Rare Investment Report - As a result of this macro economic gloom, industry experts speculate that diamond prices will remain at current levels through 2012. But don’t be fooled. Experts also indicate that the long-term outlook is extremely positive, as rampant demand from China and India is expected to outpace current global supplies in turn causing diamond prices to soar.
Today, it’s not a question if a true diamond supply shortage exists. It’s a matter of how long can current finite supplies appease the pace of global demand.
“There’s simply been no significant discovery since the early 90s really, and that’s despite an awful lot of effort going into exploration.”
– Research analyst at BMO Capital Markets, Edward Sterck specializes in researching supply/demand economics of the diamond sector.
Say Goodbye to the Oldest and Largest Mines
“The major production centers in Botswana and Russia are largely mature, with the massive open pits and many smaller mines, particularly in Russia, transitioning to underground operations,” said research analyst at BMO Capital Markets, Edward Sterck who specializes in researching supply/demand economics of the diamond sector. “Unit costs at existing assets are likely to increase and production could begin to decline over the next several years. In other words, new projects need to be commissioned in order to maintain world diamond production at current levels.”
Global Diamond Production Reached Its Peak In 2006
“We can't sell polished diamonds at discounted rates when we know that the prices of rough diamonds are increasing.”
– President of the Surat Diamond Association (SDA), Dinesh Navadia.
According to Sterck, global diamond production most likely reached its peak in 2006 at 162 million carats. When you consider the limited supply of Natural Fancy Colored Diamonds in the world and that for approximately every 10,000 white diamonds mined, one carat of color is found, you can imagine how difficult it will be for investors to secure their positions with investment quality Natural Fancy Colored Diamonds in the future.
According to the Times of India, there are no new rough sources that would significantly increase supply to the market over the next decade and global output of diamonds has reached a plateau. It’s hard to fathom but it seems there may come a day in the near future when diamonds are no longer mined but only re-sold into the secondary market.
In the longer term, the lack of new supply combined with strong and increasing demand for diamonds, particularly from emerging economies including India and China, strongly suggests that the outlook is “extremely positive,” Sterck said.
As you already know, in 2001 Rio Tinto, the third-largest diamond mining company in the world recognised that their Argyle Mine’s open pit mine was approaching the end of its life. The company began investigating the feasibility of constructing an underground block cave operation to extend mine life until approximately 2018. Sometime after this date, the Argyle Mine which produces the world’s life and vein supply of colored diamonds will cease to exist. Even I can draw the inevitable conclusions from this data.
“Prices of roughs are increasing and international buyers are resisting the polished prices asked by traders in India. We can't sell polished diamonds at discounted rates when we know the prices of rough diamonds are increasing,” President of The Surat Diamond Association (SDA), Dinesh Navadia said. The SDA is a non-profit organization, with a membership of more than 2000 industry insiders ranging from DTC Sightholders to small manufacturers who import and/or trade rough diamonds, cut polished diamonds and trade polished diamonds. The SDA also includes technology and service providers and people involved in brokerage and contract work in the Gem and Jewellery segment.
“There’s simply been no significant discovery since the early 90s really, and that’s despite an awful lot of effort going into exploration,” Sterck said in a recent interview with Bloomberg.
What this means to you as an investor is the potential to witness your investment diamond make huge jumps in value!
https://www.rareinvestment.com/newsletter/global-output-of-diamonds-has-reached-a-plateau-the-time-to-invest-is-now/