Does anyone know what VVS means?

[Garry H (Cut Nut)]

It has a new meaning - Very Very Slow - that is the current state of the global diamond market. If anyone is considering buying a diamomd then now seems like a pretty good time. There is more than $8.5 Billion dollars worth listed on RapNet - the biggest B2B site - and that is after all the EGL stones have been removed (many were stones with dual listings, like GIA I SI2 and EGL G VS2) - so its up a lot!
The miners have been jacking up prices, the Indian Govt and banks are cracking down on manufacturers who round robin stones to get more low interest export incentive loans (to buy property). De Beers have announced they will let clients leave 75% of goods on the table - never ever heard that before! So that could help clear the backlog and raise prices.

Andrey has had a lot on his plate and has not updated this chart for a couple of months - but expect to see things continue on the downward spiral!
https://www.pricescope.com/diamond-prices/diamond-prices-chart

 

[thecat]

Any prediction on how much it will fall? I was under the impression that July to Oct are slow months but will pick up near Christmas and V Day. I didn't know there're other dynamics involved. Thanks for sharing, Garry.

 

[mochiko42]

Interesting. The luxury goods sector is seeing a drop in demand in greater China (mainland, HK, Macau) due to the corruption crackdown. Also, brands like LV, Gucci are starting to complain about the high rents in Hong Kong (more expensive than Fifth Ave) due to the slowdown in sales. The recent volatility in the Shanghai stock market might both help & hurt the jewelry industry. It could help if the wealthy think that jewelry and gold are better investments than stocks after the Shanghai stock exchange crash last month, or it could depress luxury sales if people decide to keep their funds in cash instead.. One of the largest jewelry chains here reported a drop in sales.

"China Stocks Are Falling But Chinese Still Need to Get Married"
http://www.bloomberg.com/news/articles/2015-07-09/chow-tai-fook-quarterly-retail-sales-fall-6-on-hong-kong-macau

 

[diamondseeker2006]

There is a diamond I have been kind of watching for awhile, and I recently noticed the price was lower. Are you saying you expect prices to further decrease and maybe waiting a bit longer to buy would be worthwhile?

 

[Garry H (Cut Nut)]

Then buy now - the reduction in supply from De Beers and other miners will work through very quickly.
When the big retail companies and jewelry manufacturers think its the bottom the price will rocket up.
Trying to pick the bottom is the best way in any market to loose the opportunity.

 

[Garry H (Cut Nut)]

Interesting. The luxury goods sector is seeing a drop in demand in greater China (mainland, HK, Macau) due to the corruption crackdown. Also, brands like LV, Gucci are starting to complain about the high rents in Hong Kong (more expensive than Fifth Ave) due to the slowdown in sales. The recent volatility in the Shanghai stock market might both help & hurt the jewelry industry. It could help if the wealthy think that jewelry and gold are better investments than stocks after the Shanghai stock exchange crash last month, or it could depress luxury sales if people decide to keep their funds in cash instead.. One of the largest jewelry chains here reported a drop in sales.

"China Stocks Are Falling But Chinese Still Need to Get Married"
http://www.bloomberg.com/news/articles/2015-07-09/chow-tai-fook-quarterly-retail-sales-fall-6-on-hong-kong-macau

This kind of correction is part of what is happening to diamond demand, but it is largely also as a result of a slow down in the roll out of new stores that sell mostly 0.30ct to 0.70ct Erings - filling those shops has been happening for the past 5 or so years and created a big demand that is now just steady replacement sales.
The birbery and corruption crack down has been very efffective so far and we can expect that to begin under Modi in India too - my advice - stay away from fungible diamonds. D-E IF to VVS. These are diamonds those people buy because they can unload them without any buyer needing to sight the stone. Our community generally advises people to buy the best looking diamond for the money and these F to I VS SI stones have strong demand - and that demand will grow as the chinese realise (as they are now) that because the bent money wanted fungible then so too would young couples in love. WRONG WRONG WRONG. Japan started that way in the 1980's and now the market is very similar to USA - a yen for more bling for less bucks.

