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Rapaport TradeWire June 25, 2010

The diamond trade cannot trust KP certificates or system of warranty as proof of diamond's legitimacy.
Jun 24, 2010 6:00 PM   By Rapaport
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Rapaport TradeWire
RAPAPORT NEWS SERVICE | JUNE 25, 2010   www.rapaport.com | news@rapaport.com
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RapUp June 25, 2010

Kimberley Process (KP) meeting ends in deadlock over Zimbabwe exports as local human rights activist Farai Maguwu remains in jail. Zimbabwe expected to resume exports shortly. Martin Rapaport ends three day fast protesting KP certification of blood diamonds and urges diamond trade not to trust KP certificates or system of warranty as proof of diamond's legitimacy. Smaller June Hong Kong show opens with mixed expectations. Indian market buying rough in expectation of better U.S. demand in H2 2010. Namibia rough diamond production +102% to 580,000 ct. in Jan-May 2010. Remgro selling 29% stake in Trans Hex. High net worth wealth +19% to $39 trillion in 2009 with uptrend in jewelry purchases. Gold hits new high ($1,265/oz).

RapNet Data: June 25, 2010
Diamonds 713,181
Value $4,682,123,350
Carats 792,192
Average Discount -30.31%
RapNet Asking Price

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KP Meeting Ends in Impasse for Zimbabwe

The Kimberley Process meeting closed in Tel Aviv with members failing to reach a consensus regarding the implementation of a working plan meant to test Zimbabwe's compliance. The result was "unprecedented" according to chairman Boaz Hirsch, "but all parties are committed to further engagement." Given that, Hirsch along with World Diamond Council president Eli Izhakoff will jointly convene in St. Petersburg on July 14 for a mini-summit of major Kimberley stakeholders. Deliberations will continue in order to find a consensus based resolution, Hirsch said.

The issue was that those members monitoring compliance progress in Zimbabwe failed to agree on whether the country could begin exporting rough with the U.S., E.U., Australia and Canada concluding that Marange rough was not yet fully compliant. However Brazil, the U.A.E., China, Russia and India were ready to approve rough exports. Meanwhile, Zimbabwe's mines minister has been telling various press agencies that his country is ready to ship rough diamonds and will be exporting them with or without certificates to awaiting buyers. 

Gold Surges to New Record

Gold hit a new high of $1,265.07 an ounce in Hong Kong on June 21. Analysts concluded that Europe’s fiscal problems and the shaky U.S. economy continue to drive people to buy the metal, which is viewed as a strong safe-haven investment. Michael Pento, the chief economist at Delta Global Advisors, noted in a related write-up that sovereign debt and sovereign currency can't be trusted. "Gold is the only real honest money that we have," he stated.

Rapaport Weekly Broadcast

WATCH NOW: Kimberley Process chairman Boaz Hirsch and World Diamond Council president Eli Izhakoff proposed some reforms in Tel Aviv to improve the effectiveness of the certification scheme. The 2010 World Wealth Report noted an increase in jewelry, gem and watch purchases by wealthy investors who consider these purchases safe for the long term amidst the economic downturn.

U.S. Chain-Store Sales +3%

Weekly chain-store sales in the U.S. rose 2.5 percent this past week on a year-to-year basis, according to the International Council of Shopping Centers (ICSC) and Goldman Sachs. While Father's Day weekend should have served as a catalyst to improve the week-to-week sales measure, consumers were more cautious in their spending and sales slipped by 0.5 percent during the second week of June, compared against the first week of the month.

Wealthy Investors Increase Jewelry Buying

Jewelry, gems and watches became the second-largest "passion investment" category, overtaking art, for high-net-worth individuals (HNWIs) in 2009, according to the 2010 World Wealth Report published by Capgemini and Merrill Lynch. The global financial crisis increased demand for more tangible assets  expected to retain their long-term value.

Overall, HNIWs allocated 23 percent of their passion investment funds to the jewelry, gem and watch category in 2009, compared with 22 percent in 2008 and 18 percent in 2006. The other passion investment categories included luxury collectibles --such as boats, jets and luxury automobiles-- and art and sports. HNIWs from the Middle East and Asia in particular were the most heavily invested in the jewelry category, accounting for 35 percent and 31 percent of total investments, respectively. The demand for passion investments is likely to rise for the remainder of this year. Auction houses, luxury goods makers and high-end service providers all expect wealthy consumers to spend more in 2010.

Two States to Regulate Cadmium in Jewelry

Connecticut and Minnesota recently passed legislation that regulates the amount of cadmium allowed in children's jewelry. Connecticut will limit cadmium in any children's jewelry to 75 parts per million (ppm) as measured by a "total weight" test, effective July 1, 2014. Minnesota restricts cadmium in children's jewelry to 75 ppm, but measures the metal using a "migration test" from the ASTM standard F 963, which will become effective for manufacturers and wholesalers on January 1, 2011 and for retailers on March 1, 2011.

