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Guest Post: How QE2 Helped Main Street, Example 1: High-End Diamond Retailers

Tyler Durden's picture




 

Submitted by The World Complex

How QE2 Helped Main Street, Example 1: High-End Diamond Retailers

One justification for bailing out Wall Street was that it would ultimately help Main Street.  Last time we looked at the diamond price index for 1-ct diamonds. Today we investigate the effects of QE2 on that most Main Street of businesses--the high-end diamond retailer.

Below is a chart for the price of 3-carat diamonds (the RAPI index, based on the price of the best 25 diamonds of a given size, clarity, and colour).

At the prices quoted, a single diamond of this size would set you back about $110,000. Hopefully she's worth it.

There are two significant periods of rising prices--early 2010, and November 2010 to June 2011, during which time prices rose about 30%. The official CPI (excluding food and energy) was 1-2% over the same interval. We note that this last interval corresponds approximately with the timing of QE2, and congratulate the Federal Reserve for aiding Main Street business.

In a related chart, we see that jewellry prices and sales rose through the first half of 2011.

In our next installment we will compile the caviar index and the well-known 100-year-old-port index to see how these Main Street retailers have been affected by QE2.

 

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Mon, 09/12/2011 - 13:40 | 1660176 NoneOfTheAbove
NoneOfTheAbove's picture

 

Dear Ben,

 

Please steal granny's purse for us, so we can keep pretending we don't live in her 

 

basement.

 

thx, 

 

Lloyd and Jamie

aka Beavis & Butthead

 

 

Mon, 09/12/2011 - 13:41 | 1660180 JW n FL
JW n FL's picture

 

 

http://www.youtube.com/watch?v=yAT2kVQI4Qg

Gold Wars: Paper Empire Strikes Back

Mon, 09/12/2011 - 14:26 | 1660338 sgt_doom
sgt_doom's picture

From the "It's all connected" department, I chanced upon an audio documentary on the horrible memories of the survivors of the attack on the Pentagon on 9/11/01, but what is really interesting is to note that on 9/10/01, the Pentagon's comptroller mentions that $2.3 trillion is unaccounted for and on the morning of 9/11/01, especially thanks to a last-minute scheduled meeting of all financial managers, including their offsite managers, at the Pentagon,

almost the entire financial management of the Defense Intelligence Agency is killed!!!!

http://soundprint.org:8080/ramgen/documentaries/w/we_were_on_duty.rm

 

Mon, 09/12/2011 - 15:33 | 1660866 JW n FL
JW n FL's picture

 

 

I got one for ya..

were are the monies collected for all of the public lands sold in America?

were are the monies collected for mineral rights sales?

were is the income that America Generates thru the sale of anything?

You wont find any of those lines of revenue or any other.

Now on to your point of America being fleeced by the millitary.. sure, all day every day.

You see.. there is this Big Fucking Club.. and you and I are NOT! in this Big Fucking Club!

We are the suckers who pay for this Big Fucking Club!

Mon, 09/12/2011 - 13:43 | 1660184 Piranhanoia
Piranhanoia's picture

But diamonds are good for sandpaper and cutting.  What else do they do?

Mon, 09/12/2011 - 13:46 | 1660203 Cthonic
Cthonic's picture

Part legs, albeit temporarily.

Mon, 09/12/2011 - 14:10 | 1660280 Cash_is_Trash
Cash_is_Trash's picture

Diamonds in bank vaults are merely "tradition".

Nice chart of malinvestment performance.

Mon, 09/12/2011 - 14:54 | 1660574 A.W.E.S.O.M.-O 4000
A.W.E.S.O.M.-O 4000's picture

I heard that they used to buy you 15 more minutes of life at Aushwitz.

Mon, 09/12/2011 - 13:43 | 1660187 Dave Thomas
Dave Thomas's picture

Why do people buy diamonds? They're as abundant as hell.

