The move is a sign of the pressure on the world’s biggest diamond miner to find new markets following the collapse of traditional sales.

EDITOR’S CHOICE

Stephen Lussier, De Beers’ executive director for corporate affairs, told the Financial Times the group had been approached in the past two months by “half-a-dozen” brokers linked to sovereign wealth funds and wealthy individuals. He refused to identify them but said talks were in early stages.

But analysts and investors said that the closed nature of the diamond market made them a much less attractive option than gold.

Chaim Even-Zohar, an industry expert who runs Tacy, an Israeli diamond consultancy, said De Beers, which is weighed down by $3.6bn of bank debt, has been scouting for new sources of sales because of a collapse in demand which is expected to force the company to cut production by 40 per cent this year.

“De Beers are leaving no stone unturned to find buyers,” he said.  The privately-held company, whose biggest shareholders are mining giant Anglo American, the government of Botswana and South Africa’s Oppenheimer family, had sales last year of $6.89bn.

One emerging markets fund manager, who invests in commodities, said: “When you have people asking questions about gold’s intrinsic value, it’s difficult to see a bankable case for diamonds as a store of value.”

Brock Salier, mining analyst at Ambrian, a London-based resources investment bank, said the uncertainty that has gripped equity and currency markets had sparked demand for “hundreds of millions of dollars of something they can stick in a vault”, such as diamonds. An anonymous private buyer at a Geneva auction this week paid a record $9.5m for a rare blue stone from Petra Diamonds’ Cullinan mine in South Africa.

But Mr Salier added that diamonds represent a much riskier investment than gold. Unlike the yellow metal the stones, traded through auctions and private tenders, have no public market price and there is no instrument investors can use to hedge against fluctuations.  One Johannesburg mining executive suggested De Beers was targeting Saudi Arabia, which is in the process of creating what could be the world’s biggest sovereign wealth fund.

But De Beers said Gareth Penny, its chief executive, had not had any meetings with the Saudis during a recent visit to the Gulf, “nor are we aware that anyone has made a presentation to them on our ideas”.

State-backed funds in oil-rich Middle Eastern nations and Asian exporters flush with foreign exchange cash have been investing huge sums in western assets in recent years but have suffered losses of late, notably in US financial stocks.

“They’ve been so badly burned in equities they are likely to look further afield into holding resources and buying resource companies,” said Nigel Rendell, senior emerging market strategist at RBC Capital Markets.

“China has been stockpiling commodities. I wouldn’t be surprised if other sovereign wealth funds are doing the same.”

But he added: “Diamonds are of limited interest to a lot of people because of the difficulty in buying and ­selling. Gold remains the ultimate hedge.”

Pastor-Genève b.v.b.a., Brusselstraat 51, B-2018 Antwerpen, Belgium

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As the global economies continue to show signs of stabilization, rare colored diamond buyers around the world continue to consider the consequences of monetary policy and inflationary pressures that could potentially mount in the future.  With several diamond dealers and hard asset firms recognizing the potential of the market, the number of new dealers in rare colored diamonds should continue to increase demand over the medium to long term as new buyers are introduced to the market and supply continues to decline.

Pastor Geneve witnessed noted two small auctions in June showed solid results for colored diamonds, on the back end of a very strong auction season in New York, Geneva and Hong Kong in the spring. 

The market continues to shift towards the Asian economies, as rare colored diamonds continue to penetrate new locations of wealth.  With the Argyle tender of 2009 only offering 43 stones, as opposed to 65 stones last year, the strain of supply in Australia is beginning to show.  Bidding is expected to be strong, as the Argyle pink diamond tour will spend more time in Asia.

Pastor Geneve is proud to offer for sale a rare pear shaped violet gray diamond as well as a beautiful pink diamond.  These pieces were acquired from a collector with very good tastes and has given Pastor Geneve the opportunity to work with two very special pieces.

However, the stronger trend has emerged in the fancy color diamond segment, which has shown far less price volatility than white diamonds throughout the crisis. The Codiam Fund was recently established to invest specifically in high-end polished color diamonds, but more telling was a reported spike in the number of private buyers seeking such stones at the Basel show. “They’d rather have their money invested in a fancy color diamond than with J.P. Morgan,” said Eden Rachminov, owner of Rachminov Diamonds 1891, which specializes in fancy color stones.