The Manufacturing Jewelers & Suppliers of America (MJSA) learned that Washington state, on the other hand, rescinded regulations that limited the amount of lead, cadmium and phthalates in all children's products. Washington canceled the regulations because it decided not to challenge the state preemption clause in the Consumer Product Safety Improvement Act, a federal law passed in 2008 to establish standards regarding the presence of lead in children's products, the MJSA found.

Rosy Blue Completes a Number of CSR Goals

Rosy Blue published its second annual corporate social responsibility (CSR) report for which it recorded a number of achievements in 2009, including the integration of the United Nations' (UN) Global Compact Principles across operations, which promote human rights, fair labor practices and sound environmental standards, and the adoption of anticorruption measures. The company joined Global Compact in 2008 and became an active member of the Global Compact human rights working group in February of this year.

Rosy Blue also launched a pilot project for the Responsible Jewellery Council (RJC) on new global requirements in order to audit aspects of manufacturing and trading. The company took great pride in its initiative to empower women internally, while externally, it continued its empowerment efforts through the women's Welfare Center at Vishwa Nagar in India. The company also said that it made environmental management a priority in 2009 by implementing a mission of "reduce, recycle, reuse." In its report, Rosy Blue noted that it has worked tirelessly to reduce employee injury by making health and safety a top priority through advanced training programs.

The 'Great Debate' 2010 to Focus on Ethical Trade

The "Great Debate" is now an established part of the International Jewellery London event, presented by The Birmingham Assay Office and Reed Exhibitions. Conflict diamonds, dirty gold and other ethical issues are of concern to both the consumer and the trade, so this year's Great Debate aims to stimulate discussion, provoke thought, share ideas and deliver prompt action in relation to these matters. Topics will include ethical and fair trade jewelry and gold and the implementation of the Responsibile Jewellery Council's ethical practices,
The jewelry and gemstone industry is responding to issues with a variety of initiatives and the Great Debate 2010 will address these areas of action across three seminars, all of which will be held at the Boulevard Bar's center show floor in Earls Court 2 from September 5 to 8.

Johari Becomes VP of NY Dealers Club

Basant Johari was elected vice president of the New York Diamond Dealers Club and chairman of its board of arbitrators. Johari holds an undergraduate degree in law and a bachelor's degree in commerce. He joined his family diamond business and came to the U.S. in 1980, where he started a diamond trading company. Johari established his jewelry manufacturing company, Kuber Mfg. Inc., nearly 20 years ago.

Rogers, Gilberti to Join Graff Chicago

Eve Reppen Rogers was appointed the director of Graff Chicago. Prior to this appointment, Rogers acquired extensive experience in high-end jewelry sales, collection appraisals and client consultations at Sotheby’s. She will report to Henri Barguirdjian, the president of Graff USA.

Rogers, pictured, will continue to expand Graff’s presence in the Midwestern U.S., oversee sales and pursue new strategic opportunities for the brand. She will assume her new post in September and be based out of the company's Chicago salon.

Christina Gilberti, formerly of Harry Winston in Chicago, joined Graff as the sales director of Graff Chicago. Gilberti will report to Rogers.

Harry Winston Secures $100M Facility

Harry Winston Diamond Corporation  completed a senior secured revolving credit facility with Standard Chartered Bank for $100 million. The facility has an initial maturity date of June 24, 2013 with two one-year additional extensions at the miner's option. There are no scheduled repayments required before maturity. The facility is available to  for general corporate purposes.

Robert Gannicott, chairman of Harry Winston, said,  "With diamond markets recovering strongly, and capital expenditures for the Diavik Diamond Mine underground development essentially complete, the company's cash position is building and there is no normal-course need to draw on this debt facility. It does, however, provide strengthened liquidity for the company going forward."

Namibia Doubled its Production

Diamond production in Namibia rose 102 percent year on year for the January through May period to 580,000 carats, the country's Ministry of Mines and Energy reported. Namibia sold 455,000 of these carats during the five-month period. Bank Windhoek noted that given production levels so far, the country was on track to produce 1.4 million carats this year. Namibia produced approximately 929,006 carats in 2009.

