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Price bubbles persist on the expectation that greater fools will come along. That’s why price manipulators find it profitable to start bubbles. However, bubbles inevitably burst when the supply of fools runs out. Over the last few years, De Beers the owners of the Central Selling Organization, which runs the diamond cartel kept on buying as the Russians unloaded just about their entire diamond hoard. No-one knows whether the Russians, desperate to turn domestic assets into foreign cash, sold off their huge holding out of plain dumb luck, or if their massive sales rested on inside information about new mines or diamond-synthesis technologies. |
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