Kazanjian Red Diamond Returns to the LA Natural History Museum

The Kazanjian Red diamond will be on display at the Natural History Museum of Los Angeles County through May 29, 2009. The rare diamond was found in South Africa, probably in 1927. During World War II, it was stolen in Arnhem during the Nazi occupation of the Netherlands, and hidden in a salt mine with other looted treasures. When it was recovered it was initially mistaken for a ruby. The diamond has passed through several owners, including Sir Ernest Oppenheimer, but was finally purchased by Los Angeles-based Kazanjian Bros. in 2007. This is the first exhibition of the diamond in the U.S. A sneak peak at the stone was offered at the museum this past October, before the diamond was sent to the Gemological Institute of America (GIA) for examination. The diamond can be viewed seven days a week at the museum, located at 900 Exposition Boulevard, from 9:30 a.m. to 5 p.m.

Diamonds Hold Steady at Sotheby’s New York Auction

Fine signed and decorative jewelry sold well at Sotheby’s New York sale as no matter what happens in the economy strong prices are always realized for these items. The sale tallied up $11,098,638 and was sold 68 percent by lot and 55 percent by value. The top lot of the sale was a diamond necklace, which sold to a European private collector for $698,500. An Asian private collector nabbed the second top lot of the sale — a 13.98-carat GVS2 diamond ring for $482,500, or $34,514 per carat. Although the sale lacked the very special large DIF stones that generally sell at auction there was still movement in diamonds, but mostly in the under 10-carat range. Notably, sapphires, emeralds and

natural pearls did well at this sale. Natural pearls are becoming a hot item at auction as buyers from the Gulf region scoop up these wonders of the sea prized for their rarity.

Pastor-Genève b.v.b.a., Brusselstraat 51, B-2018 Antwerpen, Belgium

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Rare colored diamond sales have been solid as a rock in recent months.  In fact, the Wittelsbach blue diamond sold for $24.3 M USD at Christie’s in London on Dec. 11, 08, setting a record price for any diamond or jewelry sold at auction. 

Christie’s Rahul Kadakia believes rare colored gems will remain stable at respectable levels.  When it comes to colored diamonds, especially blues and pinks, those are rare in any market.

Says Lisa Hubbard “  Those appear to be holding their value, and they have not been subject to the ups and downs of the white diamond market.  Sotheby’s had also logged strong results in its recent colored diamond sales.  An oval shaped, vivid yellow diamond weighing 36.99 carats, IF, sold at Sotheby’s in New York in December 08 for $71,870 per carat.

These gems are still the most sought after by famous private purveyors like the William Goldberg Diamond Corp.  In New York, which has produced some of the most extraordinary colored diamonds in history, including the 30 carat $50 million Blue lili and the 5.11 carat, $20 million Red Shield, the largest red diamond ever graded by the GIA.

I’ve heard different talk totally about mines shutting down.  Says Barry Berg of the WGD Corp. adding that he expects pink and blue to become even scarcer.  Its very hard to find blue today, rough or polished.  Yelow is a little more available, but orange, I haven’t seen in ages.

We recently sold a 10 carat intense pink for $8 million, we also sold a bracelet of 58 carats of fancy colored diamonds for close to $3 million.

The company has moved from selling stones into jewelry and is pushing deeper into markets like Brazil, Russia, China and India in the hunt for now clients.  Back in NY its opening a boutique jewelry store.

Clients have started asking the Goldbergs whether they should consider buying diamonds as an investment and a shelter from plunging markets.  Sotheby’s Hubbard is not surprised.  Diamonds have an international market and they are seen as a way to preserve wealth, she says.

Pastor-Genève b.v.b.a., Brusselstraat 51, B-2018 Antwerpen, Belgium

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Reason to Hope – Pastor Geneve

BY MARC GOLDSTEH

There seem indeed to be some positive signs appearing in the diamond market — small as fledgling spring flowers peeking out of the winter-bare landscape. They hint at the fact that there might be a future after all, even if nobody knows when exactly it will arrive.

Henri Keesje of Keesje Invisible Settings elaborated:”Business seems to have resumed slightly.That is, the phone has started ring­ing again, and small and very specific orders are being placed by our clients for stones across the board. It’s definitely better than January or February, which gives us a gleam of hope in the ambient darkness.”

SELECT GOODS SELLING

“Another sign of this fragile recovery that should be noted,” Keesje continued,”is that Israeli buyers are coining back to Antwerp for the rough, which is a good thing for the stabilization of the market. Basically, I think I can safely say that our clients abroad are still complaining and are not yet ready to replen­ish their inventories, but tailor-made sales of select goods are definitely coming back.”

Noldy Grossmann of Grossmann Diamond Manufacturing has a more tempered view, although he also has noticed some resump­tion of activity.”There’s indeed a little more movement, although it is very targeted,” he said. “The market is definitely more active than it was during the first two months of 2009, which were dead months. It might be more accurate to say that March was a little less dead, but the improvement really was too small for us to be speaking about the resump­tion of business. Nobody knows when the retailers are going to decide that the time has come to refurbish their stocks.”