So the point is that this may be as good a time as it will ever be.
Do not read my thread to mean wait for a better time.
Not likely to stay this way for the diamonds this community likes.

 

[VRBeauty]

Thanks for the heads up, Garry. Hmmm... there is a diamond or two that I've been eyeing... better go check on them!

 

[diamondseeker2006]

Thanks, Garry!

 

[ihy138]

Really interesting - thanks for sharing!

 

[Garry H (Cut Nut)]

There is a chart here - a lot of this earlier fall (Aug 2014 to Feb 2015) is also based on the strength of the US$ - but more recently I think its the banks and miners oversupply.
http://www.polishedprices.com/

 

[mochiko42]

Interesting. The luxury goods sector is seeing a drop in demand in greater China (mainland, HK, Macau) due to the corruption crackdown. Also, brands like LV, Gucci are starting to complain about the high rents in Hong Kong (more expensive than Fifth Ave) due to the slowdown in sales. The recent volatility in the Shanghai stock market might both help & hurt the jewelry industry. It could help if the wealthy think that jewelry and gold are better investments than stocks after the Shanghai stock exchange crash last month, or it could depress luxury sales if people decide to keep their funds in cash instead.. One of the largest jewelry chains here reported a drop in sales.

"China Stocks Are Falling But Chinese Still Need to Get Married"
http://www.bloomberg.com/news/articles/2015-07-09/chow-tai-fook-quarterly-retail-sales-fall-6-on-hong-kong-macau

This kind of correction is part of what is happening to diamond demand, but it is largely also as a result of a slow down in the roll out of new stores that sell mostly 0.30ct to 0.70ct Erings - filling those shops has been happening for the past 5 or so years and created a big demand that is now just steady replacement sales.
The birbery and corruption crack down has been very efffective so far and we can expect that to begin under Modi in India too - my advice - stay away from fungible diamonds. D-E IF to VVS. These are diamonds those people buy because they can unload them without any buyer needing to sight the stone. Our community generally advises people to buy the best looking diamond for the money and these F to I VS SI stones have strong demand - and that demand will grow as the chinese realise (as they are now) that because the bent money wanted fungible then so too would young couples in love. WRONG WRONG WRONG. Japan started that way in the 1980's and now the market is very similar to USA - a yen for more bling for less bucks.

So the point is that this may be as good a time as it will ever be.
Do not read my thread to mean wait for a better time.
Not likely to stay this way for the diamonds this community likes.

Agree with you, the retail market for luxury goods including jewelry and diamonds is overdue for a painful adjustment in China.

A few years ago, you could only find colorless (A to E, perhaps F & G if you looked really hard) diamonds here, but now I see the big jewelry chains that have a strong presence in HK and China start to display diamonds up to I color. I also see stronger interest in colored gemstones (Mahenge spinel, Paraiba tourmaline, and of course corundum and emeralds) as people start looking at other types of stones besides diamonds. (I am Chinese in HK and I have a K diamond. Maybe I'm at the forefront of the trend here... )

 

[babydoll_mini]

hahaha, i'm so happy when I read this post, because I just put down my payment for a 1.57 H/vs1 near-super-ideal cut rock last week and the price is indeed good. The business is so slow that our local retailer is willing to make only 3000 RMB profit when ordering this stone for me - the Rapnet price is $11309 USD, and I get it for $11787. Now after I reading this, maybe I should get another one?

 

[mochiko42]

hahaha, i'm so happy when I read this post, because I just put down my payment for a 1.57 H/vs1 near-super-ideal cut rock last week and the price is indeed good. The business is so slow that our local retailer is willing to make only 3000 RMB profit when ordering this stone for me - the Rapnet price is $11309 USD, and I get it for $11787. Now after I reading this, maybe I should get another one?

