A worldwide surfeit of diamonds

An 18th century raw diamond necklace featuring an astonishing emerald with pearls and rubies throughout. The piece is part of a collection on display at the British Museum in London and stems from India under Muslim rule.

Russia's state-owned diamond company is stockpiling diamonds at the rate of 3,000,000 carats per month.

Russia quietly passed a milestone this year: surpassing De Beers as the world’s largest diamond producer. But the global market for diamonds is so dismal that the Alrosa diamond company, 90 percent owned by the Russian government, has not sold a rough stone on the open market since December, and has stockpiled them instead.

As a result, Russia has become the arbiter of global diamond prices. Its decisions on production and sales will determine the value of diamonds on rings and in jewelry stores for years to come, in one of the most surprising consequences of this recession.

Largely because of the jewelry bear market, De Beers’s fortunes have sunk. Short of cash, the company had to raise $800 million from stockholders in just the last six months...

“If you don’t support the price,” Andrei V. Polyakov, a spokesman for Alrosa, said, “a diamond becomes a mere piece of carbon.”

More at the New York Times. Photo credit swamibu.