Diamond and Precious Metals Week In Review: 9/30/05

This week saw strong trading activity at the Hong Kong show with good overall demand for diamonds especially larger stones. Excellent makes and over-sizes brought premium prices. Trade is concerned about levels of sales for this upcoming Holiday Season as consumer confidence falls amid rising oil prices.

Gold hit a high of $473.50 in trading yesterday with Platinum rising to $929 and Silver making a big jump to $7.51.

Analysts expect some short-term volatility in the Precious Metals but over the next few months expect Gold to rise to the $500.00 area.

Some dealers said gold was prone to profit-taking but would find support at around $470 an ounce, thanks to firm Tokyo gold futures and physical demand at lower levels.

“Where do we go from here, is a big question. I still don’t, at this present moment, see a reason to be selling gold. I wouldn’t be surprised if we went towards $475 during next week,” said Darren Heathcote, head of trading at N M Rothschild.

Dealers said gold was likely to watch the dollar and crude oil for direction. The euro was higher than New York levels at $1.2044.

The market awaits the payrolls report for September due next week, and Thursday’s report showing that U.S. jobless claims fell more than expected suggested the data would be stronger than forecasts.

Diamond Auction at Sotheby’s Tops 5 Mil

Yesterday’s (Sept. 28th) Sotheby’s New York sale of Important Jewels totaled $5.3 million, 70 percent sold by lot and 78 percent sold by value.

Some highlights of the sale included:

5.58 carat, D-Flawless diamond ring: $385,600
12.42 carat, Fancy Intense Yellow, VVS1 diamond ring: $168,000
6.41 carat, Fancy Intense Yellow, VS2 diamond ring: $162,000
5.04 carat, D, VVS2, diamond ring: $126,000

Sotheby’s featured period and signed pair of diamond pendant-earrings, circa 1915 that brought $60,000 and an aquamarine and diamond clip, Cartier, London, circa 1935 that sold for $32,400.

We can dream, can’t we?

Dancing Diamonds for Imelda! The Saga Continues!

Diamondvues has been following the story of the Phillipine Government trying to recoup the money they claim Imelda Marcos stole from them by litigating to seize her diamond jewelry.

In this continuing saga, todays Phillipine Inquirer reports that the Phillipine gov’t is confident that the world’s fascination with her mystique will fetch a price running into the millions of dollars, the Presidential Commission on Good Government (PCGG) says it is also now considering auctioning off former First Lady Imelda Marcos gowns and famous shoe collection along with her jewelry.

PCGG Commissioner Ricardo Abcede said he will discuss this possibility with three international auction houses he had earlier invited to bid for three collections of jewelry seized from the Marcoses after the 1986 People Power revolt that ended Ferdinand Marcos 20-year rule.

In an interview with the Inquirer yesterday, Abcede said that, like the jewelry, Imeldas gowns and shoes were nonperforming assets that should have been sold a long time ago.

Abcede said he expects that the jewelry alone, earlier estimated to be worth around $10 million, would fetch as much as $150 million, or about P8.4 billion, in an international auction.

Fascination with Imelda

Abcede believes that the worldwide publicity that the jewelry has received, plus the fascination with Imelda, the total price could be 15 times what has been previously estimated. This has happened several times with auction houses, Abcede said. He recalled that a rocking chair once owned by former U.S. President John F. Kennedy fetched a price 15 times its original estimated value.

Its a celebrity auction, meaning the price will be dictated not by the item itself but by its association with the celebrity, Abcede said.

He did not say how much the gowns and shoes would fetch or who would be interested in them.

Displaying Imeldas gowns and shoes as done in the past is no longer feasible because people lose interest after around three months, according to Abcede. He added that, like the jewelry, they could be put to better use by being sold, with the proceeds going to the governments land reform program.

3,000 pairs of shoes!

At the time of the Marcoses ouster, the former first lady was reported to have around 3,000 pairs of shoes, including many designed by such world-famous names as Ferragamo, Givenchy, Chanel, and Christian Dior, all size eight-and-a-half.

She had admitted owning only 1,060 pairs, saying they were mostly given to her as presents by Filipino shoe manufacturers in Marikina. Nonetheless, this massive shoe collection has gained her international notoriety.

Her gowns, mostly ternos, were designed by top Filipino designers like Pitoy Moreno, Ramon Valera and Joe Salazar, and international designers Valentino and Jean Paul Gaultier (in the 70s before he became famous).

The PCGG has been negotiating for some time now with three major international auction houses, namely, Sothebys, Christies, and Bonhams, for the right to sell the Marcos jewelry.

While the auction was planned initially to be held abroad, the PCGG is now considering holding it in the Philippines in hopes it would attract tourists and funnel taxes from the sale directly into the national coffers instead of going to some foreign government. Abcede said March would be a good time to hold the auction in Manila because it would fit in with an international jewelry fair in Hongkong.

