Does the De Beers diamond reserve exist, and how big is it?

[Dunderman]

I've heard about De Beers stockpiling diamonds to keep the prices high, so that somewhere there's a vault filled with diamonds that have never reached the market and won't until De Beers decides they can without driving the prices down. Are these rumours true? If they are, how much is in that vault?

[spingears]

Originally Posted by Priceguy

I've heard about De Beers stockpiling diamonds to keep the prices high, so that somewhere there's a vault filled with diamonds that have never reached the market and won't until De Beers decides they can without driving the prices down. Are these rumours true? If they are, how much is in that vault?

Only De Beers knows.

[Epimetheus]

Well, I want to know where De Beers are stockpiled too! Free Beer!

[Revtim]

I heard somewhere that the stockpile had actually been depleted. No cite, sorry, so take that with a grain of salt.

Regardless, I think it would make a pretty cool plot for a movie, an Ocean's Eleven type team robbing the stockpile.

[CarnalK]

Priceguy said:
I've heard about De Beers stockpiling diamonds to keep the prices high, so that somewhere there's a vault filled with diamonds

The one does not follow the other. If a multinational company like De Beers was stockpiling diamonds they would likely store them in multiple locations.

Anyway, it's no secret that De Beers manipulates diamond prices through a vigorous control of supply- in mining,stockpiles and distribution. They own over 50-60% of the industry total in each of those categories. There isn't much need for a secret diamond vault.

I bet they have one or two hidden around though. Maybe if artificial diamonds really take off, they'll use any stockpiles as a poison pill: just FLOOD the market so the artifical guys go bankrupt.

[Zoe]

CarnalK: Maybe if artificial diamonds really take off, they'll use any stockpiles as a poison pill: just FLOOD the market so the artifical guys go bankrupt.

De Beers would be more likely to go bankrupt if they did. The "artificial" diamonds aren't artificial at all. They are real diamonds -- just man made. The biggest difference is that the man made diamonds are perfect and the natural diamonds are not.

[CarnalK]

Your point is, Zoe? Mine was that if artificially created diamonds made it look dismal for De Beers' future, they might destroy the market on their way down.

[Jurph]

Right now there's a certain mutually-assured-destruction balance going on. Neither DeBeers nor the synthetic manufacturers have any incentive to lower the prices, because each maximizes profit by keeping prices high.

Right now most gem-grade synthetics makers are doing colored stones and engraving their work so that the natural stones will still retain value. Those making white stones (e.g. Apollo Diamonds) are making such small quantities that you have to seek them out; even if they're available at a discount, Apollo sells their entire stock whenever they make any. Because they can't increase supply until they can buy more diamond presses, a free market system would have them increase prices until just before they stopped selling their whole stock (or increase prices until they sell 90% and then sell the remainder at a slight discount). Regardless, the market pressure will continue to keep synthetic diamond prices high until the manufacturers can compete with DeBeers for volume.

[Ike Witt]

I read somewhere that if the reserves were put on the open market, the value of gem quality diamonds would drop to something like $20 a carat. I'll see if I can find that cite.

[Bill H.]

For De Beers to control the market, they don't necessarily need any reserves. They just control how fast they mine them.

Also, fwiw, De Beers sells only uncut diamonds, so seeing their stockpile wouldn't be all that impressive to the untrained observer.

Here's a fascinating read on the subject: http://edwardjayepstein.com/diamond/prologue.htm

[Duckster]

You can find a number of good links in this thread.

[ralph124c]

I mean, DeBeers has been bamboozeling people for years! Right now, they have managed to market "canary"and "champagne" diamonds as somehing special! These are the yellow-tinted diamonds, which used to be WORTHLESS in the gem trade. Yellow diamonds wereonly used as abrasives..and now they are marketing "black" diamonds as well.
Anybody who can get people to plunk down 6 months salary for a worthless chunk of carbon has my respect...although, moissanite looks a lot better and costs less!

[manhattan]

Originally Posted by CarnalK

The one does not follow the other. If a multinational company like De Beers was stockpiling diamonds they would likely store them in multiple locations.

Originally Posted by Bill H.

Also, fwiw, De Beers sells only uncut diamonds, so seeing their stockpile wouldn't be all that impressive to the untrained observer.

I think DeBeers does sell cut diamonds, or at least semi-cut. But either way, Bill H. is almost certainly correct that any stockpile they had would be of uncut stones -- it doesn't make sense to incur the expense of cutting them prior to very long-term storage.

But it's definitely more fun to imagine a single huge vault with cut gemstones, maybe with Scrooge McDuck rolling around in them. And yeah, Hollywood definitely ought to cook up another Gruber brother so John McClane can prevent him from getting the diamonds. They can call the movie "Diamond Hard."

[Khampelf]

Originally Posted by CarnalK

Anyway, it's no secret that De Beers manipulates diamond prices through a vigorous control of supply- .

