>>First, there's no doubt that aggregate demand for diamonds is in a tailspin.<< -- I have to ask how you came up with, "no doubt", Ned. I presume not from brief mainstream media, surely. ;) Things are rarely as they first appear, especially in this business. Cogitate that most any report coming from DeBeers can be considered part of a strategy. And they have long arms, including virtually all industry coverage and media feed. Undoubtedly, DeBeers and the CSO are a ubiquitous and persuasive force in the diamond industry.
In looking at DeBeer's financial report, Martin, that is, Over the six months to June 30, diamond stockpiles increased by $US256 million to $US4.7 billion and the company's long-term debt rose $US224 million to $US1.1 billion, there too things aren't necessarily as they seem.
Remember that DeBeers has drawn a line in the sand at 0.75 carats. It is stockpiling +0.75 carats and ignoring the smaller sizes, letting free market forces operate without smoothing intervention. DeBeer's requires huge stockpiles in advance of beginning new marketing campaigns so that the product is there to feed the demand created by the massive, & very expensive, advertising. - Also, DeBeers is sensitive to new Canadian production, and the runaway exploration in places like Alberta. Don't be surprised to see some negative marketing news coming from them over the next few years.
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This is the big time.
Cheers,
-j
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