A First! DeBeers Agrees to Settle One U.S. Lawsuit.

“For decades, De Beers has possessed monopolistic power in the diamond industry…” reads the opening line of a class action lawsuit against De Beers brought by Emert and Katie Null in July 2005.

The Nulls accused De Beers of illegally restraining trade, controlling and limiting diamond inventories, and falsely advertising the scarcity of diamonds in order to boost prices.

The Nulls brought the class suit “on behalf of all people who purchased diamonds in the state of Illinois,” but excluded sightholders, diamond dealers, manufacturers, wholesalers and retailers. The plaintiffs say members of the class paid more than fair value for diamonds purchased due to monopolistic practices by De Beers, and sought “less than” $75,000 per and for individual class members plus legal fees.

On November 30, 2005, De Beers released a statement saying an “agreement has been reached, and a preliminary approval order issued, to settle the majority of civil class action suits filed against De Beers in the United States.”

De Beers said that in settling the claims, it does “not involve any admission of liability on the part of De Beers and will bring an end to a number of outstanding disputes.”

The settlement announced by De Beers is for $250 million, and they name the following plaintiffs/cases: Null vs. DB Investments, et. al.; Sullivan vs. DB Investments, et. al.; Hopkins vs. De Beers Centenary AG, et. al; and Cornwell vs. D.B. Investments.

The cases are all similar in nature and list the same causes of action for price fixing and monopolistic practices. In June 2004, about one year prior to the Null’s amended complaint, Arrigotti Fine Jewelry and two of its customers, all of whom resided in California, sued De Beers for violating anti-trust laws –or the Sherman Act– in Sullivan vs. DB Investments.

The Sherman Anti-Trust Act is meant to limit a combination of corporations from agreeing to not lower prices below a certain rate in order to reduce competition and control prices within an industry.

“Defendants [De Beers Group of companies] routinely acknowledge that their control over the diamond industry constitutes an illegal monopoly that violates United States antitrust laws,” the plaintiffs wrote.

Arrigotti, Shawn Sullivan, and James Walnum, alleged supply quotas were withheld from the market, that De Beers refused to work with anyone other than “entities under their control,” restricted and price-fixed polished diamonds.

Furthermore they claimed De Beers conspired with sightholders to artificially keep polished diamonds out of “free and open competition.”

Arrigotti’s case requested of the court to name De Beers as engaged in unlawful contract, conspiracy, and that it indeed violated the Sherman Act. The court was asked to permanently restrain the defendants from continuing the practice of monopoly and conspiracy in the United States.

De Beers states, “We believe that settling these suits is the most sensible and responsible course of action for the company to take.”

“We do not wish to comment or speculate on the approval process itself, or the issues under consideration by the court. Therefore, for the time being, we have nothing further to add to this statement.”

Outgoing managing director Gary Ralfe was quoted in the announcement as saying the settlement is “behind us, De Beers can now focus greater attention and resources on being a leader in all of our markets and playing a leading role to address humanitarian issues such as the fight against HIV/AIDS.”

De Beers says any final settlement is subject to approval by the United States District Court for the District of New Jersey and the company hopes their offer is approved in 2006.

There is currently a major lawsuit against DeBeers filed by the W.B. David Corp in reference to losing their Siteholder status
due, they claim, DeBeers implementation of their Supplier of Choice program. This lawsuit is in process.

Hello!? DeBeers Mining Comes To Canada.

DeBeers is going truly global.

Press reports indicate that De Beers Canada Inc., has filed an application with the Mackenzie Valley Land and Water Board for permits to construct and operate a mine at Gahcho Kue, located in the Northwest Territories, approximately 300 kilometers northeast of Yellowknife.

The Gahcho Kue project is a joint venture between De Beers Canada (51 percent,) Mountain Province Diamonds Inc., (44 percent,) and Camphor Ventures (5 percent.) The project is located 90 kilometers east of Snap Lake, De Beers first diamond mine in Canada which is currently under construction.

With an estimated resource of 31 million tons, the Gahcho Kue project will be an open pit mine. The construction of the mine is expected to cost an estimated $706 million and will employ up to 600 people during the peak of the construction and close to 400 people durinig the operations phase of the mine.

The mine is expected to have a life of 20 years and yield an average of three million carats annually for the first 15 years.

“Advancing this project is consistent with our strategy of maintaining a pipeline of projects to meet increasing global demand as well as contributing to the sustainability of the Canadian diamond industry,” said Richard Molyneux, CEO of De Beers Canada.

“Gahcho Kué is evidence of the importance we attach to partnerships with Canadian exploration companies as a winning formula for growing the diamond industry in this country.”

The company anticipates that the project application will be referred to the Mackenzie Valley Environmental Impact Review Board for an environmental assessment.