Yes!! At the gem and jewelry show in June in HK, it was very slooooowwww and there was a drop in visitor spending from China. The jewelry shops here are having continuous sales and the discounts seem more than in previous years.

 

[D_]

hahaha, i'm so happy when I read this post, because I just put down my payment for a 1.57 H/vs1 near-super-ideal cut rock last week and the price is indeed good. The business is so slow that our local retailer is willing to make only 3000 RMB profit when ordering this stone for me - the Rapnet price is $11309 USD, and I get it for $11787. Now after I reading this, maybe I should get another one?

Erm... I don't know if that's how things are done in China.
My understanding is Rapnet price is not a good way to gauge the fair market price of a diamond since it's based on (highest?) asking cash price.
Would be better to do diamond search function on this forum for comparison.
If the price w/ local B&M vendors is within 20% it's still considered fair.

Having said that... the only diamond close to your parameters atm is priced at $11,500. So looks like you got a pretty good price.

 

[Dancing Fire]

[quote="mochiko42|

Yes!! At the gem and jewelry show in June in HK, it was very slooooowwww and there was a drop in visitor spending from China. The jewelry shops here are having continuous sales and the discounts seem more than in previous years. [/quote]



I posted this comment about China last April...

For the past year or so the Chinese governments are cracking down on the use of corrupted money, lately it is been all over the Chinese newspapers. These corrupted officials were buying luxury goods like there was no tomorrow..i.e. expensive Cognac, watches, cars. Yes, the population in China is HUGE but the avg. citizen is still poor, and couldn't afford to purchase expensive diamonds. Most of the so called "rich people" in China are corrupted officials who are hiding under their beds now. Plus, IMO the housing bubble in China will soon burst.

ETA...The Macau casino business are also dead now, plus I have never in the past witnessed Patek Philippe watch lowering their MSRP by 7% till 4 months ago, again b/c corruption money from China are dried up for now. I have been telling my Chinese friend for the past 7 yrs that China's economy flourished because of corrupted money, without corruption money their whole economy have fallen apart in the past couple of years. Look what's happening to Chinese stock market in the past 3 months.

 

[diagem]

[quote="Dancing Fire|1439521890|391434] ".....plus I have never in the past witnessed Patek Philippe watch lowering their MSRP by 7% till 4 months ago, again b/c corruption money from China are dried up for now...."[/quote]

DF, that was because of the Swiss governments strategic move on the Swiss Franc.

"Effective today, a number of retail price changes will be seen across Patek’s lineup, including a 7% decrease in the Americas. An obvious reaction to the recent currency fluctuations resulting from Switzerland untethering the Swiss Franc from the Euro..."

And

"Patek is decreasing retail prices in the Americas across the board. Other decreasing locations are Switzerland (5%), Hong Kong (7%), and Asia-Pacific (3%). Japan and Eurozone countries will see increases of 5% and 7%, respectively"

http://www.woundforlife.com/2015/02/11/opinion-patek-philippe-price-decrease/

 

[Dancing Fire]

[quote="DiaGem|
DF, that was because of the Swiss governments strategic move on the Swiss Franc.

[/quote]


Yoram
That could be part of the reason. I just return from NYC window shopping for watches. I notice that nowadays not every high end watch stores employ a Mandarin speaking SA like the past. A few yrs ago there would always be a Mandarin speaking SA to greet me at the door hoping that I was one of them corrupted official from China with $$$ to burn...

 

[Garry H (Cut Nut)]

Yoram look at the price declines on fungible diamonds (D-E IF-VVS) over the past couple of years.
That is what is really happening as a result of corruption crackdowns in China and now beginning in India, Malaysia, Indonesia et al.
Oil money is drying up too, but I believe corruption is the main issue as DF says

 

[Dancing Fire]

Yoram look at the price declines on fungible diamonds (D-E IF-VVS) over the past couple of years.
That is what is really happening as a result of corruption crackdowns in China and now beginning in India, Malaysia, Indonesia et al.
Oil money is drying up too, but I believe corruption is the main issue as DF says

Yup!... So here we are 4 yrs later. Where are these buyers now? the answer? either in jail or hiding under their beds. The Chinese government say... they are not only going after the big (high level officials) sharks , but also hunting down the little fishes too.

