I have good news and bad news for diamond investors.

The good news is for those who bought their stones in the past couple of years. Diamond prices are rising, and so far the market isn't resisting.

The lows for the one-carat D-flawless stone, symbol of every investor's highest hopes, ranged from $8,000 to $12,000 wholesale in 1985 and 1986. Recently it has been wholesaling for $17,000 in the New York market, according to the Rapaport Diamond Report, and for $15,000 by other reports.

This week the DeBeers diamond cartel, which controls the market worldwide, will raise the prices of uncut stones for the third time in a year and a half.

The bad news is that, even with improving prices, the average investor is still miles behind. At the peak of the diamond-buying craze in 1980, D-flawless stones were going for $55,000-plus.

Those of you with seven-year-old diamonds in your pension plans still have a long, long wait to get even.

My associate, Virginia Wilson, last week called the brokerage firm Thomson McKinnon, which started a diamond-investment trust just past the market's top in March 1981. Share values started at $994. Seven months later they were down to $565.

It took Thomson McKinnon days to discover the name of anyone who even knew about the trust. He was out of the office on a business trip and hadn't called us by press time. I assume his news would not be good.

But back to the bright side. DeBeers has proven to be a cartel that, unlike OPEC, works. It controls about 80 percent of the market. Even the Russians usually sell through DeBeers.

When the diamond market crashed in 1981, DeBeers reduced production, bought up the excess supplies of high-quality diamonds, and has carefully managed the number and type of new stones coming to market.

Right now there appears to be a shortage of top-quality diamonds, commonly traced to heavy new buying by the Japanese. Diamonds are priced in dollars worldwide, so as the yen strengthens against U.S. currency, diamonds grow cheaper for the Japanese.

But the shortage is doubtlessly being helped by DeBeer's cautious policy of doling out only enough good stones to keep prices heading in the right direction. Three-carat diamonds are in especially short supply, Martin Rapaport says.

Rapaport thinks the time is ripe for dabbling in a gem or two. He cites expectations of higher inflation, the enormous wealth being produced by stock markets worldwide and the renewed interest in diamond jewelry, including diamonds for men. He says that even if you stay out of the D-flawless game, high-quality stones could rise by 40 to 50 percent over the next 12 to 18 months, if the economy continues on its present course and the yen remains high. (By "high quality" he means nearly colorless -- H or G grade or better, and medium-clarity or above -- graded at least VS, meaning "very slight inclusion" in the stone.)

The paragraph above should give every tyro pause. Let's say that you buy a diamond graded G-VVS. How do you know that's what you're really getting and that the price is fair? The stone should have a certificate from the Gemological Institute of America. But basically, if you know nothing about diamonds -- including the markup you're paying -- you are likely to be burned.

William G. Underwood, president of the American Gem Society and a gemologist in Fayetteville, Ark., differs with Rapaport about the price outlook. He isn't sure that demand for polished gems is strong enough to swallow more price increases now, and certainly not big ones. Could there be another investment craze like that of the 1980s? "You'd have to go beyond the memory of this generation," he says.

What about buying diamond jewelry? These are generally less-expensive diamonds -- not top-grade stones -- whose prices aren't affected by speculations in D-flawless. They follow the inflation rate which, lately, has been going up.

But jewelry should be considered a consumption item, not an investment. By the time a stone is set, it can retail at more than double the value of the diamond. If you sold it back to a jeweler, you wouldn't come close to breaking even.

On the other hand, look at it this way: How much worse off can you be as a jewelry buyer, compared with the compulsive investors of 1980? If the Tokyo stock market crashes, so might the D-flawless, but your pretty pendant won't be touched.