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Rapaport TradeWire April 12, 2012

Apr 12, 2012 1:00 PM   By Rapaport
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RAPAPORT NEWS SERVICE | April 12, 2012   www.rapaport.com | news@rapaport.com
 
 
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Rapaport Weekly Market Comment April 12, 2012

Diamond trading quiet over Passover and Easter holidays. Indian jewelers suspend strike on govt. commitment to review proposed gold and jewelry tax. Liquidity remains tight. ALROSA FY sales +28% to $4.5B, net profit more than doubles to $1B; 1Q 2012 sales +5% to $1B, net profit +23% to $282M. Belgium’s March polished exports +6% to $1.4B, rough imports +7% to $1.4B. U.S. Feb. polished imports -8% to $1.5B, polished exports +5% to $1.6B. Japan’s Feb. polished imports +40% to $70M. GFMS/Reuters survey predicts gold to surge above $2,000/oz. in 2012. THE RAPAPORT PRICE LIST WILL NOT BE PUBLISHED APR. 13 DUE TO ‎PASSOVER HOLIDAY.‎

RapNet Data: Apr. 11
     
Diamonds   850,677
Value $5,851,458,741
Carats   902,031
Average Discount -26.28%

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  QUOTE OF THE WEEK
  We could easily see last September’s record gold being taken out, and a push on ‎towards $2,000 is definitely on the cards before the year is out, although a clear breach ‎of that mark is arguably a more likely event for the first half of next year.

Philip ‎Klapwijk | Thomson Reuters GFMS

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INDUSTRY  
 
Economic Weakness to Boost Gold

Gold prices are likely to rally towards the $2,000 per ounce mark in late 2012 driven by a ‎resurgence in investment demand as economic challenges continue, although a clear breach ‎of that mark is arguably a more likely for the first half of next year, according to the latest Thomson Reuters GFMS Gold Survey ‎‎2012.‎ Expect gold to depreciate in the short term as the ‎euro-zone crisis seems to have abated while expectations have lowered that the U.S. ‎Federal Reserve will initiate another round of quantities easing (QE3).‎ Fears regarding a possible euro-‎zone sovereign debt default are expected to rise with Spain set to be the new principal ‎area of concern. In addition, the U.S. recovery is expected to begin to falter in the ‎coming months, which will force the Federal Reserve into taking further monetary policy ‎measures, the survey noted.‎



RETAIL & WHOLESALE  
 
Tax Protest Suspended Until May

Indian jewelers and bullion traders suspended their 21-day strike following favorable assurances from the Finance Minister, Pranab Mukherjee, regarding their demands on higher taxes. The strike was deferred to May 11 and industry leaders recommended members open their business. Mukherjee’s budget proposal imposed a 1% excise duty on unbranded jewelry and increased the excise duty on refined gold from 1.5% to 3%. He also proposed to double the customs duty on gold to 4% percent, and make PAN card declaration mandatory for buying jewelry of more than $3,938 (INR 200,000) in cash, among other measures.



 
Lending Rates Unlikely to Drop Much

Lending rates for India's corporate and retail borrowers are unlikely to see “significant reduction” in 2012 and 2013, CRISIL Research projected. Continued tight liquidity, increased government borrowing and the high cost of funds for banks will limit the decline in interest rates, it explained. Lending rates are, therefore, likely to fall by 25 to 50 basis points (bps) over the next one year, lower than the 50 to 75 bps drop expected in ''repo rate,'' or the rate at which banks borrow rupees from the Reserve Bank of India (RBI), as banks attempt to protect their margins, CRISIL Research stated.



 
Silver Exhibit Showcases Judaica Theme

WATCH NOW: Israel’s Harry Oppenheimer Diamond Museum opened ''Chains of Silver,'' an exhibit showcasing pieces in sterling silver by silversmith Mauriciu Samuel and Judaica artist Itzhak Luvaton. This exhibit deals with glorifying the human soul with the Judaica theme and features items used in Jewish rituals such as the candelabra or holy Jewish sites such as the western Wall, all handmade from sterling silver. A second dimension includes items that at first glance lack the Jewish context, such as a motorcycle with sidecar or a tank, but which contain Jewish symbols hidden within.



 
USPTO Issues 'Destiny Diamond Collection'

The U.S. Patent & Trademark Office (USPTO) awarded the trademark ''Destiny Diamond Collection'' to Fred Meyer Jewelers Inc. The trademark, registration number 4122993, was applied for on March 25, 2011 and issued on April 3. Fred Meyer noted that the trademark collection would be used for diamond jewelry in stores and online.



 
Joyalukkas Centre Opens in Oman

Joyalukkas opened its Joyalukkas Centre showroom concept in Ruwi, Muscat, Oman. This showroom features a large format store for the brand's jewelry as well as a fashion section that will cater to both women and men with a wide collection of fashion and textile materials. In addition to dedicated areas for gold and diamond jewelry, the showroom features an exclusive corner for men that offers office and casual wear. Women can browse bridal and formal wear along with Sarees, Churidars and more.



