July Prices for Polished Diamonds

[starfire]

Hi vtigger,

Basically, China is a country in the middle of a huge transition from an agricultural centrally-planned economy to a market-based industrial economy.

Therefore, given the sheer size of the country and the vast gap between the original economy and what China aims to achieve, you need to understand that there is really a lot of things to be done.

China is very weak in intellectual property enforcement. But that is because there were no intellectual protection in the past, and the country needs to work on building up a judiciary system that is fair and just. This cannot be done overnight, no matter how hard you try.

In all senses of the word, you could say that China is in the midst of a huge nation building exercise.

I presume you are living in the U.S. If you are, then you know that it is a difficult task from the experience in Iraq and Afghanistan.

The people who made fake baby powder, and those who held back information on SARS and Bird Flu, are no doubt guilty as you say. But the actions of the few should not condemn the country as a whole.

These specific individuals probably don't care about the damage they inflict. But where do you get the impression the Chinese people as a whole don't give a damn? Perhaps you are privy to information that none of us know about?

China is a rising economy, and more and more people are benefitting from the growing openness in that economy. It does not mean that there are a million billionaires walking the streets, but there are probably 50 million people who earn middle-class income there. But I am sure they work very hard for their money, and wouldn't be so quick to dismiss this as "corrupted money".

Are you so morally certain that there is no corruption in the U.S.? He who lives in a glass house certainly shouldn't throw rocks... Besides, after the Abu Ghraib debacle, I am not sure how any American could go around on moral high horses with any shred of credibility.

There are many people who want to go to the U.S. to live and to study. There is after all still a reasonably high standard of education and a good chance to make a good living there. Why would the Chinese not want to go the U.S.?

For those who try to enter illegally, they are escaping the hard lives they live in the interior regions of China, which is developing more slowly than the coastal areas. But I would argue that these probably number only in the thousands, and it is not the epidemic it could be if China destabilises.

Anyway, I am not going to convince you that not all Chinese people from China are corrupted, since you are obviously set in that mind-set. You will probably find it difficult to convince me that they are all bad people.

So let's keep it friendly and leave it at that.

Best regards,
Stephen Tan
Charlotte Atelier
Singapore

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On 7/9/2004 3:31:33 AM vtigger86 wrote:

starfire,
first of all, china will have a big impact on the diamond industry in the years to come. no doubt, their standard of living has gone up in the last 10 yrs.and as they become more westernized, and give their brides diamonds for engagement. i am chinese, but haven't been back to china since i was a little kid (1965). i was born in H.K. haven't been back since 1983 and most of my friends are chinese. they ask me if i want to go into business adventures with them in china. i told them 'no thanks, i'd rather take my money to las vegas and would have better chance of winning.' most of them come back here to the U.S. broke because ,after you go through the chain, and pay everyone off, to get your business started, you'll be broke by then. people there don't care who they hurt. a few months ago they sold fake baby formulas i think killed about 30 infants. my point is, as long as they make good money, they don't give a damn. they will sell you anything fake and try to pass it as real. my friends talk like there's are alot of billionaires walking on the streets of china. if that's true and life is so good in china,why would a lot of them risk their lives to come here to the U.S. by the ship load? ----------------

 

[kevinng]

Well said, Stephen.

 

[GLudlow]

Ah, finally a topic I can be a bit of an "expert" on myself!

First of all, regarding China, it's strictly impossible to say what effect the development of that nation will have on diamond demand. I'll throw some things out...
1. The color white is accociated with Death in many Asian cultures. So giving a white stone to your fiancee might not be a very good move... The most popular color/stone is usually green/jade.
2. What if they discover diamond mines in Asia? deBeers is "powerful" and all that, but if a communist country makes a large discovery, they might not sell it and there will be a *real* competitor to drop diamond prices.
3. If China becomes a major world power, maybe the rest of the world will fall into relative "poverty" and the demand for diamonds will drop everywhere else, therefore actually lowering price.

When speaking of a global system, there are quite simply too many variables to factor in to make any reasonable conclusion. It's pure speculation, and no real trends can be foreseen, not even by the foremost experts. Welcome to the world of Globalization

 

[fire&ice]

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On 7/9/2004 9:13:17 AM GLudlow wrote:


When speaking of a global system, there are quite simply too many variables to factor in to make any reasonable conclusion. It's pure speculation, and no real trends can be foreseen, not even by the foremost experts. Welcome to the world of Globalization
----------------

Well, I can give an example of something that is affecting us in the real world. Steel prices are up & steel is being rationed here in the US. It's a direct result of the new demand & buying power of China.

