Saturday, January 25, 2014

Is the Diamond Cartel Finished?

From the Huffington Post:

Will the Diamond Cartel Survive?
When I wrote my book on diamonds in 1980, the De Beers' cartel was the master of the universe of diamonds. Its invention of calibrated scarcity had succeeded in creating the brilliant illusion that diamonds were rare. It was an illusion that the Oppenheimer family was able to sustain through masterful marketing and manipulation for over eight decades.

But the 21st century may prove a very different world for the hoary cartel. For one thing, the Oppenheimers are now gone, having cashed out their shares. For another, its once powerful choke point in London, called the Diamond Trading Corporation -- a venue in which all the diamond buyers came for their allotment -- has been moved to the tribal town of Gabonne in Botswana. Also, its stockpiling operation, which was at the heart of its operation to limit supply, has been relocated to Moscow and is now in the hands of a company controlled by the Russian government. And its attempt to move into the retail market with branding and De Beers stores had proven to be a disaster. Finally, its once secret maneuvers are now being monitored by both U.S. and European Union antitrust regimes.

In this new world, can the cartel still survive? Can it control the blood diamonds coming out of Africa? Can it sustain the price of diamond or will diamond prices crash? Is the brilliant illusion now to be shattered by the grim reality that diamonds are not really a rare gem? See my new diamond rant.

End of the Oppenheimer Era at DeBeers: Nicky Oppenheimer on What the Family Will Do With the $5.1 Billion
Commodities: Russia's Diamond Hoard Has the Potential to Crush the Diamond Market (or not)
The Next Bauble: Diamond Record Set at Christies Geneva
Paper Diamonds: How Do You Standardize Rocks So They'll Fit Inside An ETF Wrapper?
You Thought the Rio Tinto Red Diamonds Were Baubles, You Dismissed the 118 Carat 'Perfect' Being Auctioned Tomorrow as Crass, Perhaps Monsieur et Madame Would be Interested In...
...The Pink Star
Diamonds: Have You Been Depressed Since DeBeers Was Delisted? Hangdog Since Harry Winston Split? Cheer Up Bunky, There's Always Alrosa

Common sense tells us that the only way to increase the value of 
diamonds is to make them scarce, that is to reduce production.

Nothing is forever.
Except, maybe, Neil Diamond.