Mon, 09/12/2011 - 13:50 | 1660210 Construct
Construct's picture

not really. supply is low due to destruction of over supply.

Mon, 09/12/2011 - 14:09 | 1660276 MarketTruth
MarketTruth's picture

Whomever told you that is an idiot. Russia and many countries have an abundance of diamonds. Only 'rare' if they are 5 carats or higher with top rated clarity.

Mon, 09/12/2011 - 14:12 | 1660284 Construct
Construct's picture

yes ofcourse but by keeping them of the market or destroying that supply you end up with a under supply that drives prices up.

Mon, 09/12/2011 - 14:43 | 1660460 MarketTruth
MarketTruth's picture

Ahh, manipulation akin to why DeBeers was prosecuted in the USA. Yes, that is true. Go to any pawn shop and the truth about gold, silver... and no-value diamonds will become self-evident.

Mon, 09/12/2011 - 14:44 | 1660473 Construct
Construct's picture

you mean to tell me that the same is being done with gold and silver?

Mon, 09/12/2011 - 13:44 | 1660192 monopoly
monopoly's picture

Damn, I am really upset now. I sent Tyler my DOW 10,000 hat thinking I would never need it again and now he refuses to give it back.

:)

Mon, 09/12/2011 - 13:44 | 1660193 erik
erik's picture

Does anyone know an ETF for Euro banks that trades on Euro exchanges?  Preferably a leveraged ETF like FAS/FAS or SKF/UYG.

Mon, 09/12/2011 - 13:45 | 1660194 CheapPanderingCrony
CheapPanderingCrony's picture

While obviously it's not the safe haven of the poor masses. What are the chances that the increase in diamond prices are linked to people looking for somewhere safe to put their money besides the precious metals?

Mon, 09/12/2011 - 14:01 | 1660248 Flakmeister
Flakmeister's picture

Bingo....

It's pretty hard to schlep $1,000,000 in gold even in todays dollars....

Mon, 09/12/2011 - 14:06 | 1660260 Shameful
Shameful's picture

Clearly you need to hit the gym.  I might not be the strongest guy in the world but I could haul around 38lbs of gold on my back and have quite the spring in my step :)

Mon, 09/12/2011 - 14:13 | 1660288 malikai
malikai's picture

I'd rather have the gold. It just looks and feels better to me.

Mon, 09/12/2011 - 14:21 | 1660300 Flakmeister
Flakmeister's picture

Yeah, and if I had $10,000,000 or so, it would not be all in gold.

Edit: The market for Rubies and Emeralds, not to menton colored semi-precious stones is rocketing...

Mon, 09/12/2011 - 14:32 | 1660358 malikai
malikai's picture

If I was talking 10 Mil, I think I would be happy to diversify into rubies, emeralds, and particularly productive land with a good hill to build on. :)

Mon, 09/12/2011 - 14:43 | 1660458 Flakmeister
Flakmeister's picture

That is my point.... the uber-wealthy aren't worried about things at the level we are... Silver, while cute, is looked upon the same way that some of us here look at Cu pennies and Nickels....Do you want to hoard 5000 lbs of copper???

Hell, anyone with a liquid net worth greater than a few million would be foolish not to have a very portable store of wealth. Even more portable than gold.

Mon, 09/12/2011 - 14:48 | 1660511 malikai
malikai's picture

You have exposed my plebian roots. Now how am I supposed to pick up chicks here? They all know I'm just a loser serf now. Thanks.

Mon, 09/12/2011 - 15:03 | 1660647 Flakmeister
Flakmeister's picture

Sorry.... didn't mean to out you.... ;-)

Mon, 09/12/2011 - 15:42 | 1660921 NotApplicable
NotApplicable's picture

What are you taliking about? I haven't spent a nickel or penny in years. Those suckers are the silver dimes of the future.

They make for nice walls in my bunker, as well.

Mon, 09/12/2011 - 16:05 | 1661072 Flakmeister
Flakmeister's picture

Yeah.... the pennies are good for the Faraday cage.

