News First

* Jewelry and Diamond Sales grew over last year! US buyers still buy more diamonds than any other country.
* 2/3’s of all online sales are made by Brick and Mortar stores.
* No new diamond mines – Out of 7000 pipes only 60 are producing and only 10 are big producers.
* Diamond production is going down -nudging De Beers to alter its mining methods to extend the life of the mine and maintain profitability.

 
#1 The diamond industry is struggling for your business!
Rough buyers who polish diamonds for sale to wholesalers and retailers are complaining that the going rate for polished diamonds is too low! Making it impossible to stay in business. The banks are charging higher rates for loans – Indian polishers are folding because they use the loans to purchase rough and then polish to sell through to the wholesale market – *Problem, the current margins on polished diamonds are not profitable for them and they are just closing up shop.
What does this mean for you??
Well, if you are in the market right now – there are some deals to be had! It also means that prices will go up in the near future. I have been saying for about 4 years now that prices on the wholesale market are low and in some cases have been dropping. This will turn around and you will see movement in the other direction.
Philippe Mellier CEO of De Beers gave a talk at JCK 2015, which I had the pleasure of hearing and this is what I took from it! De Beers only controls about 1/3rd of the market and they are not  going to go out of the way to help businesses that show no effort to improve processes in mfg and or aren’t using GAAP standards with their financials. They are not going to support the other diamond groups that produce the other 2/3rd’s of the market by Marketing and Advertising generic diamond products to boosts sales overall.  Makes sense to me!

Why does this matter? Well for those who will not opt for improving processes, accounting , creating their own marketing and advertising its near the end of the line. For those De Beers Suppliers of Choice (sight-holders) who make the needed changes and add value to the diamonds they produce – De Beers has a division that may help with financing rough purchases. Overall what does this mean for YOU the groom to be. Prices are going to go up! By adding value they mean increasing value perception in a way that increases margins. Forevermark is a prime example that its possible… This De Beers brand is only available to select dealers.  The diamonds they select must adhere to a minimal set of parameters to receive the Forevermark designation. There are many generic diamonds in the world that are far higher performers in the beauty arena – However, US buyers are eating this brand up and paying the premium for it.  This tells us that US buyers are BRAND conscious and are willing to pay a premium for it. Which in turn tells De Beers that polishers are not paying attention. Brands sell in this case even if there isnt a big difference. Is the Forevermark worth it?? Well from an appraisers perspective of insurance valuation – Yes, You can only get Forevermark from a Forevermark dealer, much the same way you can only get a Hearts on Fire from an HOF dealer, or a Tiffany diamond from Tiffany.  Overall brands carry a premium because of what they stand for or mean to you.
I think two things are going to happen – the polishers not making money will leave the industry and prices will go up. This will happen not because the weak polishers can’t compete but will happen because polishers will be forced to refine and innovate. I wouldn’t pay more for a generic diamond unless it performed better.