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Bricks

By Charles Wyndham.

I don’t know about you, but I certainly have dropped more than my fair share of bricks.

However, at least I don’t go and try and find someone to build a brick factory for me, but then I don’t have a defunct diamond mine and I am more than capable of creating my own howlers.

So the news that De Beers is looking for someone to set up a brick factory on the site of its Kimberley mines is a perfectly and indeed commendable development, as alternative sources of employment are sought.

The news reminds us of the fact that all mines are by definition finite. Yes we know that, but at the same time we all seem so adept at sublimating the fact till it is questionably even within the subconscious.

Being finite is obviously a key reason as to why diamonds are precious, which is why I find it strange just how we treat the commodity within our own industry or trade.

As I suggested at a talk I was asked to give at the WFDB in Mumbai, the underperformance of polished is very much the product of the industry’s own blasé to contemptible treatment of diamonds.

In fact, bricks probably get more respect in terms as to how they are sold than many if not most diamonds spewed out in tacky displays with large letters announcing what special offer is applicable.

For example, for a luxury product the first words in buying or selling polished is to discuss the discount at which the deal is to be made, even before it is put into that tacky display at retail.

The trade does not treat its own product as a luxury product but goes strutting around boasting that diamonds are the ultimate luxury.... do as I say not as I do.

So as with the KP process, reading the ghastly drivel that Baroness Ashton, the EU’s Foreign Minister (for whatever that is worth... or should I say cost) had to say about progress of the Kimberley Process, especially in regards to Zimbabwe, again highlights the vortex into which diamonds seem to be so willing to rush into to get to the bottom as quickly as possible.

Zimbabwe has a repugnant regime and there is no way that any luxury product should want to be associated with it.

Shortage of supply is now becoming the clarion call.

Much of this seems to be driven by De Beers making a virtue out of its own incompetence.

Production issues that we have been writing about for sometime suddenly have been forced into the open and the full extent in the shortfall in production is hitting home.

Given the current state of the market this should be good news, but the ingrained Pavlovian reaction of panic to any idea of shortages might be resurrecting its ugly head again.

If, as I have written before, we see another bubble in rough prices driven by this ‘shortage’ then the subsequent crash will make current circumstances look like a picnic party.

The deadly combination of too much manufacturing capacity and very cheap credit could, if the banks jump onto the bandwagon, cause serious damage.

Still, we can all turn to making bricks instead.

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