An expected diamond boom

The talk in the great diamond tourism city of Amsterdam is about a diamond boom. Only an uncontrolled, persistent rise in the price of gold can possibly frustrate it. There is no diamond boom at present in Amsterdam, though the great diamond houses, such as Coster's, in front of the great Rijks-museum, swarm with Far Eastern tourists tasting for the first time the capitalist pleasure of spending money on artistic creations, both of the present and the past.

I noticed that most tourists who visited Coster's later walked en masse to the Rembrandt-Caravaggio exhibition, which was being held 50 metres away at the sumptuous Van Gogh Museum. I could not help noticing that there was a connection between the pleasure of diamonds and the pleasures of the art of such an artist as Rembrandt, who showed great skill in decorating the fair sex in his early paintings with a blaze of diamonds and pearls.

On that day in Amsterdam, my thoughts went back to my home country, which possesses a considerable heritage in diamonds and art, including the only signed Caravaggio in existence. This has for 20 years enjoyed the appellation first made in an extensive article in Time magazine of being the greatest painting of the tragic spirit between the death of Michelangelo (1564) and the maturity of Rembrandt (1660).

It was evident in Amsterdam that the Dutch international traders were consciously preparing for a world diamond boom, and as part of these preparations they were downplaying Amsterdam's past character as the world's first great commercial and financial centre.

Amsterdam had its central bank 80 years before London, but in spite of all this unparallelled glory it was being promoted for the sake of tourism and the diamond trade as the city of art. There were posters in all the city's hotels with Van Gogh's self-portrait stating - 'I Amsterdam'.

This projection of Amsterdam as Van Gogh's city explains why so much treasure was heaped on the international promotion of the Rembrandt-Caravaggio exhibition. The independent, revolutionary artistic mind of Van Gogh can easily be seen to be stemming from Rembrandt and ultimately from the attitudes of our great Caravaggio.

These things were explained in the world quality press during these last months by a profusion of means, which Malta, if it wanted to promote its Caravaggio, can never match. The Dutch deployed a vast lobbying machine behind the extraordinary Rembrandt-Caravaggio exhibition, which was able to reach every major European museum, including that of Valletta.

Who paid the millions for this exercise? It was none other than Amsterdam's diamond trading community, who saw in the promotion of their city's character as the Venice of the north the best guarantee that it would be the first to reap the fruits of the coming boom in the diamond trade.

Tourism promotion is only a simple matter for simple minds. The Dutch mind is by no means simple.

Dangerous situation

In Amsterdam everything seems set for a coming diamond boom. With strong tourism connections, even the smallest operator knows the dangers of the situation. After all, the shortcomings of the last diamond boom, which coincided with record prices of gold and silver 25 years ago, is still fresh in their minds.

If prices go extraordinarily high again, the diamond retail trade stands to be destroyed. Do we in Malta realise that we can, with our hard-won cash (in particular fruit of an STMicroelectronics which manufactures 25 per cent of its product in Malta, and of the gains of a tourist trade now firmly ensconced in its five-star status) further increase the international custom of our diamond shops?

This country does not lack diamond shops, but it can have at least one shop aimed at the millionaire yachting tourist out for a piece of antique jewellery. This island has a considerable reserve of such precious stuff. One has only to study what comes up at the Monte di Pietà auctions, and also at the more frequent quality auctions in Sliema.

These, however, are not well marketed, as can be seen by the fact that we are yet to have specialised auctions concentrating the public's attention on a particular topic, such as diamonds or paintings.

If the local prices of diamonds goes up, through the encouragement of tourist demand, one might yet see the display of some unbelievable Czarist diamonds currently in private collections. This country's diamond shops ask for special attention.

They have a link with tourism to Malta as a result of the increase in the European Union's prosperity. This is to be ignored only at the cost of overall economic loss for our country.

This article is not intended as investment advice, but aims to help produce an investment culture. John Azzopardi Vella has promoted the Malta Development Fund and advised S&P. He is currently a research economist with DBR Investments Ltd, which is licensed by the MFSA. E-mail: johnazzopardivella@hotmail.com.