Diamonds might not be forever, if you believe the world's largest diamong company De Beers. Or is it more a case of market manipulation?
The Financial Times reports that the world's supply of diamonds is depleting fast. It's like the peak oil theory which claims the world is already running out of oil. In the last two decades the industry has found no new diamond deposit, neither to match the two biggest mines in Africa, owned by De Beers nor the best Russian mines of Alrosa, the other big diamond producer.
Still, it's an argument that you have to take with a grain of salt. It works well for De Beers because it draws attention to the rarity, and hence the price of the sparking rocks which means they can charge more. And as the FT points out, De Beers has been scaling back its production to ensure that it will keep influencing prices. Analysts have forecast that such a reduction in mining could boost the price of diamonds by 5 percent.
Actually, De Beers has form on this. It might be the right time to look back at a New York Times report four years ago about how the Belgian Polished Diamond Dealers Association was telling regulators that De Beers was breaking the law by artificially limiting the supply of the gems on the market.
De Beers is doing pretty much the same thing now, pushing up the price. So if you're looking for diamonds, buy now because they are about to become even more expensive. Market manipulation does that.
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