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IHT article: The diamond overhang

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JSM

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Has this been discussed yet? I did a search but couldn''t find anything.

http://www.iht.com/articles/2009/02/23/opinion/edepstein.php

For everyone in the diamond industry - is there a lot of truth to this? As of consumer, I of course care about how this is going to effect end prices at our favorite vendors.
But in a more general sense, does this mean there will be a lot of job loss in the diamond industry?
 

strmrdr

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Predicting the future price of diamonds is impossible.
The article is right that if enough people were to try and sell their diamonds the market would crash.
DeBeers has done everything they could to kill the secondary market over the years.
A healthy secondary market is seen as a threat.
The myth that diamonds retain value for consumers is just that a myth.
The second they leave the store they lose a lot of value just like a car leaving the dealer lot.
But unlike cars they go back to full value once they go back into the dealer network.
Good for the industry bad for consumers.
That said every other luxury product loses value once it is sold some a lot more than diamonds so it isn''t the end of the world for diamonds, just an end of an era.
The fact that diamonds are not particularly rare is going to catch up to the market.
In the end the market would find a balance and life will go on.

As far as job lose there has already been a lot and there will be more before it recovers.
 

Maisie

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''Responding to the global recession, the De Beers diamond cartel has cut back production at its South African mines and reduced the price of its rough diamonds between 15 and 20 percent. Even so, industry sources in South Africa are now estimating that diamond prices could fall another "59-63 percent.''

If diamonds lose so much value won''t it put a lot of vendors out of business. I thought diamonds were a luxury item. Reducing the price of diamonds that much would be lovely for consumers but awful for sellers.
 

strmrdr

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Date: 2/28/2009 2:48:56 PM
Author: Maisie
'Responding to the global recession, the De Beers diamond cartel has cut back production at its South African mines and reduced the price of its rough diamonds between 15 and 20 percent. Even so, industry sources in South Africa are now estimating that diamond prices could fall another '59-63 percent.'


If diamonds lose so much value won't it put a lot of vendors out of business. I thought diamonds were a luxury item. Reducing the price of diamonds that much would be lovely for consumers but awful for sellers.
It is going to be tough if that actually happens.
The tough and the swift will survive.
Long term it is likely good for the industry as the best will survive.
 

Maisie

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I wonder if sellers would reduce prices or just hide their diamonds away and hope that things pick up in the future.
 
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