| I've been in diamond production on small to | | | | reason hundreds of medium sized mines had to |
| medium scale since June 1998, CEO on an alluvial | | | | close their doors, or pits in this case. In turn, with |
| diamond mine in South Africa. The other day I | | | | production going down, the consumer will pay |
| overheard someone state that he wanted to buy | | | | even more for this precious stones. |
| his wife a diamond ring, but rather went for | | | | Another factor, which kept the price low for the |
| another gemstone because of the price. This | | | | producer and high for the consumer, is the gold |
| amused me; can it be that diamonds are so | | | | price. Any diamond producer can tell you that a |
| expensive in a store? The same man turned to | | | | high gold price = low diamond value for the |
| me and remarked | | | | producer, it's an unwritten rule! I reckon it works |
| "You (meaning the producers) must be very | | | | like this: The market needs jewelry in all shapes |
| happy with the the way the diamond price | | | | and sizes, diamond gold rings, diamond gold |
| increased the last 5 years!" | | | | earrings, diamond gold watches etc., with the |
| I just turned away and started talking about the | | | | emphasis on diamond and gold. If either the gold |
| weather, because we're not happy, far from that!! | | | | price, or diamond price should unexpectedly rise, |
| You see, although diamond prices has | | | | the market wouldn't be able to cope with the |
| skyrocketed for the consumer in the last 6-8 | | | | dramatic increase in price. Because gold is the |
| years, the producer has seen very little increase | | | | currency of trading in the worlds, diamonds have |
| in the price we get! Unlike the diesel price, which | | | | to play second fiddle. Since 1998 the gold price |
| was $0.23 in 1998 and we now pay $1.52 in 2008 | | | | grew from $250 to a whopping $1000 in 2008. |
| (that is a 565% increase), the diamond price | | | | 400% increase. But the market didn't only |
| stayed pretty stable for the producer. | | | | compensate for the increase in the gold price, but |
| Here's an example: | | | | also charges for a 250% increase in diamond |
| In late 1999 we found a 22ct, I color, near | | | | prices. But the producer never sees this increase |
| spotless diamond, which were sold in early 2000 | | | | and the money ends up in the pockets of the |
| for $5681.81/ct. At the beginning of 2008 we | | | | middleman! |
| found another 22.76ct, I color, near spotless | | | | Large diamond mines are closing in South Africa |
| diamond (the shape was just as good, if not | | | | and the whole of Africa, and sooner than later |
| better than the one in 1999, and it was as similar | | | | the big companies will have to dig into their |
| as one could wish for, perfect for comparison). | | | | resources to find diamonds to sell - and for this |
| This diamond was sold in mid 2008 for $6533/ct. | | | | they WILL charge an arm and a leg. The demand |
| That is an increase of 15% over 9 years. This | | | | is big, the supply is little! |
| isn't good math for any business, and for this | | | | |