The global crisis continues to test the endurance of all segments of the diamond pipe. The latest most significant events include the decision of the Leumi Bank of Israel to curtail crediting operations involving rough diamonds; a significant slump in Japan’s retail jewelry sales; drag acceleration experienced by online jewelry sales; a slowdown in the transaction pursued by Archangel Diamond Corporation (De Beers’ subsidiary) to acquire a 49.9% equity interest in ArkhangelskGeologodobycha followed by an uncertain situation for future development of the Verkhotina diamond field; and a sharp decrease in ALROSA’a net profit.
Optimistic outlooks given by the management of the 4C-Diamond Concern, one of the few companies specialized in investment diamonds, stand out against this negative background. Michael Torner, 4C-Diamond’s Vice-President, believes that diamonds in the time of crisis may well be able to play the role of a full-fledged investment tool and bear comparison with conventional and publicly traded commodities as far as their appeal is concerned. According to Michael Torner, currently tree-carat diamonds appear to be the most attractive vehicle for investment purposes. Whereas prices for the much more rare diamonds in the 5-10-carat range decreased by 10%, two- and three-carat diamonds have so far succeeded to resist the crisis onslaught and thus-based investment portfolios have not made their owners upset. In November and the first decade of December, the demand for investment diamonds of this size was steadily growing, which inspired cautious optimism. Michael Torner also predicts a significant market revival for investment diamonds in the first six months of 2009.
Let us hope that such expectations are not groundless. As you know, Barack Obama recently gave his wife a diamond ring worth $38,000 to thank her for taking part in his election campaign. That was a smart move in his anti-crisis strategy. It’s a comfort to see that the U.S. President-elect is aware that crises come and go, but diamonds are for ever.
