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debeers

When you hear diamonds what do you think?? Most people think of a wedding rings and Well when some people hear the word diamonds they might think of acompany called De Beers and how they are considered a cartel. De Beers proved to be the most successful cartel arrangement in the annals of modern commerce. While other commodities, such as gold, silver, copper, rubber, and grains, fluctuated wildly in response to economic conditions, diamonds have continued, with few exceptions, to advance upward in price every year since the Depression.(the Economist, p17, June 3rd 2000) Through the years De Beers has sort of monopolized the diamond market. Since the company hasbroken anti trust laws they are not allowed to sell in the United States. Diamonds are said to behighly over rated because there is plenty of them but only so many are sold while the rest are stockpiled. The company owns 40% of the worlds raw diamond supply and about 60% of the polished.(Economist, losing their sparkle p17) The main way that De Beers controls the diamond market is that they only allow a certain amount of diamonds to be sold, that way they keep the diamond prices high. When actually theyhave many diamonds that could be sold but they keep them from going to market. Since they donot sell all the diamonds that they mine, they raise the price. De Beers has made stock piles ofdiamonds that they have just incase there is a dry spell in their mining. Also the prices will stayhigh for now and so, when the mines go dry they will have something to still sell at a high price. De Beers also has the worry of other countries that have the ability produce diamondsbecause despite what most people think diamonds are highly over rated all the neighboring southAfrican countries are rich with them. There is even one country close by where you can walk onthe beach and find many diamonds.(De Beers is it, 89) So if ...

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