As Djibouti Prepares To Topple Next, Should One Go Long A Girl's Best Friend?

Tyler Durden's picture

As what is rapidly becoming the biggest wave of revolutionary discontent since 1989 Eastern Europe spreads to every less than wealthy country and region, the next regime to topple may be that of smallish Ethiopia and Somalia neighbor Djibouti. The tiny country, with a population of less than a million, known only for being situated at the horn of Africa, has just seen a major (relatively speaking) protest, calling for President Ismael Omar Guelleh to step down. And while the country is completely insignificant geopolitically, it is merely a stepping stone as the African dominoes spread south: are Ethiopia and Somalia next to go? And after them all of central, and then southern Africa? So here's a thought - should the unrest reach Congo, and eventually South Africa, what will happen to the price of diamonds? While De Beers will be giddy to see a plunge in already artificially low supply, the story will be of course that no more shiny pure carbon crystals are made. And as the natural market for diamonds tends to be the rather affluent portion of society which is the only one to have benefited from loose liquidity, passing on diamond prices may not be perceived as all that difficult?

More on Djibouti from the BBC:

Thousands of people have taken to the streets of Djibouti to call for President Ismael Omar Guelleh to step down.

The demonstrators were reportedly monitored closely by security forces in riot gear.

Mr Guelleh's family has governed the Red Sea city state since independence from France in 1977. The United States has a large military base in Djibouti.

The constitution was last year amended, to let Mr Guelleh seek a third term.

Some of the protesters say they will stay in a stadium until Mr Guelleh, 63, leaves power in the Somali-speaking country.

Elections are due in April. Mr Guelleh was re-elected unopposed in 2005.

The protesters held banners reading "IOG out" and "No to a third mandate", reports the AFP news agency.

How long before we read a comparable report about all the largest diamond exporters in the world?

 

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AN0NYM0US's picture

are Ethiopia and Somalia next to go?

 

I think if you'll check Somalia is already gone but fear not, Canada, yes Canada is a repository of the shiny pieces of carbon

 

http://www.cbc.ca/money/story/2011/02/16/consumer-ekati-diamond.html

covert's picture

the majority of the people of the world have forgotten history. they have fallen in love with stupidity and because of necessity are returning to practically.

http://covert2.wordpress.com

 

velobabe's picture

this is suspect, this is the third time you have been 1st †

Huck T's picture

This is true.  There has been no effective national government there for twenty years. 

bankonzhongguo's picture

Djibouti has a largely unknown US C4I complex in the form of Camp Lemonnier - still spelled wrong? - watching entrance into the Red Sea.  I think its the only official US base - beachhead for Africa.  The 13th demi brigade French Legion still ops out of there also.  Also some regular French army.  About a million skinnies.  Very interesting geology.

redpill's picture

Yeah Somalia doesn't have anything to worry about since they don't really have a government anyway

Henry Chinaski's picture

The shift is hitting the fan. The countries in discontent seem to be largely aligned and/or supportive of US interests in the region.

This is an ongoing power shift.

Henry Chinaski's picture

I wouldn't call Djibouti completely insignificant geopolitically.  The US has had a signficant military presence in that country for a while.

Caviar Emptor's picture

Agree. Like it's model, the British Empire, US hegemony depends on control of key shipping lanes. The straight of Bab el-Mandab is crucial to supplying Western Europe through the Suez. 

Bahrain and Djibouti are two potential flash points where the US has key bases. For context, look at what happened after Marcos was deposed in the Philippines: two major US bases had to close (Subic Bay naval base and Clarke AFB). 

Coast Watcher's picture

The U.S. base in Djibouti also controls the drones operating over the Horn of Africa and across the straits in Yemen and southern Saudi Arabia, as well as serving as a listening post for tat part of the world. The rocket attacks on suspected AQ targets in Yemen were likely controlled from Djibouti.

MonsterZero's picture

Much like dollars, diamonds can also be produced out of fairly worthless carbon.

 

Investment?  I think not.

Tric's picture

I would never go long diamonds LOL

I think we'll see all kinds of diamonds come out of the woodwork the longer this recession is allowed to go on. 

savagegoose's picture

umm you gotta have a gov to protest against , so somalia is out, unless hanging out side pirate bases demanding a cut is considered protesting.

Cognitive Dissonance's picture

Man, this world wide case of revolutionary lice is getting way out of hand.....er....head.

jus_lite_reading's picture

It's more like a case of a runaway wagon as the horse gets bitten by fleas as the wheels fall off.

SILVER! SILVER! SILVER!

We don't need money. We need a whole new society!

malikai's picture

Never mind the diamonds. Mind the oil in Nigeria and Algiers. Not to mention the other resources in Africa. Gold, Silver, and Copper comes to mind.

Tyler Durden's picture

Since the (upcoming) surge in the price oil, and the other items you mentioned, is now in the vernacular, and has been discussed on ZH extensively, it seems rather logical to expect a jump there. The question is what else, in addition to cocoa of course, will soon be a "story" bubble.

jus_lite_reading's picture

Just a thought- if for some reason, the "debt ceiling" is not raised and the gubmint puts martial law into effect as some say they will, would you trust having your cash in a bank?

