A shortage of diamond supply from miners to dealers in 2009?

Well, it's rather simple - Diamond mining companies are very scared of the possibility that diamond prices would drop significantly. Although these companies suffer from the economic recession, the idea of diamond becoming cheaper and cheaper is a nightmare for them, to the extent that they prefer to stay low, look for good markets and hope that the recession will end completely soon. Diamond dealers and retailers on the other hand need a minimum diamond supply to justify their business. They also don't enjoy the fact that diamond prices might drop, but I guess that they are less effected directly from the demand to supply ration than diamond miners.

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Things are looking better and better for diamond traders in terms of recovering from the recession. The market is stabilizing slowly and new markets in the Far East are making this time period more bearable. Though there is an additional challenge - Making the total control of the major diamond mining companies on diamond supply less rigid. De Beers, Alrosa, Rio Tintio and other diamond mining companies are stubborn as they have always been, and they continue not only to keep diamond prices in stable levels but also to rise them as much as possible.

Sure, such companies also suffer from the cut in diamond production, but somehow they manage to stay above water, leaving the sinking to less firm dealers, who simply cannot provide a decent diamond supply to their potential customers. Furthermore, with the current instability of the market every diamond purchase by diamond dealers is also quite risky, since customers' demand cannot be predicted. This have led to the fact that polished diamonds' prices hasn't changed much since March 2009, while prices of rough diamonds have increased significantly. Perhaps the rising demand for diamond in Asian markets enables diamond mining companies to gain profits while numerous diamond traders (this problem is particularly evident in the Surat diamond industry in India) are falling from the business tree which they are barely holding anymore, but there's no doubt that De Beers and other rough diamond production companies are insured in many aspects.

This unbalances situation, in which prices of polished diamonds don't change much, while rough diamonds' prices are on the rise would have to change sooner or later. Until it does there's no doubt that diamond mining companies will continue to suck any additional revenue they can, without showing much sensitivity to the stressful situation diamond traders are facing.

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The motive behind the policies of De Beers and other rough diamond enterprises is obviously gaining profits (could you blame them?), but this also has to do with the abstractness value of diamond, which must be preserved in any event. Do you think that De Beers would have managed to be such a successful, long standing company if its policies were flexible and philanthropic?! These guys know how to do business, and although many of us interpret their actions as cruel greed, we are simply jealous and hoping they would lose their control over the diamond industry. As I said, with diamonds, which aren't a concrete every day life necessity, De Beers must keep their grip on the industry in every moment. The fact that demand for diamonds has stayed in high levels for decades has a lot to do with the De Beers' initiative, though it seems so natural for us sometimes. If diamond supply to demand ratio becomes too big, an unwanted process in which diamonds suddenly "lose" their beauty, rareness and halo could undergo, which could in fact lead to a devastating result, not only for De Beers, but for all the diamond industry. Yes, these diamond companies might seem too thrifty sometimes, but that's what makes them and the diamond industry so prosperous.

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