 

[kevinng]

You are right to say that the world economy is more complex than meets the eye. Steel is expensive in the US. Correct me if I am wrong, but may I suggest that China is not entirely to blame for this unfortunate phenomena. The last I heard, Bush was trying to impose tariffs on steel imports on cheaper Chinese steel, so as to protect the US steel industry.

Typically, when one nation gets stronger and more productive, ceteris paribus, the world economy benefits. (I will try to stay out of complex economics.) The logic is quite simple. When everyone is more productive, we have more to consume, after trading.

The benefits of globalisation and free trade is well accepted, even by the US. Singapore is trying very hard to forge free trade agreements with just about everyone, for the benefit of all. The benefit of specialising in industries you have relative advantage in, and leaving other countries to specialise in other industries... and then practice open trading... That is good for all. Closed economy... protectionism, etc... are all bad news.

There are many reasons why the US would impose steel tariffs. I can think of a few. First, the steel industry would lobby for protection since there is no way they can produce steel as cheaply as China because of labour cost. Secondly, the US must think of its strategic position. In times of war/unrest, it is not wise to have heavy reliance on another country to supply a fundamental resource in the war engine... Steel is needed for tanks, rifles, bullets, you name it.

Americans are using expensive steel not because of Chinese demand... but because Bush has made it more expensive for whatever reasons. Everyone is using expensive oil because of OPEC. Diamond prices are rising partly because of rising demands, which is partly fueled by China, and partly because DeBeers does not want to release more from its stockpile in order to make a bigger profit.

However, Americans are using cheaper VCDs, DVDs, Plasma TVs, PCs, Clothes, Shoes, etc... all thanks to China's cheap labour.

When everyone grows, we all benefit. Chinese people do not steal diamonds (At least not most of them). Logically, they have to work hard to make something in exchange for the money used to buy diamonds. The goods and services make their way to the global economy, and many of them end up in the US. I don't think anyone should adopt a beggar-my-neighbor policy. It just makes everyone worse off.

 

[fire&ice]

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On 7/9/2004 1:59:21 PM kevinng wrote:

You are right to say that the world economy is more complex than meets the eye. Steel is expensive in the US. Correct me if I am wrong, but may I suggest that China is not entirely to blame for this unfortunate phenomena. The last I heard, Bush was trying to impose tariffs on steel imports on cheaper Chinese steel, so as to protect the US steel industry.


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No, they were lifted. Did relieve the situation temporarily - and I understand other aspects and game playing - but in general - Building supplies & our natural resources are being sent to China in droves. I'm not making any judgement calls as they have every right to build 7 improve their lot. Just a demand that supply is having a hard time keeping up with. An economic fact - not a political statement.

Now, where is our TEA (and I mean from the 1700's)

 

[kevinng]

Thanks for the update. I have not been keeping up with my current affairs in the last couple of months. I have been really busy with all sorts of things... Diamond hunting was one of them.

I think I will head straight to the Economist website after this post.

Diamond is a very scarce resource... and perhaps supply will never keep up. Maybe prices will remain high indefinitely. However, I am confident that other resources will adjust with time. Steel is one of them.

Anyway, China cannot keep booming forever. It's just a matter of time before it gets over-heated. At the rate they are booming, a structural shift is inevitable. They are booming for the longest of time because they have been so deprived for so long... and they have some way to catch up. In any case... what goes up, must come down.

 

[SFDavey]

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On 7/8/2004 8:29:01 PM DiamondExpert wrote:

SFDavey - you're thinking too close to home - one of the major demand pressures (present and especially future) is CHINA...the demand is increasing dramatically there, they pay cash for stones and with an increasing standard of living they can easily become THE major world market for diamonds in the next decades.----------------

Yeah, hehehe, I agree. I was going a bit too 'micro' there. Still, I think the USA currently drives the consumer markets for luxury goods like diamonds.

China will most certainly be the major market for MANY things. I predict that the Chinese will be better Americans than many Americans in 20 years!

In any event, I think we will see a slow down in demand in current US markets for luxury goods as we come out of the current presidential election cycle no matter who wins the election. I strongly believe that the focus for consumers will not be on 'lovely shiny things' but will shift towards more durable goods.

Interests rates were at 50 year lows this past Winter/Spring. LOTS of folks (dare I say all that were in a position to?) spent BIG BUCKS on homes or refinanced. There is frequently money left over from home purchases these days and there is always money left over from refinancing. These extra dollars running amuck ended up on the fingers, ears, necks, wrists and 'other' parts of pretty ladies. That glut is now drawing to an end. Of course, the Consumer Price Index is riding high still, so that type of thinking should carry the day for at least another few months.

I still think diamonds will be coming down in a manner nearly as dramatic as they have risen.

What say you on the inside of the industry?

 

[SFDavey]

So...

Have diamond prices leveled or even come down a little bit?

I am curious to know!