Grossmann added that “The good news is that we sold more than expected at the Hong Kong show. I expect that the Basel show will give more indication of the climate of the industry or at least a good indication of the mood of the market, especially in the smaller goods range.”

TO RESTOCK OR NOT?

Although he also has seen shy movements in the market, Bruno Gerits of Lazare Kaplan is not overly enthusiastic. “Cus­tomers have needs and are again placing orders, that’s true, and it is important. How­ever, I wouldn’t call it a real improvement. Compared to what we used to do at the same period during previous years, we’re still at less than 50 percent of the old turnover.The general mood is bad, but sur­prisingly, rough is moving relatively well.”

“Diamantaires are now facing two choices,” he said.”Either they pull the trigger, make a decision, take their loss and move ahead with a clean slate, or they wait for better times in the hope that they will recover their losses. Nevertheless, for those who have very big stones, the losses are substantial and they are going to be terribly difficult to offset.”

Sounding a positive note, Andre Gumuchdjian ofA.V.Gumuchdjian said,”I strongly believe sales will resume in the very near future. In my opinion, our very low current turnover is no more than a techni­cal consequence of the fact that the retail level has lost some 20 to 25 percent of its turnover. Consequently, the retailers have been attempting to manage their stocks more efficiently and reduce or postpone their purchases.We’re now at about the five-month point since the drop in retail sales first impacted our level in the pipeline.”

Looking ahead, Gumuchdjian offered the prediction that”Unless retail sales continue to drop, there’s a good chance we will see our business resume in May or June in time for theVegas shows.What we must bear in mind, though, is that the U.S. will not live anymore in its financial bubble, miles away from the real economy. When purchases do resume, our industry shouldn’t expect to regain the crazy levels we knew in the past before the crisis. One of the very encouraging aspects of the current situation is that the prices of the polished are very likely to rise very soon, the reason being the shortage of rough. Indeed,

the global policy of reducing diamond output seems to be bearing fruit because, for some items, the supply already is too short. Prices are definitely more poised to go up than down. Having said that, now seems to be a fine moment to start buying rough — that is, if you’re liquid enough, of course.”

•

KEEPING HOPE ALIVE

Even though it’s not universally agreed that diamond business is resuming, there’s a kind of a general understanding among those in the market that something tiny and hopeful is in the air for the diamond indus­try. But it is important to keep any and all market improvements in perspective.

“If the market was to grow now by 200 percent compared to January, it would be interesting and diamantaires would be pleased,” said Grossmann. “But let’s not forget the example of Citibank, whose stock, which was at $1.03 on March 7, appreciated by 226 percent in just ten days to hit $2.33 on March 17.That may sound good, but you have to remember that the same share was worth $27 in March 2008 and about $55 the year before that.” +

Rough

·      Sales are picking up slightly across the board. Polished

·      Demand is slowly picking up for H-1, VS-WS but it still is not strong enough to indicate a real trend.

·      Generally speaking, people are focusing more on the bottom line — profit —than on the top line —turnover.

Pastor-Genève b.v.b.a., Brusselstraat 51, B-2018 Antwerpen, Belgium

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IF – Internally Flawless

VVS – Very Very Slightly Included

VS – Very Slightly Included

SI – Slightly Included

I – Included

All of these clarity scales are analysed under a microscope using 10 X magnification.  Only an I graded stone has inclusions large enough for the human eye to detect, all other grades require magnification to detect the inclusions.   This means that the microscopic cuts and scrapes in an SI stone will not detract from the beauty and colour of a slightly included stone.

The majority of coloured diamonds contain inclusions because of the chemical structure and pressure required to create one.  Coloured diamond connoisseurs will acquire a stone based on the colour saturation and consider clarity as a secondary issue.  In certain colours, such as orange diamonds and purplish pink diamonds, the microscopic imperfections within the stone will actually help transmit the light through the diamond prism to create a more saturated and vibrant colour appearance.  For example, at the recent Argyle Pink diamond tender in 2006, there were six VS rated stones, 35 SI rated stones and 24 I rated stones. 

Over the years thousands of coloured diamonds have sold at the worlds auction houses, dealers and retail outlets without a grade for clarity.  In fact, the GIA has a colour-only report they produce from the coloured diamond grading facilities that doesn’t even grade the stone for clarity, just the cut, colour and carat weight.  Coloured diamond connoisseurs will not use a loop to examine a stone until the end of their analysis, they will use different light sources as their guide.  They will ask questions such as: How does the stone look in natural sunlight as opposed to artificial light? 

The most expensive red diamond ever sold was a 0.95 carat fancy red diamond for $926,000 per carat in 1987.  This stone was heavily included but because of its rich strawberry colour, it sold for a world record price.  A comparable D-flawless diamond would sell for under $17,000 per carat.

