It's a fascinating piece, for a number of reasons. The first, and perhaps most interesting, is that the story behind the De Beers cartel is well known. Perhaps not in this depth, but still, it's no secret. Pretty much everyone knows they exercise a monopoly on diamond production and distribution, artificially keeping prices high. And yet, nobody takes the red pill and opts out of the illusion. Call it the power of the diamond industry's marketing. Call it adherence to tradition (created by the diamond industry's marketing). Call it what you will. But it's a powerful force. Consumers know it's a lie, and they choose to live the lie.

Second: a major prediction made in this article did come to pass, but it didn't have the predicted effect on diamond pricing. A serious contender to De Beers emerged in the early 2000s in the form of a multinational, "breakaway" cartel. Yet, both cartels -- and all other minor, independent players in the market -- seem to be acting in concert to keep supplies artificially low, and prices artificially high. In fact, the rate of price increase is at its highest in modern history. Economics tells us that this shouldn't be the case, especially given the emergence of new market entrants. And yet, the rate of price increase took off at precisely the same moment as the entrance of the new competitors. (Source: http://www.ajediam.com/investing_diamonds_investment.html)

What could be causing a major, year-over-year price increase in the face of new competition? Well, one guess would be that the two cartels are colluding in some way. Perhaps they've made an arrangement to fix prices or production. Or perhaps they've carved up the map, and reached some sort of non-competition agreement in each other's territories. Perhaps both. Ordinarily I'd call these ideas paranoid. But the history of the diamond business tells me that we can't put it past these guys.