By Charles Wyndham
Over the past couple of days stock markets have surged on the news of the benign tapering proposed by the Fed in America.
I have ceased to understand or even try to understand what is going on.
In my simplistic and stupid way, such a reaction seemed a bit over the top as everything that I have read so far has suggested that as soon as tapering even began equities would plummet, as everything was grossly overvalued.
So the prices go up, which I suppose must be better than them plummeting.
Yet in today’s FT there was a headline ‘US retailers lack Christmas cheer’.
Again, not that long ago I thought that I read that with a rising stock market retailers in general were reasonably optimistic about the coming festive season.
So that does not seem to have fed through, but maybe we will be pleasantly surprised when the real numbers come out…. But I personally will not be holding my breath.
For the diamond industry it is looking pretty gloomy.
Yes, the medium to long term looks very bullish, but that is not what can be said about the short term.
Banks are rushing to pull their money out of the industry, or at the very least not put any more in. The exception to this is the purchase of the ADB by the Yinren Group, but I think this may be rather more the exception proving the rule than any reason to hope for an overall increase in liquidity or indeed a slackening in liquidity tightening.
The only market that all in the trade seemed to be pinning their hopes upon was America, as the life boat of China has been sent back to port and Europe never got out of port.
Rough is weak, well, sufficiently weak to persuade the Okavango Diamond Company to pass on its tender and hope for better things in January.
Our Polished Index is less than happy.
All a bit grim really and might make the plum pudding go down even more heavily than usual on Xmas day.
On top of this is the continuing fall out from the industry’s own goal regarding cultured diamonds.
The stories about cultured being passed off as natural only seem to grow and I might have missed something, but nothing of any consequence appears to have been done about it.
This rather contrasts with a story in the New York Times that a Mr Kurniawan was convicted in New York of defrauding some of the country’s wealthiest by selling purportedly rare wines which in fact he had knocked up in his kitchen.
When raided the police found fake wine labels and new corks strewn about the place.
It is, or I find it, strange to think that so many must have been taken in for so long slurping their Chateau Kitchen, thinking it was some divine Chateau de Whatever.
However, the point of the story to me was that Mr Kurniawan apparently faces up to 40 years in jail for this chicanery.
In our industry, where all the traumas of passing off cultured as natural are well known and I keep being told that everyone knows everyone who is doing it, nothing has happened.
I remember doing a presentation in New York a good few years ago and being asked what the impact of the then hot topic of Blood Diamonds might be.
My view then was that it was certainly potentially damaging if nothing was done about it.
Something was done even if in my opinion what it finally spawned, the Kimberley Process is a waste of space. But at the time, the lobbying really did do something to abate the use of diamond revenues to fund a particularly vicious civil war in Sierra Leone.
However, at that same, and other presentations that I have done, I argued that what could be considerably more damaging was the possible passing off of cultured diamonds as natural; as that undermined what I would argue to be the core emotional value of diamonds in a much more fundamental way.
I also continue of that view whilst also believing that, if handled properly, cultured diamonds remain a tremendous business opportunity.
At the moment unless something serious is done to those fraudulently passing off cultured as natural, the industry could be adding long term angst to what is clearly short term discomfort.
Whatever mischief Mr Kurniawan got up to, those who were duped at least could enjoy a Chateau of a Migraine. With diamonds if some love struck couple suddenly find out that, what was to them that hugely expensive diamond engagement ring was not a natural stone, but instead what some like to refer to as a synthetic stone, I doubt that they would be part of what De Beers liked to refer to as the addiction of diamonds.
Much better buy a dishwasher from which both benefit.