The $1 billion shortfall of diamonds can be initially filled from stocks held by De Beers. If the supply/demand balance could be reached in five years by new mine development [a big ask] this would require De Beers to supply $3 billion of diamonds to the market. This is significant even for De Beers.
Another factor is the large amount of $US creation to fund current account/fiscal deficit. When this is combined with low interest rates [negative real rates] it pushes investors to hard assets.
From times past I remember a classic play in this scenario is investment grade diamonds [uncut, >1 carat, E, VVS1]. If supply is tight this will put an accelerator under diamond prices.
TAW Price at posting:
0.0¢ Sentiment: Hold Disclosure: Held
