the story behind the De Beers cartel is well known.
Is it really? Or are you assuming that because you and your friends know about it that you think that everyone knows about it? (not an attack, just a easy trap to fall into).
players in the market -- seem to be acting in concert
I think that whenever a new participant enters the market they find that the most profitable path is to collude with the existing cartels. After all, if diamonds are really worth nothing, why would you enter the market unless you planned to keep the status quo?
What could be causing a major, year-over-year price increase in the face of new competition
I seem to remember reading somewhere that the growing affluence of Asian markets was increasing demand. But that might be the marketing spin.
edit: added everything under "or are you assuming" sentence.
It's really well known. There are articles written up about it every few years. It gets the occasional pop culture shout out.
We could split hairs for awhile and debate about how well known it is, or whether "Joe Sixpack" in Des Moines knows about it. But it's far from obscure.
I'll grant you that a lot of the major demand drivers (young couples, new money, etc.) probably don't know, or at least don't care. And that might make all the difference.
EDIT: Seems we both edited our posts at the same time. I think the Asian theory is interesting, and it might be the most savory / least fishy driver of price increases. Perhaps the "Joe Sixpack" of Shanghai, newly monied and with very few reasonable investment options in his home country, is buying diamonds left and right. Wouldn't surprise me. Either way, it seems odd that the cartels wouldn't go head to head in Asia for the big prize here, unless they reached a gentleman's agreement on territories.
EDIT: Seems we both edited our posts at the same time
An edit-off at 10 paces. Draw!
I think the whole thing is fascinating. From a marketing perspective it's amazing how De Beers manufactured demand for diamonds out of near nothingness.
it seems odd that the cartels wouldn't go head to head
This is an example of mutually assured destruction at play. The big players can't go head-to-head selling what is essentially a commodity good, without price cutting which would eventually lead to diamonds being sold for their true value. None of the players are interested in that.
> I think that whenever a new participant enters the market they find that the most profitable path is to collude with the existing cartels. After all, if diamonds are really worth nothing, why would you enter the market unless you planned to keep the status quo?
Also, DeBeers has diamonds and cash enough to sell below your cost of pulling things out of the ground for a lot longer than you can stay solvent.
Is it really? Or are you assuming that because you and your friends know about it that you think that everyone knows about it? (not an attack, just a easy trap to fall into).
players in the market -- seem to be acting in concert
I think that whenever a new participant enters the market they find that the most profitable path is to collude with the existing cartels. After all, if diamonds are really worth nothing, why would you enter the market unless you planned to keep the status quo?
What could be causing a major, year-over-year price increase in the face of new competition
I seem to remember reading somewhere that the growing affluence of Asian markets was increasing demand. But that might be the marketing spin.
edit: added everything under "or are you assuming" sentence.