[URL='https://www.pricescope.com/community/threads/china-on-the-rise-new-article.150596/']https://www.pricescope.com/community/threads/china-on-the-rise-new-article.150596/[/URL]

 

[diagem]

Yoram look at the price declines on fungible diamonds (D-E IF-VVS) over the past couple of years.
That is what is really happening as a result of corruption crackdowns in China and now beginning in India, Malaysia, Indonesia et al.
Oil money is drying up too, but I believe corruption is the main issue as DF says

Hi Garry,

I see it differently a bit, near term you are correct but all the high end jewelers who's quality levels were there are still utilizing these qualities, and they will probably do in the future as well.

We all know there was an over production of Diamonds in general and in high quality too..., there is an abundant of generic Diamonds and
Diamantaires in general. But it's seems to be adjusting very rapidly now.

Value wise..., since 2007 we've been on a roller coaster ride of cycles of ups and downs, opportunities are to be had if you recognize the cycles correctly. Not easy but definitely do-able.

I agree it's a window of opportunities for fetching high quality generic cuts presently but I don't believe it will hold for a long time.

Cutters have been holding off since the beginning of 2015 causing shortages already in some segments. Naturally prices will need to move forward sometimes in the future. It's just simple economics.

In the mean time buyers who move quickly can find deals as the pressure to liquidate is high at the moment in the wholesale/manufacture level (what we call midstream).

 

[Garry H (Cut Nut)]

Yoram look at the price declines on fungible diamonds (D-E IF-VVS) over the past couple of years.
That is what is really happening as a result of corruption crackdowns in China and now beginning in India, Malaysia, Indonesia et al.
Oil money is drying up too, but I believe corruption is the main issue as DF says

Hi Garry,

I see it differently a bit, near term you are correct but all the high end jewelers who's quality levels were there are still utilizing these qualities, and they will probably do in the future as well.

We all know there was an over production of Diamonds in general and in high quality too..., there is an abundant of generic Diamonds and
Diamantaires in general. But it's seems to be adjusting very rapidly now.
I do not fully agree Yoram, and the data supports me. Take out a segment of buyers and you disrupt any market. Any way you look at those DE IF-VVS stones the discounts on RapNet(tm) are much larger than say GVS2 and that relative gap on the RapList has already been shrinking over the years.
On top of that modern technologies make it easier to produce high clarity diamonds (suporting your arguement somewhat).

Value wise..., since 2007 we've been on a roller coaster ride of cycles of ups and downs, opportunities are to be had if you recognize the cycles correctly. Not easy but definitely do-able.

I agree it's a window of opportunities for fetching high quality generic cuts presently but I don't believe it will hold for a long time.

Cutters have been holding off since the beginning of 2015 causing shortages already in some segments. Naturally prices will need to move forward sometimes in the future. It's just simple economics. it need not be so - markets correct to new fundamentals all the time. Rich world Millenials and those in developing nations who reach the middle classes may not behave as their parents and grandparents. The market share taken by tech gadgets, travel and other small and big lux stuff and services can, will and are taking money from trinket floggers pockets. Just look at what people are wearing - lots of jewels from clothing stores that go with this or that outfit. Funky designer oriented gear - with real style and looks. Swarovski et al.
We do agree though that we need creative and new diamond designs, fashion, fun, innovation, better performance, more choice, beter assesment tools, grading options that are not present and may not be even thought of by staid scientists (where most are now coming from geochemistry - the most dowdy of all the sciences - totally lacking in any understanding of optics.

