Some large and famous diamonds |
According to the Times of London the economic
downturn has created a worldwide glut of diamonds that is caused the closing of
several diamond mines. It is also caused
a precipitous drop in their price. If
you already own a high-priced diamond like all diamonds its value has
tanked. The best buys for diamonds can
be found right now in your local hock shop.
This is because right now so many people have pawned their diamonds to
raise cash in uncertain times that there are now too many diamonds on the
market.
This is simple economics where the supply of diamonds
exceeds the demand for diamonds. The law
of supply and demand whenever dictates when this happens it drives the prices
down, consequently the price of diamonds is apt to remain depressed for the
next several years.
This is not only true of diamonds but probably also applies
to the other gemstones particularly the precious ones like rubies, sapphire's
and emeralds. Just like diamonds the
demand for these stones has also fallen.
The law of supply and demand applies to these stones too.
It may be true that diamonds are forever, but right now
they're not a girl’s best friend and the buyers are more than fickle. This crashing of the diamond market has
already caused many jewelers to go out of business and shutter their
doors. Even Tiffany's in New
York one of the greatest jewelers in the world is
even struggling to sell their supply of diamonds.
By the end of 2008 diamond sales in the United
States declined by 20%, and the United
States accounts for 50% of the worldwide
diamond sales. Another factor that has
caused this decline in prices is the fact that Debeers
who for many years had a stranglehold on diamond sales no longer controls a
large portion of the world's diamond supply as it has done in prior years. For many years DeBeers was able to maintain
the high-priced diamonds by choking off the supply end of the business.
Because the economic downturn has spread to China
and India it
has chocked off the demand there also.
It had been hoped by the diamond miners that the increasing wealth in
these countries would of taken off the slack in the diamond market. This worldwide economic glut has caused the
price of diamonds to fall by as much as 30% from its peak in August of 2008.
As recently as September of 2008 Debeers reported that they
were unable to get diamonds out of the ground fast enough to meet the
demand. This all came to an end with the
stock market crash in October, 2008 and the continuing decline of the stock
market since. DeBeers has stated that is
going to decrease diamond production by 50% through April 2009.
Although troubles loomed ahead for several previous years
the diamond producers took a short-term view and proceeded to mine more
diamonds that there was a demand for.
The natural consequence of this action was that they had many more
diamonds stockpiled them they needed.
The quest for diamonds is still ongoing throughout the world
including in our neighbor Canada
that is now the sixth-largest producer of diamonds in the world. Alrosa the Russian diamond mining company has
already announced that it is not going to cut back production for the
foreseeable future.
References:
Istock, A Glut of Diamonds, http://www.istockanalyst.com/article/viewiStockNews/articleid/3059914
RT Business, Alrosa to continue producing sparkle despite
diamond glut, http://www.russiatoday.com/Business/2009-02-06/Alrosa_to_continue_producing_sparkle_despite_diamond_glut.html
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