But seriously, I do save the old pennies and when I think of it nickels, but I don't think that I will be able get anything useful for them even in the event that the dollar goes tits up...

Mon, 09/12/2011 - 15:37 | 1660894 bid the soldier...
bid the soldiers shoot's picture

Flakmeister = Scrooge McDuck

Mon, 09/12/2011 - 14:22 | 1660296 Flakmeister
Flakmeister's picture

I used to hike through the rainforest with 55 lbs on my back....(check out where Cape Fife is) BFD....

Now do it on the run...with a checkpoint or two thrown in...

Mon, 09/12/2011 - 15:36 | 1660862 Shameful
Shameful's picture

If one had millions in net assets why on God's green earth would they expose themselves to political risk?  Don't know about you but I would be parked out in Switzerland, not the US or some other police state.  They have a good record of not being invaded and welcoming guys with mounds of cash.  The rich don't need to run unless they are also retarded, and my guess is the retarded rich are not sitting with mounds of gold in their basement safe.

 

EDIT:

And if not super rich and just the million could spread it around in "safe" places.  But I'm not cursed with that problem, I'm just a debt slave in the USSA.  But really who is going to be trying to get past check points these days?  They will just feel you up at the airports.

Mon, 09/12/2011 - 15:45 | 1660937 Flakmeister
Flakmeister's picture

There have been other checkpoints besides TSA in the last 100 years, and they nabbed a lot of rich people.

No real argument from me... Swissyland is good place, as would be Bermuda with a 80' sail boat. Since I am also just a poor schlub, I don't really have to worry about this stuff.

FWIW, I used to work with a guy that built the equivalent of the "FuhrerBunker" underneath his place in New Caanan.

Mon, 09/12/2011 - 15:35 | 1660867 bid the soldier...
bid the soldiers shoot's picture

With a professional courtesy from a plastic surgeon, doctors can have up to a 4 carat marquis sewn into their abdominal cavity, which doesn't have to be removed until their arrival in Buenos Aires.

Mon, 09/12/2011 - 13:45 | 1660196 dalkrin
dalkrin's picture

How much of the jewelry store statistics are due to changes in PM prices and availability, rather than that of simply diamonds?

Mon, 09/12/2011 - 13:46 | 1660198 john39
john39's picture

have heard from inside sources that many doctors have been buying diamonds as a hedge for economic collapse/dollar collapse.   I couldn't help but chuckle wondering who, in the event of real collapse, would trade anything valuable for diamonds...  especially considering the fact that there are literally billions of unsold diamonds socked away by the ungodly diamond monopoly...   unlike gold, the scarcity of diamonds could reverse overnight, destroying the "market" for these little rocks.

Mon, 09/12/2011 - 13:49 | 1660208 Crime of the Century
Crime of the Century's picture

Not to mention that in order to be valuable, they can't be perfect, for only artificial diamonds can be perfect. 180 degrees out from gold, and the reason gold is money.

Mon, 09/12/2011 - 14:01 | 1660247 JohnG
Mon, 09/12/2011 - 13:58 | 1660232 Esso
Esso's picture

Criminy. Doctors - Retards with stethescopes & scalpels.

Mon, 09/12/2011 - 13:48 | 1660206 Sabibaby
Sabibaby's picture

Tyler, Main Street doesn't buy diamonds very often (hopefully only once when we get married) and then 100-year old port and caviar? Am I missing /sarc?

 

What about the milk, eggs, and bread index?

 

time to re-read, I'm missing the sarcasm...

Mon, 09/12/2011 - 13:56 | 1660221 SheepDog-One
SheepDog-One's picture

100 year old port? Bah. For who....the servants?

Mon, 09/12/2011 - 14:24 | 1660326 hedgeless_horseman
hedgeless_horseman's picture

Port?  Non. 

Cognac?  Oui. 

