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Diamond & Specialty Minerals Summary for May 13, 2022

2022-05-13 20:01 ET - Market Summary

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by Will Purcell

The diamond and specialty minerals stocks box score on Friday was a rousing 150-50-110 as the TSX Venture Exchange soared 29 points to 696. Rough diamond prices resumed their decline this week, according to Paul Zimnisky's global rough diamond price index, which shows a 0.5-per-cent decrease from a week earlier. Rough diamond prices hit a record high in mid-February but are now 5.4 per cent lower despite the West trying to sanction Russia's major diamond miner, Alrosa, out of the market. (Alrosa, which produces well over one-quarter of the world's rough diamonds, still has plenty of eager buyers, including China it appears.)

What comes next is unpredictable. Diamond miners and their shareholders enthusiastically cheer that supply woes can mean only one thing -- relentless price increases above and beyond inflation. That will be a challenge with inflationary pressures already at a 40-year high, and further, history suggests the diamond sector could be in for a decade of stagnation. Rough prices last soared to a record high in 2011, only to move slowly but relentlessly lower over the following eight years, defying analyst's bullish predictions.

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