De Beers is investing approximately $2 billion over the next three years in the Canadian diamond industry. Snap Lake is scheduled to open in 2007. The Victor mine will commence construction early in 2006 and will be in production by the end of 2008.

Global indeed! Prediction here: Look for the GIA (Gemological Institute of America) to open offices in a major Canadian city (Toronto?) within the next few years.

Update on Surging Gold & Platinum Prices.

Gold rose above $500 and platinum above $1,000 an ounce on Tuesday when investment funds diversified their portfolios on worries about inflation and geopolitics.

Prices then dipped after breaking through the psychological barriers to touch multi-decade highs.

The metals were vulnerable to further downward correction as huge speculative positions could spark profit-booking, but growing demand, supply constraints and plans by some central banks to buy more gold were expected to support, dealers said.

Gold topped $500 an ounce in Asia for the first time in 18 years, while platinum breached $1,000 an ounce, hitting its highest since 1980, as it tracked gold’s gains.

“The investors want to buy and they continue to buy. I see no reason for them to stop. So any pull back will be a buying opportunity,” said Peter Hillyard, head of metals sales, at ANZ Investment Bank.

“The investors are diversifying portfolios. There is a feeling that currencies and equities are not necessarily reliable and they are adding to commodities because they see the returns are greater there.”

Spot gold retreated to $496.80/497.60 an ounce from as high as $502.30 an ounce in Asia. It closed in New York on Monday at $498.20/499.00.

“People are looking for an alternative investment to U.S. dollar-based instruments. The expectations of inflation in the coming year are very high,” said Albert Cheng, Far East managing director for the industry-backed World Gold Council.

But jewelery manufacturers and buyers may need time to adjust to the high prices, Cheng said, as bullion has risen more than 14 percent in value so far this year.

The council said this month that global demand for gold in the third quarter totalled 838 tons, a rise of 7 percent from the same quarter a year earlier, as surging investment demand helped offset a slowdown from the jewelery sector.

Some analysts said gold prices could fall to as low as $475 an ounce on liquidation by investment funds to book profits.

The latest weekly Commitments of Traders report issued by the Commodity Futures Trading Commission on Monday showed a further rise in the speculative net long position in New York’s COMEX gold.

But the rally was also helped by reports that Russia, Argentina and South Africa had decided to increase the amount of gold in their reserves, reversing a six-year trend of central bank sales, mainly from Europe.

Platinum stood at $990/995 an ounce after spiking earlier to $1,002. It closed in New York at $989/993.

This year, not enough platinum is being mined and recycled to meet demand for catalytic converters and jewelery, so fundamentals have factored into the buoyant market.

Refining and chemical company Johnson Matthey, which provides fundamental analysis of platinum group metals, said in a recent report that 6.71 million ounces of platinum would be used in 2005, exceeding supply of 6.59 million ounces as demand rises from the auto sector and other industries.

It predicted that output from South Africa, the world’s top producer, would be lower than planned and the shortfall would continue to support prices.

Silver inched down to $8.27/8.30 an ounce from $8.35 on Tuesday. A breach of $8.43 would make the price highest in 18 years. Silver finished in New York at $8.35/8.37.

Palladium fell to $260/264 from $261/264.

76 Carat Diamond Found!

Petra Diamonds Limited has recovered a 76 carat diamond from the Sedibeng mine in South Africa. The company expects to sell the diamond for about $500,000. In 2004, the same mining complex yielded several large diamonds including a 57 carat diamond that sold for $489,000 and a 42 carat diamond, which sold for $282,000.

“The Sedibeng mine has consistently produced high-quality diamonds, and recoveries of such special stones combined with the growth in total carat production means that the South African operations will continue to generate increasing revenues for the group,” Petra stated in their announcement.

Gold Highest Since 1983!

Gold prices have surged past the $500-an-ounce mark, and more gains are predicted as investors look to protect themselves against inflation fears.

Gold hit $502.30 in Asian trading today, its highest level since February 1983.

Other commodity prices also have been climbing, and platinum topped the $1,000-an-ounce level.

Demand from jewelery makers is helping to boost prices, as is speculation that some central banks want to cut US dollar holdings and boost gold stores.

“The expectations of inflation in the coming year are very high,” said Albert Cheng of the World Gold Council.
People are looking for an alternative investment to products such as US dollar-based bonds”, he said.

A number of factors have come together to create what analysts are calling a commodities boom.

As well as the worries that inflation will erode the value of bonds and shares, strong demand from Asian economies for metals has been squeezing supply at a time when producers are finding it difficult to boost output.

This time of year also normally sees demand for gold pick up as jewelers prepare for the Christmas holiday period and Indian wedding season, analysts said.

