Diamonds The Size of Small Houses

The demand for diamonds – at Moneyweek.co.uk - the best of the week's international financial media.

I met a woman recently with a diamond the size of a small house on her finger. It must have weighed a good five carats - the average engagement ring comes in well under one - and it sparkled like the lobby of a Las Vegas hotel. A year ago I would have dismissed her extraordinary rock as both a complete waste of money and impossibly vulgar. Today I can only claim the latter. Just a few decades ago the diamond price was in freefall: demand was low and in most of Africa it seemed you couldn't take a step without stubbing your toe on a flawless diamond. DeBeers was stuck with a stock pile of unwanted stones worth a good $1bn and was being forced to mop up overproduction from mines in Botswana and Sierra Leone to prevent them dumping diamonds on the open market and pushing prices down further. The company's sales fell over 40% in 1981. Indeed even a few years ago there were many more diamonds around than there were fingers willing to take them: if you must buy a diamond, a dealer told me over a drink in a bar in Bangkok in 1996, buy a badly flawed one, they at least are quite rare.

Today that dealer probably hasn't got time for sitting around in hotel bars telling punters jokes about the shocking state of his business. He'll be too busy working. Over the last few years demand for diamonds has started to rise across the globe up 2% in 2002, 5% in 2003 and around 8% in 2004. Chinese demand alone grew 2% in 2003. And given that the status conscious middle class is growing fast all over Asia and will continue to do so even if GDP growth slows, that's a trend that is going to continue: rubies and sapphires may look classy but to most people nothing suggests status more than the bling of a nice diamond.

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Merryn Somerset Webb

Merryn Somerset Webb started her career in Tokyo at public broadcaster NHK before becoming a Japanese equity broker at what was then Warburgs. She went on to work at SBC and UBS without moving from her desk in Kamiyacho (it was the age of mergers).

After five years in Japan she returned to work in the UK at Paribas. This soon became BNP Paribas. Again, no desk move was required. On leaving the City, Merryn helped The Week magazine with its City pages before becoming the launch editor of MoneyWeek in 2000 and taking on columns first in the Sunday Times and then in 2009 in the Financial Times

Twenty years on, MoneyWeek is the best-selling financial magazine in the UK. Merryn was its Editor in Chief until 2022. She is now a senior columnist at Bloomberg and host of the Merryn Talks Money podcast -  but still writes for Moneyweek monthly. 

Merryn is also is a non executive director of two investment trusts – BlackRock Throgmorton, and the Murray Income Investment Trust.