Mon, 09/12/2011 - 14:27 | 1660340 caerus
caerus's picture

that's a bottle i can believe in

Mon, 09/12/2011 - 16:09 | 1661105 Lower Class Elite
Lower Class Elite's picture

And it's ribbed, for her pleasure.

Tue, 09/13/2011 - 08:03 | 1663033 malikai
malikai's picture

Dude high life is the biggest hangover inducer I've ever had!

Mon, 09/12/2011 - 15:43 | 1660927 NotApplicable
NotApplicable's picture

Is that the Holy Hand Grenade of Antioch?

Mon, 09/12/2011 - 16:04 | 1661063 mickeyman
mickeyman's picture

Unfortunately there is no cognac index.

I may be able to check out the high-end champagne index.

Mon, 09/12/2011 - 14:21 | 1660312 Apocalicious
Apocalicious's picture

It's dripping with sarcasm, bud. You need to recalibrate...

 

Mon, 09/12/2011 - 14:21 | 1660315 Apocalicious
Apocalicious's picture

It's dripping with sarcasm, bud. You need to recalibrate...

 

Mon, 09/12/2011 - 13:51 | 1660212 gaoptimize
gaoptimize's picture

Flawless diamonds of any color can be produced for ~$20 to ~100 / carat.  Enough said.  Let the deep-Earthers be impoverished by their romanticism and cruelty.

Mon, 09/12/2011 - 13:52 | 1660215 hungarianboy
hungarianboy's picture

I'd sell everything and like Robo said, go cash or short.

Mon, 09/12/2011 - 14:00 | 1660245 equity_momo
equity_momo's picture

If that clown actually suggested that recently I'm going to look for some risk assets that will perform well in the short to medium term. Just long enough for THE contrarian to flip flop back to his usual default bulltardness.

Mon, 09/12/2011 - 13:55 | 1660216 TruthInSunshine
TruthInSunshine's picture

Here's the other effect starving Main Street while teet suckling Wall Street & Banks has and will continue to have (look for a lot more of this type of behavior soon):

 

'Vampire' woman attacks man in wheelchair

A 22-year-old woman told a 69-year-old wheelchair-bound man "I'm a vampire and I'm going to eat you" as she bit off chunks of his flesh in an attack in western Florida, outside a Hooters Restaurant, police say.  

Mon, 09/12/2011 - 14:09 | 1660273 Shameful
Shameful's picture

Your just watching the cultural rot set in.  A potent cocktail of TV, drugs (legal and otherwise), and loss of any morality into a witches brew of culture.  Good times ahead for all!  After all clearly the narcissistic and delusional youth will solve all these problems, or you know you could bet that they will mess it up worse...

Mon, 09/12/2011 - 14:43 | 1660459 MachoMan
MachoMan's picture

And to think I always thought of vampires as socially inept perverts...  on the plus side they're getting out of mom's basement... 

 

Mon, 09/12/2011 - 15:23 | 1660789 bid the soldier...
bid the soldiers shoot's picture

Dexter Morgan is already doing the blood work.

Mon, 09/12/2011 - 13:54 | 1660219 SheepDog-One
SheepDog-One's picture

'Diamonds', lol what a scam.

Mon, 09/12/2011 - 13:55 | 1660220 Caviar Emptor
Caviar Emptor's picture

This is trickle down economics at its very finest!

High end hookers do well and there's a whole lot of trickle down from there.

And there's a brisk business selling the dregs from bottles of Crystal under the label Tryckle

It's the Trickle ME! economy

Mon, 09/12/2011 - 13:58 | 1660233 TruthInSunshine
TruthInSunshine's picture

This Christmas, Hasbro is releasing a Trickle Me Bernank toy, complete with beard and briefcase, which pisses on your child's leg while audibly calling out "it's just a little rain."

