What future does the diamond industry have ?

[sergiocartanese]

My question is simple. De Beers controls 60% of the market. It used to be 90%. As we go along we can see that this monopoly is threatened continuosly and De Beers is putting out fires left right and centre( See russian diamond industry , Israeli stockpiling , Australian diamonds, etc , etc). When, and i say when because it''s inevitable, De Beers loss control whats going to happen to the prices of this legendary stable luxury items called the diamond ? And especially to the people who buy diamonds thinking it''s a great investment ?

 

[AGBF]

The "status" of our diamonds-as-symbols of wealth goes down. The reality of resale potential is relatively unchanged?

 

[oldminer]

Diamond dealers and bankers have benefited from the regularity of the market DeBeers has brought. The public have paid the price, in that there was not much possible competition at the wholesale level. There has always been a free market between wholesale and retail that has moderated the effect of the monopoly at the supply end of the chain.

As DeBeers backs away from tight reins, the fre market rushes in to replace controls with competitive forces. Since nearly all the success we enjoy in the world comes from free markets rather than monopoly controlled ones, I'd say it is worth the risk and not something overwhelmingly worrisome. I have a very substantial investment in physical diamonds and have a department making a little money with them. This is the key, I believe. Don't be greedy about profits. Let a free market give you the ability to make your own decisions. It makes a pretty good case for watching this necessary change take place without a lot of anxiety.

Prices may rise and fall, but the attraction of diamonds is not based on price alone. It is oriented to beauty and marketed with romance. I don't see those two factors decreasing in any way. In fact, I believe there are more people looking and shopping for diamonds and that the money spent on marketing them is annually increasing. This is what makes a commodity a successful seller and retains its value.

 

[strmrdr]

not much untill debeers drops some more and some real compitition opens up on the wholesale rough side.
On the retail side the internet and mega stores has brought demands for lower prices.
The problem is that the retailers have no pull with the rough wholesalers to get better prices.

This leaves the cutters in a very bad position of being caught in the middle and with traditionaly very low margins to work with.

I look for consolidation and some failures on the cutting and retail fronts.
It is allredy happening to some extent the retail stores that had to have 100% markups to survive are going out of business while the ones that have thinned profit margins and learned to survive on lower margins are thriving.

Short term prices are going up Long term I see them tanking because the demand is artificial and the prices too high and going higher.

As for investment frankly anyone that invests in diamonds bought at the retail level as an inventment is a moron.
The used diamond market is at best 30% of retail.

 

[niceice]

We predict that diamond prices will continue to escalate on a fairly steady basis as they have historically because even with the addition of "competiton" for DeBeers in the form of other diamond mining and distribution companies, those companies seem intent on following DeBeer's lead rather than blazing a trail of their own... Which honestly makes us kind of wonder if the DTC doesn't have their fingers on the steerting wheel of those firms just a bit, here's our "conspiracy theory": DeBeers was seen as a monopoly and faced extensive prosecution in several countries as a result, in order not to be a monopoly there has to be some level of competition and so other companies were created or allowed to exist, but those companies always seem to do exactly what DeBeers does... Isn't that funny? Ford and GMC seem to have minds of their own, why is it that the other diamond mining companies raise their prices every time the DTC does when the obvious way to pick up market share would be to keep their prices just a bit lower? Hmmm? It's all a game as far as we can see

 

[JC]

Well said David Atlas. I couldn't agree more. You never fail to say the right thing. Oh yeah, and by the way, LONG LIVE THE INTERNET DIAMOND COMPANIES. Preferably ours,

 

[Garry H (Cut Nut)]

To add to the many well said words - Who can ever really predict markets?
Stockbrokers etc never seem to have much luck with simple commodities like coffee etc.

Diamond prices will rise as demand increases over supply, and fall when supply exceedes demand. De Beers played a role in reducing that effect by whitholding unpopular goods in times of poor demand and then releasing them in better times. (it is a myth that they witheld all goods other than at the time of the great depression).

We now have other responsible players who might also choose to hold back goods in the future if demand does drop for a period - who knows?

But one thing is for sure - the growth in demand from China and India is growing strongly at present and these 2 countries together probably easily out buy USA before the end of this decade.

 

[valeria101]

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On 3/19/2004 2:52:21 PM Cut Nut wrote:



But one thing is for sure - the growth in demand from China and India is growing strongly at present and these 2 countries together probably easily out buy USA before the end of this decade. ----------------

Just a thought...

Do emerging markets mean more demand for low-priced goods? Or lower production cost from these countries?... this may not mean good news necessarily, unless one is holding a BIG pile of rough and a tough marketing Dpt. just like the former monopole did it.

This could be just some way unfounded hunch, but the emerging quest for ideal cut goods may just be the necessary ingredient to keep the competition for these new markets start getting prices down and volume up. This, unless the conspiracy theory mentioned on this thread is (fortunately) working.

 

[Garry H (Cut Nut)]

Actually emerging markets have a tendency to prefer very high clarity diamonds because they associate this with religious / luck / superstition.