Prices are likely to climb – even though there may be some short-term profit taking – because $500 is an important psychological level which acts as a deterrent until it is broken through.

“Once they are comfortable with this level, it will not deter people from buying jewelery,” said the World Gold Council’s Mr Cheng.
People tend to buy more when the price of gold is actually upward.”

The gold price hit a record of $873 an ounce in January 1980, and hit $502 for one day in December 1987.

Since then it has recovered from lows of about $250 an ounce in 2001 and has surged almost 15% this year alone.

Platinum prices have also climbed in recent months, hitting their highest levels in 25 years, driven by strong jewelery demand and the metal’s important role in catalytic converter car exhausts.

Wear This Watch And Feel Calmer???

Audience members who attended the live taping of Monday’s Oprah show went home with a diamond Philip Stein Teslar watch worth $1,795.

Host Oprah Winfrey gave away the watches as part of her annual “Oprah’s Favorite Things” holiday show. Other 2005 items on the TV icon’s list include a Burberry coat and purse, Garrett Popcorn Shop’s CaramelCrisp and CheeseCorn tins and Fox & Obel Market’s Oatmeal Cookie Dough.

Monday’s plug marked the second time Winfrey featured a watch by Philip Stein Teslar on her list of favorites. In addition to mentioning the watch on the show, the Oprah Web site directs consumers to NeimanMarcus.com to buy the timepiece. By Tuesday morning, the retailer Web site reported $100,000 in sales of the watch since the show aired, according to Philip Stein Teslar spokeswoman Shaye Strager.

The watches endorsed by Winfrey have integrated active Teslar technology. The company claims it reinforces the human body’s electromagnetic field with a natural earth signal to bring calm and relaxation to the wearer.

phillip stein teslar watch.jpg

About the technology
• Copy provided by Philip Stein Teslar watches.
• Every Philip Stein® timepiece has integrated active Teslar® technology designed to reinforce the human body’s electromagnetic field with a natural earth signal associated with calm, meditation, relaxation, and enhanced performance.
• Experience the Teslar® Effect and let yourself feel more relaxed, more rested and less tense.
About the watch
• 12mm interchangeable black satin strap.
• Stainless steel case with pavé diamonds.
• 0.5 total carat weight.
• Black dial with marked “12″ and “6″ numerals.
• Curved mineral crystal with frosted treatment; scratch resistant.
• Two quartz movements.
• Water-resistant up to 3 ATM or 100 feet.

After you get this watch, call me: I’ve got another great buy for you: a bridge in Brooklyn.

Internet Comes Of Age For Luxury Shoppers.

A Report today by Luxury retail analyst Unity Marketing says that luxury consumers prefer the Internet for shopping, because it is easy and convenient.

Out of 15 luxury product categories Unity listed, consumers chose 11 categories they favor for shopping online.

In the wider scheme of retail shopping however, the Internet only accounts for a fraction of the total. The figure has been growing each year since 1997, and accounted for $230 billion in 2004.

“For most retailers the luxury consumer segment represents their marketing ‘sweet spot,’” said Pam Danziger, president of Unity. “They shop more frequently and spend more money when they shop.”

Danziger said that –at the very least– half of luxury consumers planned to buy gifts online in 2005.

Fully 82 percent of luxury consumers agree with this statement: Internet shopping has made shopping easier for me. Some 78 percent agree that the Internet: Lets me find exactly what I want at the right price without a lot of hassles.

The ability to compare prices was the No.1 point valued by luxury consumers, and is also one of the most important elements across all consumer segments as well from independent studies by AOL, comScore, and Forrester Research.

Unity queried some 1,200 consumers with an average income of $142,000 and an average age of 43 years. Of the group surveyed, Unity said 94 percent used the Internet to buy products during the third quarter of 2005.

Other findings report:

* 43 percent researched a product and made the purchase in-store.
* 35 percent browsed the product in-store and bought online at a later date.
* 20 percent researched the product online and ordered it by calling the store.
* 67 percent use the Internet to compare prices.

Criminal Risks Closes London Diamond Exhibit.

In what had been billed as the world’s largest collection of diamonds on display, London’s Natural History Museum exhibit ‘Diamonds’ abrubtly ended some three months early without any warning on November 23.

According to Diamonds exhibit director, Michael Dixon, the closure was decided overnight after the police advised the museum that closing the exhibit was best for security reasons.

“Since we began planning this exhibition, we have followed Police advice to the letter in terms of ensuring the security of our staff, our visitors, and the exhibition specimens,” Dixon said in a statement.

“That advice changed on the afternoon of Tuesday 22 November. It indicated a heightened criminal risk to the exhibition.”

No specific details on the threats or risk were made available. The museum said it would refund all pre-booked tickets.