March 3rd, 2014
From the IDEX columnist Edahn Golan:
flowing back into the system from consumers.
The surge in recycled diamond offerings was caused by the 2008-2009 financial crash and the subsequent recession. All of a sudden, many Americans stood to lose their homes because of difficulties in meeting mortgage payments. The need to tighten the belt as many lost their jobs or suffered from pay cuts, while their financial obligations continued to increase, forced many to consider selling some personal goods to protect other holdings.
Collectibles, cars, baseball cards and other valuables, such as grandma’s old jewelry, were sold at a rate not seen before and as a result, in 2009 recycled diamonds became a growing part of retailers’ offerings.
At $1 billion in estimated annual sales globally, recycled diamonds constitute more than 4 percent of diamonds sold by retailers in 2011, according to Even Zohar. In 2012, the market share of recycled diamonds increased to 5.5 percent on an estimated supply of $1.2 billion.
Retailers love these goods. Together with trade-ins, where a client replaces the diamond in a jewelry item with a nicer or bigger diamond, retailers added to their inventory diamonds that cost them less (sometimes a lot less) than when they buy from wholesalers. Sold at full retail price or even at a modest discount, retailers make a far wider margin with these goods: anywhere from 50 percent to a few hundred percent. No doubt, retailers love this revenue stream.
Wholesalers, naturally, are less enthusiastic. Wholesalers’ margins are typically very slim, around 3-5 percent at best, and therefore wholesalers don’t have the ability to compete with consumers that are desperate to sell old diamonds and uninformed about wholesale prices. Losing 5.5 percent of their business is a serious blow to wholesalers. There is no doubt this was a contributor to the large overhang (growing inventory held by manufacturers) experienced in 2011.
Growing by 20 percent between 2011 and 2012, have recycled diamonds continued to grab market share in 2013 as well? According to our anecdotal information, the answer is no. It seems that the improved economic scenario has taken away much of the motivation consumers had to offload their old jewelry.
Not only is the housing market improving in the US, but the global economy in general is slowly improving, even in battered Europe. With a wild rally at some of the world's largest stock markets in 2013, consumers feel less distressed.
For retailers, trade-ins will continue to provide them with nice margins. Further up the diamond pipeline, pawnshop owners learned the value of diamonds and are selling them for more, mainly to manufacturers that re-polish, clean and certify the diamonds and sell them to retailers at regular wholesale prices, or at a small discount. Recycled goods will continue to be part of the landscape; however, until the next major economic crash, the recycled diamond party is winding down.
Feb 17, 2014:
From the IDEX columnist Edahn Golan:
publication of that article, a discussion on Twitter went further, and tossed around baseless theories about diamond bank financing, transparency and more as if they were solid, well-researched facts. They were not; in fact, they just were urban legends.
As someone who spends much of his time researching the diamond industry, reading all those errors annoyed, amused, dismayed and ultimately concerned me. It’s okay to hold to your beliefs, even if they are wrong, that is a private matter. However, insisting on spreading ignorance is not at all okay. Therefore, here is some information about the diamond industry that we can all be proud of:
The diamond industry provides jobs for about a million people. In India alone, the polishing industry employs some 650,000 people. The diamond industry brings mining work to tens of thousands of people in remote locations in Africa, Canada, Russia and Australia. There are also diamond polishing and jewelry-manufacturing operations in China, Thailand and many other developing countries that feed many more families and raise their standard of living. These are the salaried and contract workers. With their dependents, the diamond industry supports several million people.
Artisanal alluvial diamond digging is source of an estimated 14%-15% of the world’s rough diamonds. These are people hard at work, not companies, let alone large international corporations.
Diamond mines in Zimbabwe, Botswana, Sierra Leone, Namibia and other countries brought health services to populations that otherwise would not have access to them. That alone is a good enough reason to buy diamonds. These services include HIV testing, treatment, and education about this insidious disease.
A large part of the cost of diamonds is salaries, royalty payments and taxes paid in Africa. On top of that, other local expenses by the mines include purchasing food, services and supplies that benefit local economies. Add to this new water and filtration systems, educational programs, medical clinics and ready supplies of hard-to-get medicines, new housing provided around mines and there is all of a sudden a level of support for disadvantaged communities that none of the folks boycotting diamonds in the name of “ethical standards” are providing to anyone. Anywhere.
The majority of the world’s diamonds are polished in Surat, a city in Gujarat, India. According to the Indian government, Surat has the highest average income in India. The fact that diamonds and textiles are the main economic sectors in the city means that diamond (and textile) workers are some of the best-paid laborers in the country.