Mrs. Marcos is seeking a court injunction to stop the sale, claiming she is the rightful owner of the jewelry, but nothing has come out of this thus far.

The jewelry consists of three lots: the Malacanang collection consisting of around 300 items left behind in Malacanang when the Marcoses fled; the Honolulu collection of around 400 items confiscated by U.S. Customs in Hawaii when the Marcos landed there in 1986; and the so-called Roumeliotes collection, supposedly the most expensive, confiscated at the Manila airport in 1986 from Greek national Demetriou Roumeliotes, said to be a friend of the Mrs. Marcos.

Abcede said keeping the jewelry on display as some quarters want goes against the mandate of the PCGG and would require a congressional amendment of the law creating it.

I have one question, friends: Abcede heads the Commission on Good Government; isn’t that an oxymoron? Talk about non-performing ass-ets!

Holiday Ads Target Male Egos.

The diamond industry continues to target the male ego with marketing plans this holiday season, as Diamond Trading Co. (DTC) ad agency J. Walter Thompson (JWT) has devised a fourth-quarter campaign asking men, “What will you do for love this Christmas?”

DTC’s new multimedia campaign will tell its story through two sequential television commercials aired separately—the first in mid-November and the second at Thanksgiving. In the weeks between the spots, consumers will be able to follow the story through local radio ads and an interactive, experiential Web site. The campaign will be supported by national newspaper insertions and out-of-home placements in top diamond jewelry markets, with ads highlighting three-stone diamond jewelry, diamond right-hand rings and diamond solitaires.

The ads depict the story of a man who gets stranded at an airport during a snowstorm as he is trying to return home for Christmas. After talking to his wife by phone, looking at the three-stone diamond necklace he’s gotten her for Christmas strengthens his resolve, and the commercial ends with a shot of him running through the airport terminal, followed by the teaser: “To be continued at ADiamondIsForever.com.” Consumers can then follow the story through a DTC Web site enabling them track the man’s journey home. Finally, the second commercial will debut during Thanksgiving week, when viewers will find that the man has commandeered a snowplow to get home.

Guys, what do you think? Appealing?

Black Diamond With A Curse.

In what is being called the world’s largest exhibit of diamonds underway at the London Natural History Museum, a new diamond joined the display on September 21.

The Black Orlov or The Eye of Brahma, joined the Diamonds show begun at the museum July 8. A 65-year old curse is associated with the Black Orlov and lore tells that the jewel was responsible for deaths of two Russia princesses after it was removed from a Hindu shrine in southern India.

Black Diamond.jpg

A monk removed the original rough 195-carat diamond from the eye of the Idol of Brahma at a shrine near Pondicherry, India. This act forever cursed all future owners of the precious stone by bringing a violent death.

In 1947 princess Nadia Vyegin-Orlov and princess Leonila Galitsine-Bariatinsky (both former owners of the Black Orlov) leapt to their deaths in apparent suicides. Fifteen years earlier, J.W. Paris, the diamond dealer who imported the stone to the United States, had jumped to his death from one of New York’s tallest buildings shortly after concluding the sale of the jewel.

In an attempt to break the curse, the diamond was re-cut into three separate gemstones and has since been owned by a succession of private owners, all of whom seem to have escaped the curse. The 67.5-carat Black Orlov is set in a 108-diamond brooch suspended from a 124-diamond necklace.

Black diamonds are incredibly rare. Only one in 10,000 diamonds mined are colored. Most colored diamonds get their color from chemical impurities or defects in the stone itself. Black diamonds are different: Their color comes from the presence of tiny mineral inclusions.

Recent studies have shown that these inclusions are predominantly the iron oxide minerals magnetite and haematite along with native iron itself. When these iron-rich inclusions occur in a high enough proportion they can even make diamonds magnetic.

Big Funds Push Gold To-18 Year High! Silver & Platinum UP!

Gold touched 18-year highs yesterday as surging commodity prices signalled accelerating inflation across the world.

Big funds drove the price of gold to modern records in all major currencies, reaching $471.40 an ounce in London before falling back slightly on profit-taking.

Ross Norman, head of TheBullionDesk, said gold had lagged base metals and energy resources in the current commodities boom but is now catching up as investors begin to suspect that the world’s central banks are responding to the oil shock “the lazy man’s way” – by yielding to creeping inflation.

“The mindset has changed. The big funds are buying into strength and holding. We’ve broken through very important chart points and there are now prospects of $600 next year,” he said at a Dow Jones-AIG event.

Of great interest but little noticed is the fact that Copper and Nickel have increased over 200% over the past two years, driven by surging industrial demand in China and resilient US growth. Oil fell slightly yesterday to $64.32 a barrel for Brent crude in late trading after OPEC ministers pledged to raised output by 2million barrels a day, but it remains at levels viewed as unthinkable just five years ago.