Mon, 09/12/2011 - 14:05 | 1660259 Caviar Emptor
Caviar Emptor's picture

lol

Mon, 09/12/2011 - 13:56 | 1660224 Bokkenrijder
Bokkenrijder's picture

How is gold doing? I thought we had a record high in €'s this morning? :-0

 

http://www.zerohedge.com/news/gold-new-record-high-euros-%E2%82%AC1375oz...

Mon, 09/12/2011 - 14:27 | 1660336 hungarianboy
hungarianboy's picture

Seriously dude.

Look at EURUSD man.

By the way, your nick only misses a R from bRokken Rijder.  Pisnicht! :-)

 

Mon, 09/12/2011 - 15:20 | 1660778 bid the soldier...
bid the soldiers shoot's picture

Hey, we're getting a lesson in Magyar. Or is it Dutch?

Mon, 09/12/2011 - 15:49 | 1660964 Bokkenrijder
Bokkenrijder's picture

Hehehe!

Seriously, don't want to be an antfucker, but the EURUSD hasn't stopped Gold from trading higher in the last few weeks now has it? As a matter of fact, ZH proclaimed a "record high" of €1375 this very morning.

This whole "gold is trading higher because of EUR problems," or "gold is trading lower because of EUR problems" is getting a bit too easy for me. Which one is it?!

Mon, 09/12/2011 - 13:57 | 1660229 caerus
caerus's picture

i for one refuse to cancel port and caviar wednesdays 

Mon, 09/12/2011 - 13:58 | 1660234 Cognitive Dissonance
Cognitive Dissonance's picture

Ya gotta hold the line somewhere.

Mon, 09/12/2011 - 13:58 | 1660230 Cognitive Dissonance
Cognitive Dissonance's picture

 

 

At the prices quoted, a single diamond of this size would set you back about $110,000. Hopefully she's worth it.

Now now Tyler, don't be a sexist. The diamond might be for a Wall Street 'he'.  

Mon, 09/12/2011 - 14:03 | 1660253 lieutenantjohnchard
lieutenantjohnchard's picture

when i got married my wife made it perfectly clear that she had a very big ring finger.

Mon, 09/12/2011 - 14:23 | 1660275 Azannoth
Azannoth's picture

The biggest mistake a man can make in life is to get contractually married, no I am not an enemy of monogamy, but putting in in writting on paper creates more problems than it solves, maybe a few decades ago it was an even trade, but today with the pro-feminist/anti-male laws and a strong pro-feminist society any man getting married might as well be selling himself a slave to the woman

Tue, 09/13/2011 - 02:13 | 1662714 Cultural Capital
Cultural Capital's picture

That's some real talk.  This is the real reason to off-shore money, not to hide from the irs but to hide from the wife.. 

Tue, 09/13/2011 - 07:45 | 1662969 Flakmeister
Flakmeister's picture

Let me fix that for you

The biggest mistake a man can make in life is to get contractually married to the wrong woman

 

Tue, 09/13/2011 - 08:02 | 1663028 malikai
malikai's picture

Hear hear!

Mon, 09/12/2011 - 14:03 | 1660255 hungarianboy
hungarianboy's picture

Gold looks good :-) Glad I'm not long on this shiny metal right now. And since I'm not long I am short or cash. You guys can guess :-)

Mon, 09/12/2011 - 14:03 | 1660256 Downtoolong
Downtoolong's picture

Changes I've noticed in my neighborhood last year.

- Two new retail bank branches built.

- Gold buying shacks springing up like wildflowers.

- My local Food Lion grocery store closed (there goes the rest of the strip mall too, I bet.) Now I have to drive farther and use more gas to buy food.

Thanks Wall Street.

 

Mon, 09/12/2011 - 15:52 | 1660986 JW n FL
JW n FL's picture

 

 

buy the center.. put in a Whole Foods and make money.. fuck food lion.

Mon, 09/12/2011 - 14:04 | 1660257 MFL8240
MFL8240's picture

Everyone watching the gangsters knock Gold in lieu of the confetti fraud?  I have had enough of the games in the US and the overall level of fraud and deciept is becoming so intolerable I have to wonder when and where it will end.

