In Diamonds Are Forever, James Bond is pitted against the evil Blofeld. The MacGuffin this time around is diamonds. Why? Blofeld wanted a cozy retirement. No, no, I'm kidding. He needed diamonds to focus a satellite-based Destructo-beam at various targets he sought to obliterate.

Fortunately, investors need not concoct as elaborate a scheme to benefit from owning diamonds. Crushed carbon is a go-to holding for me in bad (and good) economic times because it's a hard asset – something that tends to retain its value over the long term. A diversified portfolio should always have some hard asset exposure, and for me this includes actual gold bullion held by the Central Fund of Canada (NYSE: CEF). It also includes oil companies Chevron (NYSE: CVX) and ExxonMobil (NYAE: XOM), a more or less direct way to play black gold.

So how does one actually get hold of diamonds, short of signing on as one of Blofeld's henchmen? My suggestion is buying Harry Winston Diamond (NYSE: HWD). The company is interesting because it has two different components – a retail side and a mining side.

Dig deep
The mining side is the hedge for bad times. The company owns 31% of the Diavik Diamond mine in Canada. The mine is believed to have at least 10 years' worth of diamonds in it, produced at 8 million carats annually. So short of Bond dumping a nuke down the shaft and wiping it out, those diamonds are going to be there, in bad times and good.

And while the value of diamonds will fluctuate somewhat over time, history has shown they will always retain some value -- value that makes them as good as or perhaps better than greenbacks. If you own Harry Winston, you own diamonds. And while it is possible that the value of diamonds could completely crater one day, my own opinion is that just ain't gonna happen. Almost every girl wants one on her finger and trust me, like Bond, I've been around enough of them to know.

That means that Harry Winston will always have a tangible book value backed by a hard asset.

That one is purty!
On to the retail side. You should know that Tiffany (NYSE: TIF) has a deal to purchase $50 million worth of diamonds each year from Harry Winston. That's right, that little blue box you just got your girl may have a Harry Winston in it.

The company is also doing a really smart thing by selling its own diamond jewelry with the Harry Winston name, in an attempt to bolster the brand, and is devoting more money toward this goal. Diamonds are indeed valuable but they are also a commodity -- there's no inherent difference between the ones sold by Zale (NYSE: ZLC), DeBeers, Tiffany, or even the ones in the cases at Costco (Nasdaq: COST) -- although the ones at that last one won't be as expensive. This means that if Harry Winston's brand-building can further distinguish its name from everyone else's, its retail side may pick up.

Takeaway
The takeaway is that Harry Winston Diamond is a buy for me. Now, because the company is not a pure hard-asset play, it isn't advisable to just buy the stock at any price. I would rather grab the stock during bad times. I missed the low of $2 back in March 2009, but the stock is still well off its high of $43 in late 2007. So we are closer to a low than a high, and I think we are certainly closer to a low in the retail sales cycle than a high.

I'd rather buy when improvement lies ahead, rather than buying in boom times with retail sales about to decline. The balance sheet is in decent shape with $125 million in cash and $231 million in debt, and sales roared up 62% in the most recently reported quarter, so I feel the company is in good shape.

That's my two carats, anyway. Check with the white cat on your lap for another opinion.

Matthew Brown owns shares of Chevron, ExxonMobil, Harry Winston Diamond, and Central Fund of Canada. Costco is a Motley Fool Inside Value pick. Costco is a Motley Fool Stock Advisor recommendation. Chevron is a Motley Fool Income Investor selection. The Fool owns shares of Costco. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.