Dividends and Diamond

If you go to a wedding or you know someone who is engaged, likely the lady received a diamond. The ring is a symbol and is pretty and many many people receive rings. Outside of being pretty, diamonds that go into the rings do not have many economic value. Do they increase in value over time? not really, for the average person buys through a retail outlook and anything retail has been marked up a number of times, but diamonds are pretty.

In the book Diamond – A Journey to the Heart of an Obsession by Matthew Hart, published by Penguin Books, Toronto and London, UK, 2001 the author reveals how the diamond industry has changed. For 100 years, the diamond industry was center on South Africa with Anglo American Corp or DeBeers run by the Oppenheimer family controlled the industry. Rough diamonds were sent to London and sold every 5 weeks which went to the Antwerp. Beligium and Tel Aviv, Israel to be sent to the jewellery retail companies of the world. The largest diamonds tended to go to New York to Tiffanys and Winstons and on the day of the Oscars – the stars wore diamonds that were lent to them by the companies. People watching the show would want what the stars were wearing. The world was good for the people who controlled the diamond markets.

In the 1980’s things begin to change, because diamonds are formed around the world and can be found in countries around the world. Between the metallic core of the earth and top of the earth is layer of rock about 2,000 miles deep, Every once in a while diamonds which are formed by layers of carbons, and once in a while a structure known as kimberlite pipe brings them to the surface under the correct conditions. What has generally happened is the pipe breaks the surface the softer kimberlite breaks down the minerals over millions of years are spread across a wide distance, but to find the diamonds took a long time to find the right signs. In 1970 a couple of researchers pubished a paper discribing tiny bits of farner included in diamonds. The colour was purple. Was it easier to look for the purple garnets than diamonds? If the sample contained the purple garnets, then diamonds were very close by.

It turned out it was true, and when independent prospectors learned what to look for they began to look again in South Africa, Australia, Canada and Russia. The more prospectors learnt about where to find diamonds and using technology, it was easier to find them

Linking to dividend paying stocks, investing in Anglo American for a long time was a very good investment for it controlled the supply and through marketing encouraged more demand than diamonds really should have. Over the years, knowledge has allowed for others to seek and try to find diamonds for there was no particular reason they should only be found in Southern Africa. Learning the signs allowed people to see the signposts and develop new supplies. It also allowed more people to benefit from diamonds as an stock investment. As you invest, what signs are you looking at?

There are more questions than answers, till the next time – to raising questions.


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