Chapter Two: Demand / Supply

http://www.canada.com/theprovince/news/money/story.html?id=b8cd8389-5d2c-48ab-be30-584cc049ed45

Summary
Prices for diamonds are significantly rising. Because of the limited global supply, diamonds are very unlikely to meet the expected demands. Beginning 2007, prices of some three-carat diamonds have already risen fourfold. The stocks of Harry Winston, a renowned and luxurious jewellery store has rose from $1.52 to $14.54 at 1:24pm on October 1st. This jump of 12 per cent is the largest one-day increase since November 4th, 1999. “Rough diamond supply is likely to fall short of expected demand within the next three to five years,” RBC Capital Markets analyst Des Kilalea told clients on August 27th.

Connection
This article is related to what we have learned in chapter two in a sense that demand and supply are interconnected. The demands for diamonds have always been high due to the belief and theory that diamonds are the best presents any girl could possibly get. Because diamonds are a non-renewable resource, the quantities available for extracting from our Earth’s mines are limited. When demand is high and the supply is low, like the diamonds, we have a rapid increase in the value of the substance. Diamonds don’t really have a substitute other than the other rocks, but they don’t seem to be too popular, so diamonds continue to have that slowly but steady rise in demand.

Reflection
Growing up, I’ve constantly heard the phrase, “Diamonds are a girl’s best friend”. Perhaps because we’ve been brought up in a society where diamonds are the most expensive and most exquisite jewellery out there, everyone has this impression that it is true. In events of special occasions such as a man proposing to the love of his life, it is almost a guarantee that they will get engaged with the help of a diamond ring. As people continue celebrating milestones in their lives, the demand of diamonds will continue to soar. With the demand increasing, supply will decrease alongside, which will result in an increase on the price of diamonds. When it comes to the time that I get proposed to, even though its unlikely, I hope the price for diamonds won't be as high as they are now. Better yet, it might be a wiser decision for my future fiancé to buy me another stone for our engagement. But it appears that most countries are heading if not already in recession, so that would mean citizens are unlikely to spend money on items that aren't neccesities. With people holding onto their money and unwilling to spend it, the demand of diamonds may slowly decrease.