The Future of De Beers
According to James Picton of South Africa's Standard Equities at a Financial Times conference, DeBeers will remain the dominant player in the diamond market for a long time. He predicts that DeBeers will control 70% of rough diamonds in 2000, down from 73% in 1995. Despite the fact Australia has left the cartel, DeBeers' power base is really Africa. He believes Russia's stockpile of diamonds will be depleted by 1998. Further, he predicts there will be a diamond shortage by 2000.

DeBeers and Russia
The Russians and DeBeers have reached a new pact. This is the second agreement in less than a year. Under the terms of the new agreement, Russia will be a producer-member of the DeBeers cartel. Russia will export $1.2 billion of diamonds, or 26% of DeBeers' total output. The agreement is expected to be signed on March 31, 1997. The Russians will receive first rights to Russia's top quality diamonds. The plan will allow Russia to keep control of its diamond mines and gem-polishing business. Russia will also be invited to purchase rough diamonds at DeBeers secretive, 10 times a year, ritualistic sales, or "sights".

DeBeers Web Site
DeBeers now has its own web site. The site appears to be an extension of DeBeers' typical direct mail marketing. It is heavy on fluff and romance, but it does have some great images of diamonds. It is located at

Armed Robbery
S& G Diamond was recently robbed near 47th Street in New York. A phony UPS man buzzed the company at 10:30 A. M. and said he had a package from one of the company's regular vendors. After he was buzzed in, he announced the holdup, pulled out a gun, and tied up the receptionist. Then an accomplice tied up the nine employees in the office and started grabbing diamonds. The company President, Susan Grant, and an office manager watched all the events in the back office through a video camera. When the men were outside, she called 911 and her insurance agent. She locked the main diamonds in the vault. The robbers started demanding they be let into the back office and started shooting through the door. The robbers started kicking down the door, but heard the police arrive and fled. They raced down the building discarding the uniforms, guns, and the diamonds. One robber was caught in the building and another was later apprehended. Susan Grant said she is going to build a bullet proof window with a pass through for packages.

DeBeers Sales
YearTotal Sales
1990$4.17 billion
1991$3.93 billion
1992$3.42 billion
1993$4.37 billion
1994$4.25 billion
1995$4.53 billion
1996$4.83 billion
Source: Central Selling Organization

More Violence
In December, 1996 assassins murdered 24 peasants execution-style in four villages in northern Colombia. There were no arrests and no known motives. Leftist guerrillas and paramilitary groups are fighting for control of the region.

A U.S. pilot was killed recently in Colombia when his plane crashed during a crop dusting coca-eradication operation. The plane was a T-65 Turbo Thrush and was accompanied by Colombian police helicopters. Leftist guerrillas who guard the coca plantations shoot at the planes. These pilots are involved in this operation at the request of the U.S. State Department.

Civil War
In February, the guerrilla war intensified between the Colombian government and the Revolutionary Armed Forces of Colombia. Both sides clashed 30 miles southeast of Bogota. An elite anti-guerrilla unit of Colombian Army troops landed via helicopter into the region near San Juanito. Only 21 of 37 survived the ambush as 150 guerrillas were waiting.

El Espectador, one of Bogota's leading newspapers, criticized the government by stating, "It is hardly sensible to send the patrol into the lion's mouth." The guerrillas still hold 60 soldiers captured in August and 10 Navy marines in January. The Colombian government and the Revolutionary Armed Forces of Colombia have agreed to negotiate their release.

The leftist guerrillas are financed by narco-trafficking, kidnapping, and extortion. They maintain 60 units and an army of 10,000. They are striking in small towns after midnight. They kill police, politicians, and peasants. They rob banks, free prisoners from jail, burn down buildings and steal food and supplies. They also destroy the oil pipelines.

Due to the fact 97-99% of all Colombian criminals are never brought to justice, vigilante paramilitary groups have sprung up. They use chain saws to decapitate suspected guerrilla sympathizers. The government has a backlog of over 1 million cases. The political situation in Colombia remains grave.

Emerald Forum
A national forum was recently held in Colombia with 200 representatives from the emerald trade. Included were private mining companies, emerald cutters and dealers. They met to discuss holding an international Emerald Congress in July in Belo Horizonte, Brazil.

Colombian emeralds are considered the best in the world, but the industry is fragmented. The plan is for the Colombian emerald dealers and the Colombian government to work together to develop marketing, cutting, and exporting capabilities.

The topics discussed were:

  1. The plan to market Colombian emeralds internationally, like the DeBeers diamond campaigns. The emerald dealers would like 1997 to be "The Year of the Emerald" with ICGA promotions.
  2. The creation of an emerald bourse, where emeralds could be traded under one roof.
  3. The proposal of an "emerald law". This law may be introduced to the Colombian Congress to facilitate trade.
  4. To seek honest and open disclosure of emerald treatments.
  5. The development of research institutions. For example, emerald cutting schools, appraisal laboratories, treatment investigations, and jewelry manufacturers.
Although it is too early to tell if the venture will be successful, the Colombian government and the emerald dealers do have the money for such a plan.

The Net in Burma
Burma has ruled that using computers to obtain or send information on the economy is illegal. Also, unauthorized possession of a computer for networking is against the law. Offenders can face penalties up to fifteen years. Belonging to a computer club may result in three years in jail. Burmanet, a local electronic mailing list has been deemed an unauthorized club by the State Law and Order Restoration Council (SLORC). However, SLORC has its own home page on the internet.

