By Saul Singer
The apprehensive mood that has swept across the global diamond trading markets over the last two months has eased somewhat in light of the better than anticipated expectations for this week’s Hong Kong Jewellery and Gem Fair. Notwithstanding this, the overall market sentiment remains subdued.
Polished diamond prices remain flat whilst prices for smaller commercial goods ease on the back of lower trading levels. Despite these lower trading levels, prices for better quality investment diamonds remain stable at their historically high levels. Compared with the first half of the year where there was significant upward price movement, the pendulum has now shifted to create a buyer’s market.
The signing of the much anticipated agreement between De Beers and Botswana will give a tremendous boost to Botswana’s endeavours to create a local diamond hub of global standing. The new 10-year agreement calls for ten percent of De Beers’ Botswanian rough production to be sold to the Government of Botswana and not aggregated into the rest of its own rough production which is on-sold to its clients. This level will increase to fifteen percent in five years. Perhaps the most poignant element of the agreement is the relocation of the De Beers’ rough diamond sales activities from London to Gaborone. From a macro perspective the agreement should open up the rough diamond market somewhat and is another step in De Beers shift away from being the custodian of global rough diamond supply.
The market will look towards the trends and transaction levels at the Hong Kong Jewellery and Gem Fair which continues this week to ascertain the current state of the market. There is an expectation of the return of some real value buying opportunities as sellers adjust their pricing strategy in line with the more subdued prevailing market conditions. Furthermore, the depth of the strength of the Far East market will be put to the test as many diamond houses realign their sales channels away from weaker geographic markets and focus more on the Far East.
Investment diamonds remain relatively less affected by overall diamond market trends and more affected by the overall jitteriness in global financial markets. We expect investment diamond prices to remain stable over the next few weeks with the emergence of potentially good buying opportunities.
(Saul Singer is a partner at Fusion Alternatives, an innovative investment house and the leading alternative investment asset manager specialising in investment diamonds. Fusion Alternatives does not hold any diamond inventory and aims to give expert and independent insight into the global diamond market. Visit www.fusionalternatives.com)
