth. There hasn't been a major diamond discovery since 1997. Last year, rough diamond output – measured in carats – rose by only 2%.

Going forward, Bain agrees with others in the diamond industry who say that, beginning in 2019 or 2020, diamond output will actually decline by about 2% annually. It's a result of aging mines, with some major mines having only about 10 years of life left.

De Beers, which is part of Anglo American PLC (AAUKY), said in September, “Unless major new discoveries are made in the coming years, supply can be expected to decline gradually from 2020.”