RAPAPORT… Jewelry Demand For Platinum Slumps
Global demand for platinum rose in 2010 by 16 percent year on year to approximately 7.9 million ounces, but the demand for the metal in jewelry manufacturing fell 14 percent to 2.4 million ounces, based on high prices and accumulated stock, according to the “Platinum 2011” report by Johnson Matthey, a specialist chemical company.
Palladium experienced a similar dynamic as global demand rose 23 percent to 9.6 million ounces, while the demand for palladium jewelry slumped 20 percent to 620,000 ounces.
Platinum for jewelry in China, which accounts for two-thirds of the global demand, dropped by more than 16 percent year on year to approximately 1.7 million ounces. Bucking the downtrend, the North American market experienced a 30 percent increase in platinum for jewelry at 175,000 ounces.
Gold Jewelry Demand Jumps
The World Gold Council (WGC) stated that the outlook for gold remains robust for
the duration of 2011 following an 11 percent jump in demand during the first quarter.
In its recently released report, “Gold Demand Trends – First Quarter 2011,” the WGC noted that global gold demand by value reached $43.7 billion, a 40 percent
year-on-year increase, during the three-month period.
In dollar terms, gold jewelry demand jumped 34 percent year on year to a record $24.8 billion. Gold demand by weight for just jewelry in the first quarter rose 7 percent to a provisional 557 tons, but investment demand jumped 26 percent to 311 tons.
By weight, India’s gold jewelry demand rose 12 percent to 206 tons, but China’s consumer markets drove gold jewelry demand 21 percent higher to 152 tons. U.S. gold jewelry demand fell 10 percent. Gold supplies declined 4 percent year on year in the first quarter to 872.2 tons. Mine production increased by 44 tons, a growth rate of 7 percent.
The WGC predicted that continued uncertainty over the U.S. economy and the dollar, ongoing European debt concerns, global inflationary pressures and continued tensions in the Middle East and North Africa would keep gold purchases strong.
Covenant Financial Plans Diamond Fund
Covenant Financial Services, a hedge fund based in Oklahoma City, is building what it termed a collection of “large, rare and highly sought-after stones,” including the “Yellow Rose,” a 77-carat yellow diamond.
The company noted that people in the U.S. and Europe were “selling diamonds and gems at depressed prices,” with China and the Middle East acting as eager buyers. Steve Shafer, the company’s chief investment officer, said, “We are seeing an enormous multi-generational transfer of wealth taking place from the West to the East and moving a small portion of our capital into diamonds is one of the ways we are profiting from this.”
Harry Winston Secures Deal For Investment Fund
Harry Winston Diamond Corporation and Diamond Asset Advisors AG formed a limited partnership fund of up to $250 million to offer institutional investors direct exposure to the wholesale market price of polished diamonds. Under the terms of the agreement, Harry Winston will source polished diamonds without the need for additional capital and avoid the risks associated with polished price volatility. It will use the diamonds to boost its diamond jewelry inventory as part of its salon expansion plans.
Harry Winston stated that the polished goods would be the same high quality as its jewelry, with a portion to be derived from the company’s existing inventory. The fund will purchase these diamonds and consign them to Harry Winston as the custodian. Harry Winston will then use the polished diamonds in the manufacture of its jewelry and timepieces. The price paid to replace the polished diamonds sold by Harry Winston in its finished products will be used by the fund to determine the market value.
Bob Gannicott, Harry Winston Diamond Corporation’s chairman, described the fund as an “innovative and efficient way for the company to support its luxury brand growth objectives.”
The company anticipates raising the first subscription of approximately $100 million later this year.
