Sometimes I am not sure that I should trust what I hear, that is if I hear it at all.
In Antwerp a few days ago the climate of fear amongst some to whom I spoke was palpable, Charles Wyndham writes in his article posted on polishedprices.com on October 12.
This was reinforced by a few calls that I have got from various people expressing concern if not dismay about the situation.
Whilst it might appear easy for me to appear sanguine, holding no stock in diamonds, not being forced to buy expensive diamonds or staring at any outstanding invoices, I am not sure that such extreme levels of disquiet are justified.
However, I must be a bit more precise in emphasising that this is a view in relation to diamonds in the context of the overall financial situation about which I certainly feel queasy about. Indeed, as the printing presses go into overdrive maybe diamonds might be a good bet even beyond the well known prospective shortage of supply.
The ability of Europe to get itself into such a mess has been pretty spectacular and only exceeded by its inability so far to tackle its own failure.
Diamonds, however, have not fared ‘that’ badly.
I read in last weekend’s FT that the index of all the worlds’ stock exchanges was in fact back to almost exactly where it was in 2008 before the crash.
Even with a 30% fall in rough prices, rough diamonds are still well ahead of the peak in 2008, with rough still about 40% higher than its then peak.
Polished is also still well ahead of its previous peak if still languishing behind rough.
It has to be said that talking prices for rough is a bit academic, as it is debatable just how much of a real market there is at the moment.
If the story I was told is true that Diamdel has been contacting clients asking them what they would offer on the basis that they have or were thinking of reducing their reserve prices to 10% below DTC prices and that (not unsurprisingly) they got no offers; then, this only confirms that the market is frozen.
Frozen does not have to mean rigor mortis, but the market is very weak, exacerbated inter alia by good old Boney* dropping prices and a strong dollar.
Boney’s shenanigans are yet another repeat of just how damaging his price list is to the industry.
His discretionary stepped increases or decreases to prices have a totally disproportionate impact compared to a price list where prices are constantly going up and down in tune with reality.
His fabrication so beloved to our industry for the lack of clarity by which they hope to dupe their customers has really come around to bite the industry in its own backside.
We have witnessed excessive exuberance generated by Rap when each week he put prices up so that people were betting on a (supposedly) one way ticket in 2008; and now, he is crucifying everyone with his decreases, which we all know are about as close to reality as the French president is to six foot.
Still most of those to whom I have spoken continue to cling onto this bit of pap, just as many still do not seem to have grasped the significance of the latest negotiations between De Beers and the Government of Botswana.
The announcement of a 10 year deal has been hailed as some remarkable victory for De Beers, promising another cosy decade of bumper profits as long as any company stays part of the club.
My own view is that it is meaningless, Government would not have wanted to ditch De Beers which being in such a weak position makes a perfect pet poodle as a companion.
I just hope that Monsieur Mellier, the new MD of De Beers, was kept fully in the picture that his new boss is in fact the Government of Botswana.
Like two dead stars, De Beers and Rap still seem to produce light even though we all know that both ‘died’ a long time ago.
Our industry will wallow in its own self pity and stagnation till it grasps these facts and stops singing in hope as they try to go to sleep, ‘Twinkle, twinkle little star....’
*Charles Wyndham, owner of PolishedPrices, Rapaport's main competitor in diamond pricing, is often very critical of Martin Rapaport's prices and personality, often referring to him as "Boney", a comparison to Napoleon Bonaparte (http://en.wikipedia.org/wiki/Martin_Rapaport).
