What to do with piles of diamonds, asks Thomas Biesheuvel on Bloomberg. Diamond giants De Beers and Alrosa have “barely sold any rough diamonds since February” after refusing to cut prices in response to the pandemic. So gemstones have been piling up. Industry specialist Gemdax thinks that the industry’s top five producers are sitting on $3.5bn of excess inventory. By January 2021 that could hit $4.5bn, “about one-third of annual rough-diamond production”.
The preference for stockpiles over price cuts is a familiar tactic in the luxury goods industry. Historically, the likes of Burberry have gone so far as to burn “excess inventory” rather than offer discounts, lest they sully their reputations for luxury, writes Greg Petro on Forbes. Consultants Bain & Co. forecast a 20%-35% global contraction in demand for personal luxury goods this year.
For diamonds, a product that “relies on sight and touch”, the challenge of lockdown has been acute, says the Financial Times. The entire supply chain is being squeezed, from Indian diamond cutters disrupted by shutdowns to jewellery retailer Signet, which will close 380 stores in the US and UK. On a brighter note, there has reportedly been strong demand for diamonds from China since reopening, thanks to the bridal business. “People have rediscovered what’s important to them and [are] committing to their partners,” says Stephen Lussier of De Beers.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
-
Six out of 10 retirees who accessed a pension didn’t use Pension Wise - how does the guidance service work?Many pension savers don’t bother using the free government-backed service Pension Wise. So, how does it work, and could it be useful for you?
-
UK-EU trade deal: Britain to get a £9bn boost to the economy by 2040The government’s agreement with the EU follows on from separate deals with India and the United States. Will it breathe life into the UK economy?
-
'Pension funds shouldn't be pushed into private equity sector'Opinion The private-equity party is over, so don't push pension funds into the sector, says Merryn Somerset Webb.
-
Greg Abel: Warren Buffett’s heir takes the throneGreg Abel is considered a safe pair of hands as he takes centre stage at Berkshire Hathaway. But he arrives after one of the hardest acts to follow in investment history, Warren Buffett. Can he thrive?
-
Who will be the next Warren Buffett?Opinion There won’t be another Warren Buffett. Times have changed, and the opportunities are no longer there, says Matthew Lynn.
-
Will Comstock crash – or soar?Opinion The upside for Comstock, a solar panel-recycling and biomass-refining group, dwarfs the downside, says Dominic Frisby.
-
'As AGMs go digital, firms must offer a new form of scrutiny for shareholders'Opinion Technology has rendered big AGM meet-ups obsolete, but the board still needs to be held to account, says Matthew Lynn
-
Unilever braces for inflation amid tariff uncertainty – what does it mean for investors?Consumer-goods giant Unilever has made steady progress simplifying its operations. Will tariffs now cause turbulence?
-
Two ways to tap into monopoly profits from airportsMost investors can’t get their hands on airports. Here are two ways you can
-
Fat profits: should you invest in weight-loss drugs?The latest weight-loss treatments could transform public health and the world economy. Should you invest?
