Establishing an Equilibrium

There are certain fundamental laws of economics that govern a genuinely free and globalised marketplace, and one of the most basic is that demand and supply have their own dynamics, Diamond world reports in its Weekly E-Post. The diamond industry is no stranger to this, having experienced how De Beers controlled prices through managing its diamond stockpile during the monopoly era, but had to suspend mining operations in a more competitive scenario in 2008.
These same laws have given birth to the system of auctions, now practised by all leading miners in some form.
In today’s globalised world, they cut across national boundaries and physical markets. Industrial capital flows into countries where quality manufacturing can be done cost effectively, and finance capital flows into those instruments and markets that offer the most attractive returns. Why should diamonds be any different, one was tempted to ask on reading the open letter from Russian manufacturers to their Indian counterparts? It concerned an appeal made by an Indian minister to the Russian government suggesting that it should sell a part of Gokhran stocks to Indian companies.
Though the merits and demerits of the issues raised are best settled through mutual discussion, especially since both the organizations are part of the International Diamond Manufacturers’ Association (IDMA), suffice it to say that ultimately goods will tend to flow in the direction of demand, just as water will seek its own level in nature.