This past week ended with 42 people dead and hundreds wounded after the cruel xenophobic attacks on immigrants in South Africa. This violence already show its results in the mining sector and might soon be affecting the volatile Diamond and Gold industry if not resolved. The global effect of the disturbing violence might have a repercussion on diamond prices and its markets.

Since a large production of the worlds diamonds come from South Africa it is unavoidable to have such production cost sustained under the tremendous pressure created among the laborers of the mining sector. With legal emigrants fleeing the country of whom several hundred’s are working in the mining sector it might be a wakeup call for all the investors.

The sharp rise in diamond prices this week on Tuesday might not be dropping so soon. Although it was recently reported that this were a temporally reflection of the diamond market but not a permanent reflection of the stability of the industry, it might still have a long term influence on the investments of diamond.

The ordering of military troops by the president Thabo Mbeki is a clear indication that he has lost control of the growing nightmare that is facing the developing country. The Argus in news in South Africa has branded this a “revolution’ and it is almost unimaginable that South Africa might be on the same highway as its neighbor’s, Zimbabwe and the Congo. These same haunting images were released by similar conflict when the revolution began in mid-Africa just a short while ago.

The idea of conflict diamonds could soon become a question and it is unimaginable should the violence in South Africa increase as predicted by some. The question by many investors are if South Africa would turn in a war zone with its rich deposits of diamond as the Congo? We will have to see how South Africa is going to act on this issue of xenophobic attacks that could very easily spread into a multi war zone if not urgently controlled by the South African government. In conclusion, a question remains that we should ask as the international community, “Is this a situation of a week power in the presidential seat of the country? “

By Baretzky for DiamondTopics.com