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17 september 2021

Australia becomes world’s biggest producer of gold for first time

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17 september 2021

Nigerian minister mulls death penalty for gold smuggling – report

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17 september 2021

Gemfields back to black

Gemfields is expected to register a net profit after tax of $23.8-million in the first half of the year compared with the net loss after tax of $56.7-million, a year earlier. Earnings per share are expected to be 2 US cents from a loss per share of 4...

17 september 2021

Debmarine Namibia's new diamond recovery vessel to arrive in SA next week

Debmarine Namibia’s new N$7 billion diamond recovery vessel, Additional Mining Vessel #3 (AMV3), is expected to arrive in Cape Town, South Africa next week ahead of commissioning early next year.

17 september 2021

Three Speakers and a Funeral

04 february 2009

Under this title the PolishedPrices posted an article by Charles Wyndham examining problems related to the DTC’s diamond sights held for sightholders in current environment:

It may not have been quite such a pleasure for the DTC’s sightholders to attend the annual cocktail party, as it would appear to have been for Nicky Oppenheimer, who told the gathered “members of this special diamond family” that he, “always looks forward to this (event).”

Doesn’t say much for the rest of the year, in my opinion.

Nicky contrasted the different circumstances of this year’s event compared to last year’s, when the talk was of the new contract period and the welcoming of “new members into our fold.”

Of course in 2008 there were those that under the new contract had been booted off the list as a consequence of the outrageously flawed and convoluted selection process underpinning the equally flawed and abysmal DTC’s Supplier of Choice strategy and therefore did not join in this joyous family gathering, despite some who had been DTC clients for over 40 years and who had been major clients paying in cash for the diamonds that the DTC graciously decided to offer to them, even during all the previous recessions that Nicky et al were anxious to mention as signs of their confidence in seeing through the bad times.

This totally impartial and logical process that was claimed by the DTC to be so perfect that I am told that at this gathering, there was the somewhat surprising sighting of a previously interred company, doing a Lazarus, and confirming their exhumation by wandering around the merry gathering.

The reaction of some DTC members to this apparition was akin, I am told, to a viewing of Banquo’s ghost.

It all adds to the fluid or deceased riddled meaning applicable to ‘this special diamond family'.

However, I do not want to dwell on Nicky’s comments. He has been talking about the diamond family for so long it would be quite unreasonable for us to expect any change whatever the circumstances maybe.

Also of course he is not one of his own staff in London who were told a week before Christmas that 25% were for the chop, and then having the news as to which individuals had been designated for execution delayed from this week, so that they have longer to mull over their potential fates and probably learn that the number is much higher than 25%.

The good news about Nicky’s speeches is that they are invariably short.

In contrast Gareth Penny likes to take his time, or the time of the audience.

Firstly, I have never heard such an eulogy to Nicky the chairman who with his “continuity, perspective and wisdom….if you have not seen it all, you’ve certainly heard about it all – and the industry sails into unchartered waters in an uneasy time, we are privileged to have your insight and judgment to guide us.”

Is Gareth worried that he might be in the 25%?

Whilst it might be reassuring to Gareth and Varda Shine who have next to no experience at all themselves, I find it a rather queasy statement.

I will gloss over what Gareth confirms might be the industry’s most difficult period as he rather prefers to see it as being “our proudest moment.”

He did confirm to the ennui of everyone in the room that the reduction in production will be “significant”, they are all aware of that and it is not as if De Beers has any choice.

To help everyone understand “significant” today, the day after the speeches, Bloomberg is carrying a report that De Beers may be cutting production by 50%.

The long term is looking great and as Gareth puts it the issue is how to get there.

There is a new “big idea”, to help us all on our way along down the Yellow Brick Road.

Thank heavens all were spared the BHAG (Big Hairy Audacious Goal) so gleefully trumpeted by his predecessor Gary Ralfe in his pomp and as noticeable as him in its absence.

Anyway, we can all look forward to ‘St. Petersburg 11’.

I suppose we must all hope that we are around to hear about it, but not all at the same time as in some plane crash.

Varda’s “With Challenges come Opportunities” was what has really kept me glued to the paper as my head crashed into the table, just as assuredly everyone hung onto every word.

With all the cross references to each other’s speeches it may be that they all got the same luckless individual in the DTC, if there are any left, to churn out these paeans to banality.

Varda also chose to refer back to the same gathering held last year attended by “the most qualified Sightholders best positioned to add value to the rough diamonds we sell and drive demand.”

I wonder what Lazarus thought when he heard that one?

Selling diamonds at, at least, 20% below market up to the catastrophically timed price increase in July last year of around 18%, which with the DTC’s usual uncanny ability was exactly the wrong timing, was described as “pricing fairly”.

Fair to whom? Not the best news for producers, but they, the producers should be consoled by the news at the end of her speech that DTC remains committed to beneficiation.

It maybe better news for them if DTC actually said that it was against beneficiation as its current interpretation of this is to sell to the pubescent factories in Africa at prices which are unsustainable even for fully mature factories in traditional centres.

Who needs enemies when you have friends…….

Varda told the gathered that initial research was that the US’s seasonal sales had dropped dramatically by up to 20%.

Not news to the gathered but good to know that even the DTC knew just how dire things were given that prior to Christmas the splurge in advertising was held out as being akin to the arrival of Sir Galahad but on this evidence a better analogy might be with the Charge of the Light Brigade.

The frightening thing of course is that Varda might actually believe what she said when saying, “We have taken great efforts to present the DTC goods at fair value- I am sure you will agree when you see the goods.”

Well, I am told that prices were dropped by around 15% but that to be commercial prices needed to go down by another 20%.

A sight at around $100 million would seem to say it all about the rapturous greeting to this week’s sight.

Varda’s comment noted above that the DTC were selling fairly into the “hot market”, i.e., well below market price, is even funnier when she says there was pressure for the DTC to adopt a tender system because SSV ( i.e., the Standard Selling Value or sight system) was “missing a trick”.

Just in case Varda has forgotten, DTC did adopt a tender system via Diamdel and this highlighted, to their acute embarrassment, just how much below market prices they were selling at that time.

The shock of another tender now might actually show the DTC what the prices should be, not what they hope they might be.

However, I have saved the best for last.

With all this gunk about families and togetherness and the esprit de corps to face the troubles of the world united, Varda let slip, that “the DTC is exploring options for bringing surplus goods to the market once every avenue of Sightholder demand was satisfied”.

Varda has been kind enough to elucidate this bit of news with a statement to her happy family today by saying: “The DTC is therefore exploring options for offering unforecast, surplus availability beyond current Sightholder list once every possible area of Sightholder demand has been met….on a Sight by Sight basis.”

Though not looking for new sightholders, Varda said such “surplus availability” will be “conducted on an ad hoc, transactional basis and there would be no contractual commitment on the part of the DTC….to repeat such sales.”

The implication is that any goods not taken up by sightholders will be sold to others which especially in these difficult times makes it even more dangerous for any company to buy when balances of goods could be tossed onto the market at more advantageous terms to undercut him and when the purchaser has no commitment to the DTC.

The piquancy of this statement was confirmed to me by the news that DTC has started to contact ex sightholders to see if they are interested in any purchases.

I suppose all in all that this is as good a way as any other of announcing the death of the sightholder system.