Impetuous, romantic and old fashioned as it may seem, I got married last month. So diamonds have been much on my mind, and of course have knocked a large hole in my bank balance. No comfort, then, to discover how poor an investment diamonds are. I’m sure the quality of the marriage more than makes up for it.
It seems the world’s diamond business – very important to Hong Kong, as one of the world’s leading diamond trading centres after Antwerp and Tel Aviv and host to at least nine diamond and jewellery fairs every year – is in a bit of a tizz.
The value of worldwide sales last year fell by 2 per cent to US$79 billion – but the volume of sales of rough diamonds tumbled by around 30 per cent. In Hong Kong, jewellery-shop leader Chow Tai Fook has seen sales fall by 12 per cent this year, while Tse Sui Luen has reported an 8.6 per cent fall.
People in the business are bravely insisting that this is just a cyclical thing, and that we can expect a rebound by the end of the decade, but there is evidence that the slippage may be structural and long term.
On the cyclical side, people talk of lots of new diamond mines coming on stream. Most awesome is the Gahcho Kue mine recently opened in Canada’s steel-shatteringly cold Northern Territories which, coupled with Lukoil’s Grib mine in Russia, will be adding around 10 million carats of new diamonds a year by 2019. Add in the other new mines and the global output is expected to jump by 15 per cent to 150 million carats a year.
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