Welcome Guest [Log In] [Register]
Welcome to The New Coffee Room. We hope you enjoy your visit.


You're currently viewing our forum as a guest. This means you are limited to certain areas of the board and there are some features you can't use. If you join our community, you'll be able to access member-only sections, and use many member-only features such as customizing your profile, sending personal messages, and voting in polls. Registration is simple, fast, and completely free.


Join our community!


If you're already a member please log in to your account to access all of our features:

Username:   Password:
Add Reply
Bloomberg: Screw gold, buy diamonds; Blame China and India's exploding middle class
Topic Started: Apr 25 2011, 10:21 AM (412 Views)
kenny
HOLY CARP!!!
Colored diamonds are not even mentioned in the article, probably since volume is a drop in the ocean of diamond sales, but they are rising in price even faster than whites.

One thing the article forgot to mention is diamonds are not a commodity.
Gold is, so every single ounce is identical and has the same universally agreed-to price.
You pay only a small commission when you buy or sell.
The value of each diamond is more difficult to establish and the market is such that retailers can charge and get more than private sellers for the same diamond.

This means, unlike gold, a diamond looses value when you drive it off the lot.
It takes large long-term price increases to make money, which is what we are seeing now.

Unlike the speculative run up and crash of diamond prices in the 80s this one is based on demand in China and India.

http://www.bloomberg.com/news/2011-04-19/-grossly-undervalued-diamonds-outpacing-gold-chart-of-the-day.html

Damonds Outpacing Gold Still `Grossly Undervalued': Chart of the Day
By Maria Kolesnikova - Apr 19, 2011 4:01 PM PT

Polished diamonds, beating gold this year, remain “grossly undervalued” relative to uncut gems and will extend gains on booming demand in India and China, WWW International Diamond Consultants Ltd. said.

The CHART OF THE DAY shows polished gems trailing rough diamonds, which rose to an all-time high this year, according to data compiled by polishedprices.com, as supply from mine operators fails to keep up with Asian demand. Cut stones, up 9.6 percent so far in 2011, have still outperformed gold, which climbed to a record $1,497.90 an ounce on April 18.

“Rough has just gone ballistic,” said Charles Wyndham, founder of WWW International and formerly a director at the sales operations of De Beers. “Polished is grossly undervalued. If people are pushing rough skywards because of an anticipated shortage, at the very least the same should apply to polished.”

China recently surpassed Japan as the second-biggest buyer of diamonds, behind the U.S., which consumed 38 percent of production in 2010, according to De Beers. Demand in India grew 31 percent last year, while in China it jumped 25 percent and the U.S. market expanded 7 percent, it said in February.

While rough prices advanced to a record this year, polished gems are below their 1979 all-time high, polishedprices.com data show. Cut stones have risen above levels reached in 2008 before a slump in demand spurred by the global financial crisis.

Rough prices may gain an annual 15 percent to 20 percent in the next two to three years, according to Namakwa Diamonds Ltd. (NAD) Chief Executive Officer Nico Kruger. “Prices are overheated,” he said yesterday. “There is just no supply, so what else must the big cutters and polishers do? They must buy.”
Offline Profile Quote Post Goto Top
 
« Previous Topic · The New Coffee Room · Next Topic »
Add Reply