Diamonds

Diamonds

When you hear diamonds what do you think?? Most people think of a wedding rings and

how expensive they are. Well when some people hear the word diamonds they might think of a

company called De Beers and how they are considered a cartel.

De Beers proved to be the most successful cartel arrangement in the annals of

modern commerce. While other commodities, such as gold, silver, copper, rubber,

and grains, fluctuated wildly in response to economic conditions, diamonds have

continued, with few exceptions, to advance upward in price every year since the

Depression.(the Economist, p17, June 3rd 2000)

Through the years De Beers has sort of monopolized the diamond market. Since the company has

broken anti trust laws they are not allowed to sell in the United States. Diamonds are said to be

highly over rated because there is plenty of them but only so many are sold while the rest are stock

piled. The company owns 40% of the worlds raw diamond supply and about 60% of the polished.

(Economist, “ losing their sparkle” p17)

The main way that De Beers controls the diamond market is that they only allow a certain

amount of diamonds to be sold, that way they keep the diamond prices high. When actually they

have many diamonds that could be sold but they keep them from going to market. Since they do

not sell all the diamonds that they mine, they raise the price. De Beers has made stock piles of

diamonds that they have just incase there is a dry spell in their mining. Also the prices will stay

high for now and so, when the mines go dry they will have something to still sell at a high price.

De Beers also has the worry of other cou...

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...Sparkle,

17)

There are many things that cause worry to this company. Most of it is their fault, but they

are just doing so they can sell their goods they really aren’t hurting anyone directly. Hopefully

things will become easier for them and they will be aloud to sell in the states. But until that time

they will probably keep n doing what they do, stock piling buy diamonds before they go to market

dealing with rivaling countries. It will all go on as long as they are in business.

Bibliography:

 Axon, Gordon, The Wonderful World Of Gems, New York, New York, Criterion Books,

1967

“De Beers is it”, The Economist, Dec 19, 1998, p89

“Is it a crack or a scratch? De Beers” The Economist, Sept 12, 1992, p76

“Losing their Sparkle”, The Economist, June 3, 2000, p17

“ Diamonds aren’t Forever”, Time , Oct 12, 1992, p 73