Global Diamond Club

[chucka]

INFO from Weekly Rapaport:
Long-term Plans Target ALROSA Sales at $3.7B by 2015

ALROSA expects consolidated rough diamond sales to total $3.664
billion annually by year 2015, including sales of $592.4 million by
its subsidiary Alrosa-Nyurba. By 2015, ALROSA expects to sell $210.6
million in cut diamonds, with Alrosa-Nyurba selling $21.7 million
worth.
''''
Rapaport TradeWire - Friday, February 21, 2008
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NEWS: Rapaport introduces new 10 carat price list and issues warning
that speculative prices for large diamonds based upon interdealer
demand may not be sustainable. Metal prices continue to break records
with gold at $954.70/oz and platinum at $2,185/oz. DTC February sight
estimated at $600 mil with slight rough price increases for better
qualities. Indian markets slow as trading confidence wanes under
severe liquidity crunch. Christie’s Hong Kong to auction 101.27 ct. F,
VVS1, diamond this May. Macao 2007 watch, clock and jewelry sales +54%
with overall retail sales +33% to $1.9 bil. GIA opens South Africa
lab. JCPenney 4Q07 sales -4.1% to $6.39 bil and profits -10% to $430
mil with fine jewelry weakest performer. Zale's 2Q08 profits -32% to
$52.7 mil. as company announces plans to reduce $100 mil in excess
inventory.


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ANNOUNCEMENTS:
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---Rapaport Introduces New 10ct. Price List

The Rapaport Diamond Report is pleased to announce that ten carat
prices will now be incorporated into our regular weekly Rapaport Price
List. Thirty and forty point diamonds have now been consolidated into
0.30-0.39 and 0.40-0.49 size categories. The introduction of the new
price list comes about as demand and prices for very large diamonds
reach record highs.


---Martin Rapaport Warns About Speculative Pricing

The diamond industry is undergoing a period of great opportunity and
challenge as a rapidly expanding global economy creates unprecedented
wealth. Demand for large , fine quality, diamonds has increased
significantly over the past few years while supply has remained stable
due to natural scarcity. In some instances scarcity and the resultant
higher prices have increased demand for very expensive conspicuous
consumption diamonds.

Surging global growth combined with a rapidly declining U.S. dollar
has pushed commodity prices to record highs while destroying
confidence in the dollar as the primary international store of value.
Over the past year, India and Israel have witnessed a 20% decline in
the dollar while Belgium has seen a 13% decline. Many diamontaires,
having lost confidence in the dollar and expecting increasing large
diamond prices due to a consistent imbalance between supply and
demand, now prefer to keep their wealth in diamonds instead of
dollars. This natural and rational development is having a noticeable
impact on the price level of large diamonds.

While higher price levels that reflect the long term imbalance between
supply and demand are sustainable, higher prices brought about by
internal diamond industry speculation are not sustainable and may
result in significant financial loss. Members of the diamond trade are
encouraged to consider at what price level they are buying diamonds.
If the price level reflects reasonable sustainable broad based
external consumer or investment demand, the level of risk is
mitigated. On the other hand if a significant component of the price
level is based upon internal diamond industry speculation that prices
will continue t rise, then even a slight short term decline could
cause a collapse.

All prices are unpredictable and therefore all market positions carry
risk. Diamontaires that buy diamonds in order to sell them to specific
customers through well established marketing channels have limited
risk. Those that buy diamonds to hold them in hopes of ever increasing
prices are subject to severe risk. Volatile market conditions dominate
the global economy and at some stage it is reasonable to expect a
temporarily price decline. Trade speculators, particularly smaller
players are not well equipped to handle a downturn and many can be
expected to dump and run.

The current market situation evidences a relatively high level of
trade speculation in large diamonds. It is therefore prudent for us to
advise members of the trade to carefully consider the sustainability
of the current price level before investing in diamonds. There is
nothing wrong with trade speculation/investment in large diamonds and
it is reasonable and given the current supply demand ratio it is
rational to expect higher prices in the future. However, when the
trade pushes prices to levels well above what consumers or “normal”
external investors are willing to pay and when the only incentive for
buying is an addiction to yet higher prices, the stage is being set
for trouble.

While we are confident that diamond prices will increase significantly
over the long term, there is no assurance that they will continue to
do so in the short or medium term. What we do know is that global
economic uncertainty and volatility is rapidly increasing and a
slowdown if not a downturn in demand is most likely. The diamond trade
will be challenged to justify the price level of diamonds and how well
they do so will depend on the industry’s ability to sell diamonds to
customers that are not in the trade.

So speculators beware. When the music stops will you have a chair?