Yep. They've always been Facet Dictators.

[hajario]

Originally Posted by manhattan

I think DeBeers does sell cut diamonds, or at least semi-cut. But either way, Bill H. is almost certainly correct that any stockpile they had would be of uncut stones -- it doesn't make sense to incur the expense of cutting them prior to very long-term storage.

Also because cut styles change. You don't want a vault full of cut diamonds cut it the last generation's style.

Haj

[Bill H.]

According to http://www-1.gsb.columbia.edu/journa...d_Industry.pdf, which claims to be quoting the Economist, 2000:

At the beginning of 1999, De Beers had a stockpile of diamonds worth $4.8 billion; even after a stellar year, it is $3.9 billion... under pressure to cut costs, the company wants to slash its diamond stockpile to $2.5 billion or less -- only three to five months of sales -- and keep it at that low level.

[filmyak]

Originally Posted by CarnalK

Maybe if artificial diamonds really take off, they'll use any stockpiles as a poison pill: just FLOOD the market so the artifical guys go bankrupt.

First, remember that cultured (i.e. man made) pearls are more valuable than natural ones.

Second, the main thrust of artificial diamonds is to make large, flawless, very cheap (abut $5/carrat) diamonds for use in computer processors to replace silicon chips. Faster and cheaper (especially FASTER) alternative.

Entering the jewelry market is a possibility, but 2nd priority.

No time to search for cite, but there was an excellent article in Wired on this just under a year ago, maybe feb or mar of '04.

[Excalibre]

Originally Posted by ralph124c

I mean, DeBeers has been bamboozeling people for years! Right now, they have managed to market "canary"and "champagne" diamonds as somehing special! These are the yellow-tinted diamonds, which used to be WORTHLESS in the gem trade. Yellow diamonds wereonly used as abrasives..and now they are marketing "black" diamonds as well.

While slightly yellowish diamonds have always been considered inferior to clear ones, brilliant yellow-colored ones are considered Fancy, and more valuable than clear ones (as with fancy blues and reds) as they're significantly rarer. If DeBeers is marketing diamonds as "champagne" (that's certainly not an attractive color for a diamond) that would formerly just have been considered not very clear, then that's pretty funny. But diamonds that are yellow in color are nothing new.

[rocking chair]

you could just go to arkansas and dig for a diamond. they tend to have yellow ones there. hillary clinton wore a large yellow diamond at the inaug. ball, that was dug up in ark.


http://www.arkansas.com/things-to-do/diamond-hunting/

[CarnalK]

Was this the article filmyak? Link to wired article

"This is very rare stone," he (Arnold Weingarten, a Belgian diamond dealer-CarnalK) says, almost to himself, in thickly accented English. "Yellow diamonds of this color are very hard to find. It is probably worth 10, maybe 15 thousand dollars."

"I have two more exactly like it in my pocket," I tell him.

He puts the diamond down and looks at me seriously for the first time. I place the other two stones on the table. They are all the same color and size. To find three nearly identical yellow diamonds is like flipping a coin 10,000 times and never seeing tails.

"These are cubic zirconium?" Weingarten says without much hope.

"No, they're real," I tell him. "But they were made by a machine in Florida for less than a hundred dollars."

Since the mid-19th century, dozens of these modern alchemists have been injured in accidents and explosions while attempting to manufacture diamonds.

Recent decades have seen some modest successes. Starting in the 1950s, engineers managed to produce tiny crystals for industrial purposes - to coat saws, drill bits, and grinding wheels. But this summer, the first wave of gem-quality manufactured diamonds began to hit the market. They are grown in a warehouse in Florida by a roomful of Russian-designed machines spitting out 3-carat roughs 24 hours a day, seven days a week. A second company, in Boston, has perfected a completely different process for making near-flawless diamonds and plans to begin marketing them by year's end.

The high tech uses of diamonds are definately there but they would be fools to ignore the money to be made in gem sales.

[JimMacMillan]

In the U.S. there is a program called Frontline. In my opinion it is a program that can be taken seriously. It is broadcast on PBS stations. I don't know if it is broadcast in other parts of the world.

Frontline did a special about man made diamonds. If memory serves, DeBeers discovered that if a certain frequency of light was shined on the artificial diamond it fluoresced for a few seconds after the light was turned off. Apparently this is something that real diamonds are incapable of.

FWIW
Jim

[rabbit]

Revtim
Regardless, I think it would make a pretty cool plot for a movie, an Ocean's Eleven type team robbing the stockpile.

I've actually seen a movie that dealt with this basic plot. Filmed late 60s I think. Saw it a while ago so I don't remember the name (sorry) but it was about a couple stealing the reserves from the organization that monopolized the diamond trade.

Ended up with them being paid by the cartel to NOT flood the market. (They ended up using the diamonds as the agregate for their driveway or some such.)