Skip to main content

The Globe and Mail

Diamond prices suggest chaos hasn't ensued

It may seem like a bit of a stretch, but believe it or not, diamond mining is tied to Europe's banking mess.

Although the euro zone isn't known for these jewels, its banks are the dominant credit facilities underwriters to diamond polishers, which John Hughes at Desjardins Securities pointed out in a research note. If the banks were freaking out, those credit lines could get cut - quickly.

But they haven't, and Harry Winston Diamond Corp. released a mid-quarter update this week to reassure investors that the industry is in decent shape. Overall, credit facilities have neither been reduced or increased.

Story continues below advertisement

On top of that, Harry Winston announced that its jewellery and watch sales were strong in August and September, and demand has been particularly strong in the U.S. and Japan. Yes, polished rough diamonds have seen their prices fall by about 10 per cent since the end of July, but this isn't 2008 all over again.

If you recall, Harry Winston traded around $46 in July 2007 and fell all the way down to about $2.80 in March 2009. The stock is back up just north of $12, and year-to-date has actually seen a 6-per-cent increase.

Just another sign that this crisis is different from 2008.

Report an error
About the Author
Reporter and Streetwise columnist

Tim Kiladze is a business reporter with The Globe and Mail. Before crossing over to journalism, he worked in equity capital markets at National Bank Financial and in fixed-income sales and trading at RBC Dominion Securities. Tim graduated from Columbia University's Graduate School of Journalism and also earned a Bachelor in Commerce in finance from McGill University. More

Comments are closed

We have closed comments on this story for legal reasons. For more information on our commenting policies and how our community-based moderation works, please read our Community Guidelines and our Terms and Conditions.