 
Gitanjali Introduces Payment Plans

The Gitanjali Group introduced two plans for customers to invest in gold. Shagun, a monthly jewelry savings plan, and Swarna Mangal, a gold price protection scheme enable customers to put something aside each month towards a future purchase.




 
HRD Engages Forensic Audit Team

HRD Antwerp found ''potential inconsistencies'' in the grading lab pertaining to the implementation of ISO procedures as part of the certification of diamonds. HRD Antwerp immediately conducted an internal investigation and terminated the contracts of four staff members. Following the initial investigation, on March 27 the boards of both the HRD and the Antwerp World Diamond Centre (AWDC) appointed a committee to oversee an internal review of the HRD Antwerp diamond lab, which is ongoing and led by an independent forensic audit team.



MINING  
 
ALROSA's Profit Jumps

ALROSA's diamond sales rose 28% year on year to $4.45 billion in 2011 and net profit doubled to $1 billion. Diamond production rose slightly to 34.6 million carats in 2011. For the first quarter of 2012, ALROSA's sales of rough and polished diamonds rose 5% year on ‎year to $1 billion as growth remained moderate for rough demand and prices. Net profit rose 23% percent year on year to $282 million, during the period.



 
Ministry Revokes Stellar's Kono Licenses

Sierra Leone informed Stellar Diamonds that the Ministry of Mines ought not to have granted the renewal of the company's Kono licenses in 2010, thus revoked mineral rights. Stellar Diamonds informed shareholders today that it disputes the assertions and is seeking clarity on the Ministry's position. The company has not received a similar statement for its Tongo exploration license, which was renewed in November 2011, according to the company.



 
Namakwa Secures $10M

Namakwa Diamonds secured a $10 million loan from Sputnick Limited as it faces ‎operational challenges at its Kao diamond mine development in Lesotho. ‎The company explained that its current $40 million loan facility with Jarvirne Limited is ‎insufficient to meet the group’s short-term funding requirements due to operational ‎challenges at Kao and the delayed execution of a potential sale of non-core assets. ‎Namakwa has drawn $33.2 million from the Jarvirne facility so far and an additional $2 ‎million was made available to the company earlier in April. ‎





STATS  
 
USA

  Feb. $Mil. %Chng. YTD $Mil. %Chng.
Polished imports $1,495 -8% $3,010 -6%
Polished exports $1,587 5% $2,763 -0.5%
Net imports ($92)   $248 -44%
         
Rough imports $30 -63% $68 -50%
Rough exports $22 -24% $72 14%
Net imports $8 -85% ($4)  
         
Net diamond account ($84)   $244 -53%



 
Belgium

  Mar. $Mil. %Chng. YTD $Mil. %Chng.
Polished exports $1,379 6% $3,572 4%
Polished imports $1,303 -3% $3,712 16%
Net exports $76   ($140)  
         
Rough imports $1,364 7% $3,480 3%
Rough exports $1,461 8% $3,608 3%
Net imports ($97) -26% ($128) 11%
         
Net diamond account $173   ($13)  



 
Japan

  Feb. $Mil %Chng. YTD $Mil. %Chng.
Polished imports $79 40% $143 16%



ECONWATCH  
 
Diamond Industry Stock Report

U.S. retail stocks were mostly negative this week while European shares were mixed. India's diamond industry shares were slightly lower except for Goenka (+14%) and Vaibhav (+7%). Diamond mining stocks were fair, except funding news from Namakwa (-30%) and license revocation issues at Stellar (-31%) sent those stocks tumbling. Read the extended industry stock report for this past week.
  Apr. 12 Apr. 5 Chng.  
$1 = Euro 0.758 0.767 -0.009  
$1 = Rupee 51.39 51.00 0.4  
$1 = Israel Shekel 3.75 3.74 0.01  
$1 = Rand 7.91 7.83 0.08  
$1 = Canadian Dollar 1.00 0.99 0.01  
         
Precious Metals        
Gold $1,672.90 $1,630.40 $42.50  
Platinum $1,593.00 $1,600.00 -$7.00  
         
Stock Indexes       Chng.
BSE 17,332.62 17,486.02 -153.40 -0.9%
Dow Jones 12,939.92 13,060.14 -120.22 -0.9%
FTSE 5,706.46 5,723.67 -17.21 -0.3%
Hang Seng 20,327.32 20,593.00 -265.68 -1.3%
S&P 500 1,383.04 1,398.08 -15.04 -1.1%
Yahoo! Jewelry 966.90 988.40 -21.50 -2.2%


INDIA MARKET REPORT  
 
Polished and rough trading activity

The domestic market is picking up again, but overseas demand remains very weak for polished diamonds. Rough trading is steady, yet weak, and better activity is seen for goods yielding fancy shapes. Read the full report.



 




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