The price of diamonds has been rising every year more than 14%
The price of diamonds has in particular suddenly risen since 2001.
There are three reasons why the value of the diamond rises.
1.Downturn of the World Economy
After the collapse of Lehman Brothers, the financial situation of
Greece, Spain and Portugal has worsened in Europe. For that reason,
a financial panic has spread throughout the world.
The main investments before the collapse of Lehman Brothers were securities and foreign exchange.
However, after the collapse of Lehman Brothers, investors came to need a risk hedge for their investments.
It is not only derivatives that investors chose for hedging risk.
The investors looked for a product which could store wealth securely even if we face a financial crisis such as the bankruptcy of Lehman Brothers.
That product is diamonds.
The reason why the price of diamonds has been rising is that investors worldwide have been purchasing high valued loose diamonds for diversified investments.
2. Explosive Increase of Wealthy People Around Asia
The wealthy people of rising nations including China and Southeast
Asia has increased.
Luxury cars, big houses・・ There are many products which wealthy people are eager to get.
Diamonds are one such products.
Wealthy people increase year by year all over the world.
However, the production of diamonds does not increase.
Instead, the production of diamonds decreases.
Since there is a small supply of diamonds, it is natural that the value of diamonds would rise.
3.Decrease in Production Diamonds
There are two types of diamonds.
Those used for ornaments such as jewelry and those used for industrial purposes.
In recent years, large diamonds for ornaments and jewelry have seldom been mined.
For example, Botswana is the world's largest diamond-producing country.
Jwaneng mine is the largest diamond mine in Botswana.
It is well known that Jwaneng mine has a high ratio in the total output of diamonds for ornaments and jewelry in the world.
The ratio of rough diamond found in such a mine is only about 1 carat in several hundred tons of material.
It is a miracle that very transparent and beautiful rough diamonds can be mined.
For the above reason, the price of diamonds is stable. Even if the world economy is unstable, the demand of diamonds increase more than 14% every year.
Reprocessed diamonds keep the balance of the market
Originally the diamond attracted attention as the asset which resists recession.
The price of diamonds is relatively uninfluenced by the recession.
The price of diamonds seems to go up and down relative to the rise and drop of the world economy and the production increase and decrease of rough diamonds. The price of reprocessed diamonds however is based mainly on the number of big diamonds in circulation in the market and balances with the market.
In Japan, a large number of reprocessed diamonds which were big and had high transparency were put up for auction during the past several years.
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