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Prices of Polished Diamonds Increase - July.2004
Someone asked the other day, “Are polished prices leading De Beers to
increase rough prices, or are De Beers rough increases’ pulling polished
prices?” It’s like the question of the boy walking his dog. You don’t know
if the boy is leading, or is the dog leading, by looking back, or are they both
in sync?
We do know that polished prices rose considerably in June across the board,
from flawless to SI2, in some cases as much as ten percent since January. This
is mostly due of course to the rough price increases earlier this year from De
Beers, followed by other producers. Slowly, the old inventory is being depleted,
and the price increase is being felt down to the jeweler and the consumer.
While part of the firmness in polished prices is due to the increased cost of
rough, it was also fueled by the general improvement in the economy, as proved
by the retail demand at the recent JCK Show in Las Vegas. Asia and Europe are
also picking up considerably. However some in the industry believe that this
mini-bren (fire) is caused by dealers holding back from selling and
speculative buyers betting that De Beers and other producers will raise prices
again.
In the short run, everyone is happy when there is an increase. In the long
term, nobody really gains from these price increases if they don’t reflect
economic reality. Already, we’ve heard a young cutter tell his father, “Put
the goods in the safe, go on vacation and we’ll make tons of money.” It is
reminding us of 1979 all over again, and that’s a little scary. We remember a
speech by De Beers chairman Harry Oppenheimer, in which he said something along
the lines of “You can’t say that De Beers never makes mistakes. But you can
say we never make the same mistake twice.” Let’s hope the industry can say
the same thing. v
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