Costly commodities have pushed US inflation to an annual rate of 3.6 %, reaching 5% over the past six months. Interest rates are barely keeping pace even after the US Federal Reserve’s 1/4 point rise to 3-3/4% yesterday – an ultra-lax stance heavily criticised by the Bank of International Settlements.

In Britain, inflation reached 2.4% in August, the highest in eight years. With the M4 money supply still ballooning at 10.2% a year, there are concerns that inflation may burst through the Bank of England’s upper limit of 3% this Autumn.

Analysts say the 13% rise in gold since May is different from earlier rallies in its four-year climb back into favor. Previous surges largely reflected weakness in the dollar, leaving gold almost static against the euro.

Almost unnoticed but of tremendous significance during this latest surge of Gold has been the very strong price increase of Platinum, now selling at $929/0Z.

Silver, the poor Man’s Gold, is quietly moving up as well…now selling at $7.29/OZ.

As we have mentioned in the past days these price surges in the Precious Metals coupled with worldwide economic inflation, Oil, and the slow recovery from Katrina, will increase prices for consumers on diamonds and jewelry during the upcoming Holiday shopping season.

Ernst & Young Predicts Challenging Season for Retailers.

Rising distribution costs that resulted from Hurricane Katrina will deliver a hit to retail spending this holiday, but consumers will still pursue luxury products, the Ernst & Young Consumer Trends Center said in a preliminary report released today.

The firm expects holiday sales increases for November and December to be 6 and 7 percent this year, compared to an 8.3 percent increase for the same period last year.

“It will be a challenging holiday season for most retailers, but many have back-up distribution plans and inventories that will help them cope with the effects of Hurricane Katrina,” said Jay McIntosh, Americas Director of Retail and Consumer Products for Ernst & Young LLP. “To bolster traffic and sales, retailers will begin promoting earlier in the season and promote more frequently and aggressively than originally planned.” Luxury items such as diamonds and jewelry, due to the growing luxury trend will continue to appeal to shoppers, and higher gas prices likely will boost Internet sales.

Model Wearing Jewelry.jpg

Ernst & Young issues a final holiday forecast in early November.

Fed Raises Interest Rates Again: Diamond Price Increases Expected.

The Federal Open Market Committee increased its target for overnight interest rates by a quarter percentage point to 3.75% today. This is the eleventh straight meeting with a quarter-point rate hike. The Fed funds rate is now at its highest level since June 2001. The increase in the federal funds rate was expected by traders and economists on Wall Street. There was one dissent. Fed governor Mark Olson preferred that the Fed stand pat. The committee once again concluded its monetary policy stance remains accommodative and that this “accommodation” can be removed “at a pace that is likely to be measured.”

Analysts are not as sanguine believing that the reversal of rising Interests rates is a long way off. Current upward price pressures in both the Oil and Precious Metals markets will spill over into the Diamonds sector as the cost of doing business increases.

Consumers can expect to be paying more for their Holiday jewelry.

Gold Rises for 5th Straight Day!

Gold rose for the fifth straight day as a surge in energy prices renewed concern the pace of inflation may accelerate.

Gold for immediate delivery yesterday touched $468.65 an ounce, the highest since January 1988, as oil prices jumped 7 percent on concern Tropical Storm Rita may strengthen into a hurricane before striking Texas. Investors buy gold to hedge against inflation, which erodes the value of other fixed-asset investments, such as bonds.

`Speculators continued to buy on the back of inflationary worries and uncertainty about the U.S. economy,’ Darren Heathcote, head of trading at N.M. Rothschild & Sons (Australia) Ltd., said in a report e-mailed today.

$525 an Ounce?

Gold for immediate delivery may rise as high as $470 an ounce this quarter, from a previous forecast of $450, Barclays Capital said in a weekly report e-mailed yesterday from London.

Barclays Capital, the investment-banking arm of Barclays Plc, is one of the nine market-making members of the London Bullion Market Association.

Newmont Mining Corp. President Pierre Lassonde expects gold to rise to $525 an ounce by January, according to an interview published yesterday in Le Temps.

Gold prices will then stabilize within a range $25 higher or lower than $525, Lassonde told the Geneva-based newspaper. The surge in prices will be triggered by a depreciation in the dollar, the newspaper quoted him as saying.

Stay tuned.

Platinum and Diamonds HOT HOT HOT at The Emmys!

Though consumers have been warming to yellow gold in recent months, television’s biggest stars stuck mainly to a celebrity staple—platinum and diamonds—for Sunday’s Emmy Awards.

Style-wise, the stars chose pieces that are sure to gratify jewelers. Earrings of all shapes were rampant, with hoop, chandelier and linear styles all popping up on the red carpet. Bracelets were the season’s hot addition, with styles that ranged from diamond and gemstone line bracelets to gold bangles largely trumping cocktail rings, as stars strove to adorn their wrists instead.

Long necklaces, which have taken root within the fashion world in recent months, will enjoy longevity for at least for another season, if celebrity preferences are as strong an indicator as in years past.