Also in India, many diamond firms have opened schools. They provide free education to children. Some of these schools are for the children of their employees, while others are open to any child in the area. A few of them actively seek homeless children and provide them with a place to live in, addition to an education.
These schools provide free meals and a vocation in diamond polishing (not a requirement, but an open invitation) and an opportunity where it does not otherwise exist. One firm (that does not have a school) regularly recognizes and praises the good grades children in their community achieve in their internal newsletter.
There is a diamond firm that donates a third of their profits to projects supporting the communities where they operate (another third is set aside to R&D). One firm, in another country, finances one of the largest local projects of free meal for the homeless and needy. Many other firms donate a tenth of their profits to worthy causes.
No one outside of the diamond industry, and only a few in it, know of any of these projects. It’s no coincidence – these projects are not financed for show or eye-candy in their annual reports. They are doing it out of a belief that they should share their good fortune with others. I’m not mentioning their names because they don’t want to be named. They are humble and prefer acting to publicity.
If you have ever read this column before, you know that there are many areas that could stand improving in the diamond industry. However, occasionally it’s important to look around and mention some of the good deeds, the benefits and yes, the ethical behavior that does take place.
So the next time you hear someone saying that diamonds are just an evil ploy by “The Cartel” and it brings death and devastation, don’t lose heart. Answer with all the above, and mention some the good things that organizations such as the Diamond Development Initiative, Diamond Empowerment Fund, Jewelers for Children and many more do. There is much to be proud of in the diamond business and it is our job to spread some positive reality in the public sector and not just let the painfully uninformed spread non-facts and harmful mistakes.
Feb 12, 2014
Client steps into my London office requesting a diamond for an engagement ring that fits his budget. His conditions are simple: The diamond múst have the highest possible color & clarity, regardless its size. I try to convince him to buy a bigger diamond with some lower specs that are invisible to the naked eye. He tells me: "Thank you Rob, but my reasons are more symbolic. Tomorrow, I will take my girlfriend to Saint Moritz skiing, and on the highest slope will I go on one knee and propose to her saying: On this highest slope, and with this diamond, being of highest color and of highest clarity I would like you to fulfill my highest wish; that you become my wife."
Now howz thàt for a proposal!
Feb 10, 2014
While penciling the words to announce the make-over of an 18 year(!) old website, I thought; why not share our industry’s haps & mishaps over these last few years. Maybe it’s interesting you to hear what we have gone through during these years of global crisis.
Diamond House has been operational since 1986, and was internationally the first-ever diamond website in 1996 together with ‘Honest Abe’. And only G.d knows where Abe has since gone.
But back to today:
Back in 2008, announced to us as the beginning of a new economical era, we saw the demand for diamonds drop as much as 40%. In fact, the idea that an engagement ring is a necessity, rather than a luxury, in countries like the USA is the only reason diamond demand still existed! The average ticker-price in the jewelry shops on Main Street USA in those days dropped from $4.500 to $2.400 per finished ring. In other words, young men were still spending money on persuading future wives to say yes! but both overall demand and average budget went down sharply.
Our Russian clients, to whom we simply could not sell enough diamonds before 2008, suddenly vanished. We have not heard back from them, even today. Russia was more affected than any other country by this crisis… And our 10ct+ diamonds were suddenly left without clients.
As we moved through 2009 the three largest providers of rough diamonds (De Beers, Alrosa, & Rio Tinto), decided to start limiting the supply side, in order to maintain sync with the downward trend in demand. Mines closed down and excuses were given. So-called floodings or provoked strikes; any excuse was used to keep the diamonds from reaching the surface.
That effort restored balance. By 2009 the supply was again more in sync with demand, and prices that had dropped with as much as 35% were back at the pre 2008 level.
Today we see that small diamonds (0.01-0.10ct) are back in business more than ever again, due to Chinese and Indian demand. Millions of formerly disadvantaged people have reached middle class levels, and are now able to buy their first (little) diamond.
Hyped quite a lot today, and becoming popular, is the colored diamond. Two reasons:
It is true that they are rarer than white diamonds and are marketed as such, and…
More & more celebrities cover the magazines with their colored diamond engagement rings.
It has been some time, but we see 2013 as the rebound of beautiful and precious diamonds again. Thank you so much for trusting us to be your guides in the process of this extraordinary product. We promise that we will never fail to go that extra mile.
Our warmest wishes,
Rob & Céline.