Another reason to buy silver and smelt it...

redpill's picture

The problem with diamonds is their value has been inflated by artificially constrained supply for many decades.  As a result, I would think the diamond cartel would make sure that diamond prices stay at the ideal point on the supply/demand curve intersection regardless of geopolitical turmoil.

Tyler Durden's picture

If the idea is to find how inelastic demand is, this could serve as a strawman. Demand for high margin diamonds comes primarily from the uber wealthy who can probably meet new price levels. If the diamond cartel works in unison, it should be an easy transmission.

velobabe's picture

i junked you, sorry dude†

did you get my email? you seem to like this subject matter!

Ratscam's picture

A good friend of mine is a known diamond dealer in central Europe.

He is one of the guys who does'nt get the De Beer's closed box to sell off to his customers. He can choose.

So we discussed exit strategies to this global mess. He refuted my precious metals arguments in a smart way.

I said hey, I can move USD 1M in platinum in one suitcase. 

He replied i can move USD 10M with one diamond I can swallow.

End of discussion! 

The problem is knowledge. Not only the 4 C's  but also the experience, the suppliers, the dealers, the customers, the entire environment around diamonds, not easy to attain, it all depends on how well you're connected and of course how knowledged you are about the "blood diamond" topic.

But give credit where credit is due, he definitely convinced me on his strategy.

Now the question would I invest with him and do I trust him?

Yes I do, because all the big diamond deals are based on trust, else you're out of business. It's a very small group and that's how business is done since decades, else you're out immediately! Being Jewish in this business has it's advantages. He's living it up.

malikai's picture

Many fruits and vegetables on the shelves here in the UK and I suspect most of Europe, are produced in various parts of Africa. Morocco, Congo, Cameroon, and Ghana are some of the big agri exporters.

If history is any predictor of the future, diamonds will indeed be a major source of funding for any wars in Sub-Saharan Africa. Depending on the scale, we could be facing a diamond glut as the factions pay for soldiers, food, and guns with their rocks.

StychoKiller's picture

Unfortunately, it'll probably be Coffee, one of my drugs of choice!

dick cheneys ghost's picture

the chinese are colonizing africa. 

 

nakedempire

lieutenantjohnchard's picture

no way i could get the rock off wife's finger no matter the price of diamonds. and besides, after the price i paid with her dragging me to every single diamond parlor to find just the right one for her no way i sell, just on principle alone.

Cognitive Dissonance's picture

The finger can be removed as well when the price is right. Outsource the extraction and retain plausible deniability.

velobabe's picture

no i go to hospital a lot with accidents of my arms and fingers. you can drink a whole heck of a lot of water, to get swelling down, and slide rings off with some grease. they cut one ring off my finger, and just had the jeweler re solder it back together.

andybev01's picture

Just out of curiosity; what exactly does one do to end up in the hospital so often?

StychoKiller's picture

Drama Queen springs to mind...

velobabe's picture

breaking human bones and cutting skin open in varying degrees.

AN0NYM0US's picture

want to hear an angry rant on the US and its Mid East policy

 

check out this interview from this AM (WLS chicago) with ex Shell guy Hofmeister

 

http://wlsam.com/FlashPlayer/default.asp?SPID=17424&ID=2114220

Bruno the Bear's picture

I suspect the Somalian pirates have used all that blackmail loot to seriously arm themselves. Pirates aren't gonna let some protesters screw around with their chosen, and very lucrative, profession.

Dick Darlington's picture

If girl's best friend is too pricy, one can always try best friend's girl. ;-)

almost_have_a_name's picture

It’s the United States of Africa coming right at you.

All we need to kick this thing over is a few hundred thousand soldiers, clean and fresh, back from a Vegas massage. You can accomplish almost anything after a well-deserved vacation.

koeleköpke's picture

than the market will be spoiled by a flood of blood diamonds.

 

Rodent Freikorps's picture

Holy crap.

Civil wars in Africa are not for the squeamish. Don't you all remember how freakin vicious the last ones were?

Not something to crow about.

LFMayor's picture

For real.  Nevermind the diamonds, go long on pangas.  You could make a fortune selling bulk Frost cutlery machetes to them.

Rodent Freikorps's picture

You should read all the bloody details of Rwanda. The French and Brits did just that.

trav7777's picture

good thing we have cities loaded with africans, huh?  Should be real entertaining

Rodent Freikorps's picture

It'll get out of control, and we'll be lucky to survive.

 

Caviar Emptor's picture

As tensions rise in sovereign nations with key US bases the risk of US armed incidents and intervention rises. The stakes just keep going up as the status quo crumbles. 

Ahmeexnal's picture

The power elite need to sell guns and steal gold.

 

lieutenantjohnchard's picture

remember a few weeks back when all the usa ambassadors were recalled to the home office. i can't exactly remember the timeline but it sure seems like there might have been a heads up in there somewhere.

lieutenantjohnchard's picture

who knows the truth anymore but i also remember a year ago harry schultz reporting that all usa embassies were directed to keep six months or so of cash on hand for whatever reason. seemed odd at the time. maybe just planning. who knows?

StychoKiller's picture

When all of your "secure" communications end up on WikiLeaks, guess a face-to-face has to substitute!

The Answer Is 42's picture

What kind of pervert would get a hard on from the toppling of Djibouti?