I haven’t heard anyone bringing up the topic of a diamond futures market for some time now. But here’s Martin Rapaport keeping the topic alive. According to him, there are “increasing calls from within the industry” for a futures market. He goes on to say that the price of 4-carat-plus stones has appreciated 130 percent since the beginning of the year and that “There is no limit to the upward movement of diamond prices in an environment where the appetite of the wives of billionaires is insatiable.”
Firstly, how can anyone use the price of 4-caraters as an industry benchmark? And does Rapaport think billionaires’ wives will drive this industry? By the way, I don’t believe the demand for large stones is being driven by actual demand from women who want to own and wear them. They’re being bought by speculators who don’t really care whether the diamond is beautiful or not. They just holding on to it as another investment instrument.
The last thing the industry needs right now, in my opinion, is a futures market.
June 20, 2008 at 3:58 am
Vinod, the question isn’t how can you use 4 caraters as a benchmark, the question is how can you create a benchmark where there is no transparency.
After all, no one will buy oil in the futures market if it was not very clear what the real, paid price of a barrel is.
To create a benchmark, you (meaning everyone) need to know for how much diamonds are sold for. Therefore, “price list,” by whoever publishes them, can not serve as the basis for such a futures market.
As for the need of a futures market, that is for a different discussion, my good friend
Edahn