Civil War
Southeast Asia's longest ethnic struggle is in danger of complete collapse if the Karen National Union is defeated. The Burmese army is using 100,000 troops to crush 2,500 Karen rebels. Two years after a major setback from the untimely loss of its headquarters, Burma's embattled Karen guerrilla movement is now facing a new military and political crisis. This crisis threatens to end the longest armed struggle in Burma for the recognition of ethnic rights and greater autonomy for the Karens. The Christian-led, anti-communist Karen National Union, which has been fighting for autonomy from Rangoon since 1948, was attacked by the Burmese junta. In February, 1997 between 12,000 and 15,000 Karens, mainly women and children, fled to Thailand to escape Burmese artillery, mortar and infantry attacks. SLORC troops swept through the KNU's remaining strongholds in Karen State, forcing the rebels to flee into the jungle. Relief officials say the Burmese army's latest offensive against ethnic Karen rebels has increased the number of refugees fleeing into northern Thailand to more than 100,000. The influx of mainly ethnic Karen and Mon refugees into the north is the biggest mass exodus into Thailand since the Cambodian refugee crisis of the early 1980s. According to figures from the Burmese Net News, Burmese troops have tried to enter Thailand to raid the refugee camps, but have been repelled by Thai troops.


The Maltese Falcon
Remember the 1941 Humphrey Bogart film, "The Maltese Falcon"? In the film, detective Sam Spade sought the Maltese Falcon-a priceless golden bird studded with gems. In the movie, the bird turned out to be a worthless hunk of lead. Ronald Winston has recently created the Harry Winston Falcon. He bought the original prop at auction two years ago for $398,000. He recreated the bird with 10 pounds of gold and it sits on a malachite base. It has two Burma ruby cabochon eyes and interchangeable coral and gold claws. From the falcon's beak hangs a 42 carat diamond. It took two years to finish, and the cost is $8 million.

Palm Beach Robbery
Kathleen DuRoss Ford, the widow of Henry Ford, had 200 pieces of jewelry stolen from her apartment in Palm Beach, Florida. There is a $500,000 reward for anyone who can help. The loss includes a large ruby and diamond ring, a ruby and diamond bracelet with 28 oval rubies, a pearl and diamond necklace, and a Cartier yellow diamond and emerald bracelet. Anyone with information should call the Palm Beach Police Department at 1-561-838-5470.


Newsweek, January 20, 1997
Doug Bandow, senior fellow at the Cato Institute
We found this article amusing and maybe too close to home. Editor
"Perhaps it is time to found Collectors Anonymous. But give up collecting? It offers the joy of a bloodless hunt, the thrill of conquest without carcass. It provides an opportunity to learn about art and history, sharpen one's negotiating skills and put together the best possible choices within one's budget. It's simply too much fun to stop. The next time you run across someone with a tendency to prattle on about his collection... be patient. Remember: collecting is a sickness that can strike anyone."


The Offshore Money Book: A Comprehensive Guide for Reluctant Americans
By Arnold L. Cornez, J.D.
Call: 1-800-488-4149, US$29.95 + S&H, 288 pages paperback, or in your bookstore.
This is an excellent primer on the subject of going offshore. It is not a a list of countries and banks. Rather, it is a logical legal analysis of the advantages and disadvantages of going offshore. Many people think you can simply respond to an advertisement in "The Economist" and open up an offshore company. Nothing is further from the truth. What you really need is a comprehensive plan and $15,000-25,000 to begin. The book analyzes the US real tax ramifications of going offshore. It discusses why you should or should not go offshore and how and where you should place your assets. It takes the mystery out of the International Business Companies and The Foreign Asset Protection Trusts. The author discusses offshore banks, credit cards, and annuities. Further, he discusses privacy and offshore scams.

The book includes numerous offshore internet links on an IBM disk.
Highly recommended; by one of the brightest minds in the business. Editor

High Profile
A couple drove their new Rolls Royce (which they had recently purchased for $158,000) to a restaurant in New Hampshire A curious IRS agent spotted the car and wrote down their license plate number. The IRS began a tax audit of the couple and eventually won a conviction for tax fraud. Moral: "If you are going to flaunt it, remember: Big Brother is watching," says Michael Insel, a New York tax lawyer.

Intel Supercomputer
Intel and the US Government are building a new supercomputer 2 1/2 times faster than any supercomputer. It will shatter the teraflop barrier, meaning it can calculate more than one trillion calculations per second. It is named the Ultra, and in a second it can perform as many calculations as the entire US population could do working by hand for 125 years. The computer will contain 9500 Pentium Pro processors operating in tandem, at a cost of $55 million. It will be installed at the Department of Energy in Albuquerque, New Mexico. If you are concerned with how easy it is for the government or business to store information about you, this new computer is chilling news.

Smart Highways
Many states are installing high-tech roadside sensors that promise to speed traffic, eliminate tollbooths, and cut costs. Sixteen of the nation's sixty five tollroads already have this equipment. The primary manufacturers of this equipment are Hughes Electronics and Lockheed Martin. However, besides collecting toll fees, these devices can monitor where a vehicle is at certain times and can photograph motorists and their license plates. The routes you travel can be recorded and stored in a computer file. In Florida and New York, police use toll records to check suspect whereabouts and to check for stolen cars. Tens of thousands of motorists already participate in a smart highway system along State Route 91 near Los Angeles and another system is operating in the Western states along Interstate 5 in California, New Mexico and Arizona.

The information provided in this newsletter has been derived from research and sources believed to be reliable. However, no guarantee is expressed or implied as to their validity. Opinions included herein are subject to change without notice. The gem market is speculative and unregulated. Certification does not eliminate all risks associated with the grading of gems. Recommendations are meant for those who are financially suited for the risks involved. Past performance is not a guarantee of future performance. Neither NGC nor The Gemstone Forecaster guarantee a profit or that losses may not be incurred as a result of following its recommendations. They may also hold positions in areas they recommend. Subscribers should not view this publication as investment advice, nor is it intended as an offer or solicitation with respect to the purchase or sale of any security.
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