For the week ending June 24, 2010:

  June.24 June.17 Chng.  
$1 = Euro 0.811 0.800 0.011  
$1 = Rupee 46.35 46.19 0.2  
$1 = Israel Shekel 3.87 3.83 0.04  
$1 = Rand 7.60 7.59 0.01  
$1 = Canadian Dollar 1.04 1.03 0.01  
Precious Metals        
Gold $1,240.90 $1,246.10 -$5.20  
Platinum $1,561.00 $1,577.00 -$16.00  
Stock Indexes       Chng.
BSE 17,730.24 17,616.69 113.55 0.6%
Dow Jones 10,152.80 10,434.17 -281.37 -2.7%
FTSE 5,100.23 5,235.89 -135.66 -2.6%
Hang Seng 20,733.49 20,138.40 595.09 3.0%
S&P 500 1,073.69 1,116.04 -42.35 -3.8%
Yahoo! Jewelry 823.50 880.36 -56.86 -6.5%
Birks & Mayors $1.17 $1.18 -$0.01 -0.8%
Blue Nile $48.87 $49.98 -$1.11 -2.2%
Charles & Colvard $2.85 $3.11 -$0.26 -8.4%
DGSE Companies $3.10 $3.05 $0.05 1.6%
Fuqi Intl. $8.23 $9.27 -$1.04 -11.2%
JCPenney $23.27 $26.54 -$3.27 -12.3%
Kohl's $49.80 $52.78 -$2.98 -5.6%
LJ Intl. $2.85 $2.96 -$0.11 -3.7%
Macy's $18.88 $21.66 -$2.78 -12.8%
Man Sang $1.95 $1.99 -$0.04 -2.0%
Movado Group $10.88 $12.30 -$1.42 -11.5%
Nordstrom $35.42 $39.09 -$3.67 -9.4%
Saks $8.03 $9.24 -$1.21 -13.1%
Signet $29.93 $31.43 -$1.50 -4.8%
Sotheby's $26.30 $32.01 -$5.71 -17.8%
Tiffany $40.79 $43.77 -$2.98 -6.8%
Walmart $50.02 $51.44 -$1.42 -2.8%
Zale $1.92 $2.43 -$0.51 -21.0%
Bulgari €6.20 €6.26 -€0.06 -1.0%
Bijou Brigitte €118.50 €120.70 -€2.20 -1.8%
Damiani €0.90 €0.84 €0.06 7.1%
LVMH €92.04 €93.25 -€1.21 -1.3%
PPR €104.65 €103.10 €1.55 1.5%
Richemont CHF 40.05 CHF 41.24 -CHF 1.19 -2.9%
Swatch Group CHF 321.00 CHF 319.60 CHF 1.40 0.4%
Theo Fennell (pence) 38.00 36.00 2.00 5.6%
INDIA (rupee)        
Classic Diamond 21.25 19.50 1.75 9.0%
Gitanjali Gems 124.35 115.05 9.30 8.1%
Goldiam Intl. 44.10 44.90 -0.80 -1.8%
Rajesh Exports 86.60 80.05 6.55 8.2%
Ren. Jewellery 78.75 82.30 -3.55 -4.3%
Su-Raj Diamonds 52.25 51.05 1.20 2.4%
Titan 2,238.45 2,200.55 37.90 1.7%
Zodiac JRD 26.90 26.55 0.35 1.3%
Suashish Diamonds 173.50 174.10 -0.60 -0.3%
Michael Hill NZD 0.69 NZD 0.69 NZD 0.00 0.0%
Harry Winston CAD 13.49 CAD 14.51 -CAD 1.02 -7.0%
Lucara Diamond CAD 0.80 CAD 0.90 -CAD 0.10 -11.1%
Mountain Province CAD 2.50 CAD 2.47 CAD 0.03 1.2%
Peregrine Diamonds CAD 1.99 CAD 2.12 -CAD 0.13 -6.1%
Rockwell Diamonds CAD 0.07 CAD 0.07 CAD 0.00 0.0%
Shore Gold CAD 0.74 CAD 0.77 -CAD 0.03 -3.9%
Stornoway Diamond CAD 0.62 CAD 0.61 CAD 0.01 1.6%
True North Gems CAD 0.10 CAD 0.08 CAD 0.02 25.0%
UK (pence)        
African Diamonds 32.86 32.72 0.1 0.4%
Anglo American 2,545.00 2,672.50 -127.5 -4.8%
BHP Billiton 1,920.00 1,920.50 -0.5 0.0%
Firestone Diamonds 35.09 33.70 1.4 4.1%
Gem Diamonds 219.00 232.40 -13.4 -5.8%
Gemfields 5.00 4.93 0.1 1.4%
Mwana Africa 8.30 8.68 -0.4 -4.4%
Namakwa Diamonds 47.00 47.00 0.0 0.0%
Petra Diamonds 69.50 71.50 -2.0 -2.8%
Rio Tinto plc 3,275.44 3,320.00 -44.6 -1.3%
Stellar Diamonds 12.00 12.79 -0.8 -6.2%

