Hey, everybody I just wanted to make a quick post about this video that I just put up on YouTube.
I was doing my browsing on Reddit this morning and I saw an article from Bloomberg that was talking about the cut in diamond prices from DeBeers. This got my attention since DeBeers is more or less a global monopoly on the diamond market
So this may be think, why would DeBeers lower prices?
The only answer is that there isn’t enough demand.
And what does that mean for the global economy?
Diamonds are a pure luxury consumption item. People buy them as gifts and people buy them for weddings. These are natural behaviors within our culture. So if people are buying fewer diamonds, that means that they simply do not have the money to do so.
It is a sign of the times. The global consumer simply doesn’t have the cash to buy.
So how does that tie-in to what’s going on in the stock market now where we had a day of the Dow Jones industrial average going down 1000 points?
Essentially what is going on is that people are assuming the Federal Reserve is going to be raising interest rates in September. Even though Jenny Yellen has come out and said that if they do raise rates it’s going to be very small and are going to take a long time. For whatever reason, people have interpreted this to mean that Richard go way up the dollars and get stronger and therefore prices must come down.
So they want to get out while the getting is good. That’s why stocks all across the world have been going down over the last little while.
The silver lining for all those buy-and-hold investors out there is that the Fed can now use this as an excuse to not raise rates. In fact, I think they will use these events as an excuse to ramp up the printing presses again with another round of quantitative easing.