Mon, 09/12/2011 - 14:13 | 1660290 JohnG
JohnG's picture

Yes, gold and silver getting hammered hard today.......I say so what.  It's just because they are in serious trouble with thier shorts, trying to get out of it by hammering to cover.

This will end badly for them.  I for one am just holding fast, waiting to see what happens when PAGE gets up and running.

Mon, 09/12/2011 - 14:07 | 1660264 Caviar Emptor
Caviar Emptor's picture

Support your local banker. It's the right thing to do. 

Mon, 09/12/2011 - 14:15 | 1660295 Azannoth
Azannoth's picture

Yes, do it for the children they will thank you for it later ;)

Mon, 09/12/2011 - 14:16 | 1660298 TruthInSunshine
TruthInSunshine's picture

Bank of America®. Bank of Opportunity™.

Mon, 09/12/2011 - 14:09 | 1660271 Reform1776
Reform1776's picture

Stocks just took a dip, did O just go on TV?

Mon, 09/12/2011 - 14:17 | 1660301 Conax
Conax's picture

I thought good old Bart Chilton was going to 'make a statement' this month.

C'mon Bart, say something..

Mon, 09/12/2011 - 14:26 | 1660337 monopoly
monopoly's picture

Main street retailers. Right.

Mon, 09/12/2011 - 14:28 | 1660346 Sizzurp
Sizzurp's picture

If certain big banks are counting on QE, and know the only way to get it is to smash the metals so the fed has political cover, then guess what, that is just what they will do.  Sure they might lose on the metals side, but they make up for it by getting more free money from the fed.  As far as the metals are concerned, that expression "don't look a gift horse in the mouth" comes to mind.

Mon, 09/12/2011 - 14:35 | 1660384 bid the soldier...
bid the soldiers shoot's picture

Isn't Main Street a division of Van Cleef & Arpels?

Mon, 09/12/2011 - 14:51 | 1660537 Jack Kreuz
Jack Kreuz's picture

The Rapaport price index for 3-carat diamonds was about 480 in 1980, when a graded diamond of this size would sell for $195,000 - in 1980's dollars!!

Mon, 09/12/2011 - 15:11 | 1660707 monopoly
monopoly's picture

Gold looks excellent here. In a correction, what is the matter with some people. Nothing goes straight up. You buy gold to trade it or preserve wealth. Drives me to drink. I guess you think it "looked good" at 850, 1,100, 1,300 and 1,700. Beyond words guys.

Mon, 09/12/2011 - 15:14 | 1660729 Diamond Jim
Diamond Jim's picture

I am a cutter, in the business. As of june there was another increase in the price of diamonds. Supposedly, there is a bit of hoarding of high end material going on in the middle east cutting center. they are hoping to sell in the future to India, the place where most diamonds are cut, but only < 1 caraters and of dubious clarity etc. I am currently looking for a 1.5 ct diamond for a customer...used to pay a little less than $5k/ ct a year or so ago, F / G color, VVS...now darn near 9-10k.

 I have also seen my business get better over the last couple of years. People are coming into the Shows looking for better places to put their money than gold. Much easier to move wealth around in one's pocket than a knapsack or by armorewd car. Many are buying sapphires and rubies. Problem with ruby at the moment is that there is an embargo against Burma (Myannimar) for the last 3+ years , and civil war in madagascar where no one fears to tread. So little rough of quality is coming out. I can sell 3 + ct rubies all day long if I had any. Sold my last burmese about two years ago.  

Mon, 09/12/2011 - 15:56 | 1661012 JW n FL
JW n FL's picture

 

 

Joo Rox's!

Mon, 09/12/2011 - 16:06 | 1661079 mickeyman
mickeyman's picture

They are great until you need to make change.

Tue, 09/13/2011 - 21:54 | 1665957 moxia19
moxia19's picture

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