Polished and rough trading activity

POLISHED: Stable demand in the local polished market, but buyers are resisting high asking prices that in some categories reflect extremely high increases.
-1 point: Very Good demand: -$500 whites.
-2 point: Good demand: -$300 whites.
Fair Demand: +$350 whites.
2-7 point: Very Good demand: -$350 whites.
Good Demand: +$350 whites.
8-18 point: Good demand: -$400 whites.
Fair Demand: +$500 whites
20 points: Good demand: -$350 & +$600 whites.
25 points: Good demand: -$350 & +$700 whites.
33 points: Good demand: $300 - $500 & +$850 whites.
50 points: Good demand: $500-$700 & +$1000 whites.
75 points: Good demand: $700-$900 & +$2000whites.
1 carat+: Very good demand: -$2000 whites.
Good demand: +$2000 whites.
-3 point: Good demand: $200-$250 whites.
+3 point: Good demand: $250-$300 whites.
+9-18 point: Good demand: $250-$350 whites.
20 point: Fair demand: $700-$750 whites.
25 point: Fair demand: $800-$850 whites.
50 point: Fair demand: $400-$700 & $1600-$1,800 whites.
75 point: Fair demand: $800-$1,200 whites.
1 carat+: Good demand: $1000-$2000 whites.
Fair demand: +$2,500 whites
-6 point: Fair demand: $250-$350 whites.
+7-18 point: Good demand: $250-$400 whites.
20 point: Fair demand: $250-$400 & $900-$1,000 whites.
25 point: Fair demand: $250-$400 & $1,100-$1,200 whites.
33 point: Fair demand: $250-$400 & $1,300-$1,500 whites.
50 point: Fair demand: $1,600-$1,800 whites.
75 point: Fair demand: $2,600-$2,800 whites.
1 carat+: Good demand: $300-$600 & +$1,000 whites.
Tapers & Baguettes
Fair demand: $600-$800 +5mm whites. $250-$325
2mm-2.5mm whites; $350-$400, 2.5mm-3mm whites;
             $400-$450 3mm-4mm, $500-$600 4mm –
             5mm & $175-$250 +2mm-3mm whites.
ROUGH: Antwerp rough market is hot with good demand seen from India. Some activity is seen for mixed lots, but weaking dollar against rupee is holding back transactions.
1-5 point: Good demand: $90-$130 makeables; $100-$200 crystals.
$50-$80 makeables.
Fair demand: $10-$25 & $50-$100 OW TTLB & TTLC.
6-20 point: Very Good demand: $155-225 crystals; $110-$185 makeables.
Good demand: $65-$115 fancy shapes; $45-$75clivage.
Fair demand: $50-$90 OW TTLC & TTLB rounds.
21-50 point: Very Good demand: $200-275 makeables;
$120-$200 & $225-$300 crystals.
Good demand: $90-$200 fancy shapes;
$95-$200 rounds; $50- $90 clivage.
Fair demand $20-$40 OW TTLC & TTLB.
0.51-1.00 carat: Very Good demand: $180-$340 makeables;
$125-$260 & $290-$470 crystals.
Good demand: $90-$125 makeables;
$100-$210 fancy shapes; $55-$110 clivage.
Fair demand $60-$100 OW TTLC & TTLB.
1.01-2.00 carat: Very Good demand: $240-$590 rounds; $290-$750 crystals.
Good demand: $100-$130 clivage; $200-$380 all fancy shapes.
Fair demand: $140-$180 OW TTLC & TTLB.
2.01-3.00 carat: Good demand: $270-$1,050 makeables; $350-$1,300 crystals;
$400-$825 fancy shapes; $210-$300 clivage.
Fair demand: $100-$325 flats & TTLC & TTLB
$350-$800 OW.
5.00 carat+:  Good demand: $1,000+ makeables, crystals & all fancy shapes till L color.
Mixed Lot: Good demand: $2-$40.


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Tags: African Diamonds, Anglo American, Australia, BHP Billiton, Blood Diamonds, Bulgari, China, Compliance, Conflict Diamonds, Consumers, Diavik, Dubai, Economy, Exhibitions, Fair Trade, Firestone, Gem Diamonds, GIA, Graff, Harry Winston, Hong Kong, ICSC, India, Israel, Jewelry, Kimberley Process, Lucara Diamond, LVMH, Manufacturing, Michael Hill, MJSA, Movado, Namibia, NY Dealers Club, Petra Diamonds, Production, Responsible Jewellery Council, Richemont, Rio Tinto, RJC, Rockwell, Russia, Signet, Sotheby's, Stellar Diamonds, Theo Fennell, Tiffany, Titan, World Diamond Council, Zale, Zimbabwe
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