IDEX Online Special: The Economic Woes and the Silver LiningOctober 15, 08
There is much discussion among pundits about the current economic crisis, but hardly any that examines it from the perspective of the global diamond industry.
Credit, especially of the American flavor, allowed us to live well beyond our earnings. Financial institutions in fact encouraged us to do so.
We can hardly claim that the latest economic downfall took us by surprise. It was more like a snowball effect. We all witnessed the Sub-Prime crash and before that we felt that sales in the U.S. were weak and we approached the last Las Vegas JCK show with caution. Even before that, we witnessed a number of big industry players drop to their knees, not to mention the Friedman’s bankruptcy back in 2006, which provided credit to low income buyers, who clearly didn’t have the necessary income to buy diamond jewelry. That, in hindsight, was an early warning.
Fortunoff, Whitehall, Fred Leighton, Alpha Omega, Fabrikant, LID, Derco, Odimo (Diamond.com) and Samuels Jewelers - looking at the IDEX Online news archive, problems clearly started to surface at a growing frequency.
Crazy market? In the past year we were surprised to see the price of oil smashing the $50 a barrel psychological barrier, zoom by $70, pass $100, climbing until it started to fall back. Gold crossed $500 an ounce in early 2006 and some predicted it would cross the historic $1,000 mark - only to fall this week to $837 an ounce. In January, platinum was $1,545 an ounce, then it rose to $2,013 in May, and currently it hovers around $1,000. And this is before we looked at the price of polished diamonds or rough, not to mention fluctuating premiums.
We have three perspectives in this IDEX Online special. According to Chaim Even-Zohar, the diamond cutting centers will be taking the more severe beating in the current crises, predicting a ripple effect that will be felt throughout the industry.
Ken Gassman, looking at the retail side of the current crisis, is calling for cool headedness. Jewelry, he writes, is not a fad product, it has been around for at least 50,000 years. He offers a long list of practical ideas and tips in his action plan.
Sergio Tjong-Alvares takes a wide historical view. Going as far back as the ashes of the
As all three are asking us to look beyond our desk and take a wider perspective, may we suggest some alternative venues of investment: In the storm, it is easy to forget what makes life worth while. Lets invest in play with our kids, time on the beach, a good book (Jean- Marie Gustave Le Clézio just won the Nobel Prize in Literature, his books are available at any public library), a long walk at a destination we have put off visiting, writing those thoughts we never had a chance to do or getting some weekend projects done. Whatever it is, there is a silver lining to this cloud. It’s called The Future.