Zimbabwe Threatens Black Market Diamond Sales

Source:

"Man who brought Zimbabwe's currency coup holds ~25% of global supply."

A classic store of value during hard times I don't recommend is high-quality stones in the 1 carat range, and never mind that they brought fortunes through most wars for the last two hundred years safely.

Why? Because DeBeers will be unable to keep its artificially high price on one of the most common carbon formations. The IDC has controlled availability for a very long time; but the more we tolerate falling standards and increased governmental interference, the less safe we are.

Diamonds aren't hard to find. They aren't particularly hard to mine. The real problems are keeping the miners (official and amateur) from stealing them, shipments from being hijacked and ironclad control of the price.

The threat to your investments, if they include diamonds, is that the man who brought you the Zimbabwe currency coup, essentially, has control of ~25% of the world's unmined diamond supply, and he says calmly that he's going to sell them on the black market. He's got a nice supply of mined diamonds, plenty of diamond sands and an agreement with diamond cutters.

Mugabe's opposition is, I conjecture, a mask for the no doubt terrified diamond cartels. Obama says he will forbid diamond imports into the U.S.! The threat is that cartel control will be loosened to some extent and diamond prices will fall somewhat. Surely Mugabe has enough sense to see he can't afford to knock too much off the price of diamonds because he'll be among those with the most diamonds to sell. Perhaps that doesn't matter when you have a quarter of the world's supply. . .he can make up in volume what he loses in price.

If the diamond market ever really gets away from the cartel, the average modestly nice stone will run about $5/carat.

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