Pastor-Genève b.v.b.a., Brusselstraat 51, B-2018 Antwerpen, Belgium

Tel: + (0) 32 3 244 1871 Fax: + (0) 32 3 244 1873

http://pastor-geneve.com

Pastor-Geneve has been working closely with Argyle pink diamonds since the late 20^th century and has seen this segment of the market gradually and steadily rise in demand, recognition and price.

As supply at the Argyle mine continues to decline before they close the mine in the next decade, prices of these rare diamonds are expected to dramatically increase over the long-term.

Whether you are planning to live “off the grid” and free yourself from energy bills or just “kick back” and enjoy lower energy bills, the first step is always to understand your home’s energy usage and employ good old fashioned energy conservation techniques.

The reason for this is simple – you can not be charged for what you don’t use (in terms of energy…well this is strictly untrue if you are on a utility company’s budget payment system…but we’ll pretend for a moment that is not the case.) So, if you use less energy, your energy bill will go down.

Makes sense. So…how do you conserve energy?

It all starts with understanding your home, and more to the point, understand how you and your family use energy. Simple everyday activities, like turning off the lights when you leave a room really can add up to make a difference. Now that the holidays are here, not going overboard with the lighted decorations (and those inflatable, light up decorations) can help. Of course, if you do go overboard (like many of us tend to) just mind the usage. There is no need to run them every night. If you must, run them a couple of hours at the most. Every hour those machines are being run, energy is being used – sometimes in mass quantity. And since you pay per kw/hour, this could really add up.

Energy conservation doesn’t stop there, though. Only running the appliances such as the dishwasher and washing machine when full saves on both electricity and hot water. (Hot water is a double whammy – you incur a water cost, plus the cost to heat the water…and keep it heated.) And promptly removing clothes from the dryer avoids running the dryer again to remove the wrinkles from clothes that have sat too long. (Dryers can be another double whammy…the electricity to run the motor, plus the cost of energy to heat the unit.)

By intelligently regulating the heating and cooling of your house, you can also conserve energy and keep your bills low throughout the year. For example, lowering your thermostat to 68 degrees F when you’re home can save you as much as 5-10% during the cold season. And letting your thermostat go as high as in the mid 70’s during the warm summer months will save you on air conditioning costs.

You can realize even more savings by avoiding overuse of the heat as well. For example, at night, it isn’t necessary to keep the thermostat at 68. Try lowering it even more, and just doubling up on the blankets or cuddling up to your loved one to keep warm.

Keep in mind that all these tips might help you save money on energy…but when it comes to saving on your energy bills there aren’t any guarantees. Why? Because every single home is different. Every single situation is different, just as every family uses energy differently. A family of 5 will use energy much differently than a family of 2. This isn’t a bad thing at all – it is just a fact of life.

Community energy conservation efforts can go a long way with short changes to make a big difference. Community leaders can truly lead the way, by hosting public events that encourage residents to follow energy conservation practices. Local ordinances can be formed or rewritten to encourage conservation of local public resources, and provide avenues for residents to participate in resource conservation, recycling, and reuse of materials.

Local communities are working together to provide recycling centers for public use. They can revise building codes to promote environmentally sustainable technology so that new buildings and remodels are made into healthy buildings. Efforts can be made to avoid excess duplication, by not allowing strip malls on every corner that cover land and add to urban sprawl, through zoning laws that are more environmentally friendly than builder friendly.

As population spreads, so does the impact of pollution and the potential for permanent damage. Local communities can work together to protect the environment and indigenous species from this overload and damage. Mass transit systems can be improved and brought out to their remote communities. Car pooling parking lots can be zoned into land management and car pooling encouraged. Zoning can be planned for maximum use in minimum areas to preserve the landscape, and parks are wonderful additions for local residents. Renewable and recyclable building materials can be encouraged. How land is developed, and built up, has major impact upon local resources and natural habitats. Careful planning can help offset the impact and promote conservation efforts.

By providing local resources, local farm markets, and local recreation sites, overall energy consumption is reduced, and local businesses profit. Even utilities can be managed locally, with some communities being built with a target of zero energy cost, using solar and wind power systems for the entire area. Lighting in buildings and on streets can be refitted to be efficient, solar powered, and otherwise conservative of energy resources. In high population areas, parks help relive the urban heat island problem, as well as be available for local recreation and open spaces.

Community energy conservation needs to increase awareness of the eco-system, and promote new advances in conservation techniques and materials, so they get used. Small changes by all can lead to big results for conservation of natural resources like water, electric and natural gas. Businesses can encourage employees to follow conservative practices at work as well as at home, like turning off unneeded lighting, and powering down machinery and computers when not working with them.