In the mean time buyers who move quickly can find deals as the pressure to liquidate is high at the moment in the wholesale/manufacture level (what we call midstream).

end of rant

 

[Serg]

Yoram look at the price declines on fungible diamonds (D-E IF-VVS) over the past couple of years.
That is what is really happening as a result of corruption crackdowns in China and now beginning in India, Malaysia, Indonesia et al.
Oil money is drying up too, but I believe corruption is the main issue as DF says

Hi Garry,

I see it differently a bit, near term you are correct but all the high end jewelers who's quality levels were there are still utilizing these qualities, and they will probably do in the future as well.

We all know there was an over production of Diamonds in general and in high quality too..., there is an abundant of generic Diamonds and
Diamantaires in general. But it's seems to be adjusting very rapidly now.
I do not fully agree Yoram, and the data supports me. Take out a segment of buyers and you disrupt any market. Any way you look at those DE IF-VVS stones the discounts on RapNet(tm) are much larger than say GVS2 and that relative gap on the RapList has already been shrinking over the years.
On top of that modern technologies make it easier to produce high clarity diamonds (suporting your arguement somewhat).

Value wise..., since 2007 we've been on a roller coaster ride of cycles of ups and downs, opportunities are to be had if you recognize the cycles correctly. Not easy but definitely do-able.

I agree it's a window of opportunities for fetching high quality generic cuts presently but I don't believe it will hold for a long time.

Cutters have been holding off since the beginning of 2015 causing shortages already in some segments. Naturally prices will need to move forward sometimes in the future. It's just simple economics. it need not be so - markets correct to new fundamentals all the time. Rich world Millenials and those in developing nations who reach the middle classes may not behave as their parents and grandparents. The market share taken by tech gadgets, travel and other small and big lux stuff and services can, will and are taking money from trinket floggers pockets. Just look at what people are wearing - lots of jewels from clothing stores that go with this or that outfit. Funky designer oriented gear - with real style and looks. Swarovski et al.
We do agree though that we need creative and new diamond designs, fashion, fun, innovation, better performance, more choice, beter assesment tools, grading options that are not present and may not be even thought of by staid scientists (where most are now coming from geochemistry - the most dowdy of all the sciences - totally lacking in any understanding of optics.

In the mean time buyers who move quickly can find deals as the pressure to liquidate is high at the moment in the wholesale/manufacture level (what we call midstream).

end of rant

combination of corruption crackdowns , low oil prices and Indian import task for polished diamonds was just Trigger to change market trend.
Overproduction was huge. Some Surat factories had 6-12 months production in stock. they financed it by credits.
it worked until prices grow. if prices do not grow they have sell stock to return credit that drop prices very fast.

Overproduction mainly was due wrong market estimation in China. they mixed demand based on opening new stores( from low base level) with real annual sales to end consumer. So trend changing was inevitable . It is necessary time until cutters reduce stock to reasonable level.

 

[Texas Leaguer]

Alot of good points here. Undoubtedly the market cycles are responding to all of these factors to one extent or another. Now that the diamond market is no longer the monolithic structure that it once was, it is now and will continue to be impacted by global economic events. For producers, predicting where these events will go is particularly challenging so the supply side will continue to be choppy.

But then, as Garry points out, you have the demand side. Things are different today. The US market is still a major driver of the global diamond industry and the Millenials do not fit the profile of the consumer of yesteryear (at all!). Retailers have to understand and adapt. As Yoram suggested, there is a rapid shakeout taking place as a result. Millenials want information, and value. But above all else they want TRANSPARENCY. If they cannot get a sense of confidence in the product or the merchant, they will be down the street to spend their money on something else. And marketers need to be where the mellenials are and speaking their language in order to have a chance to develop that confidence.

The good news is that the mellenials are only going to grow in financial strength. There will be opportunities for merchants that have staying power to get in synch with them. While Millenials are already driving the engagement ring business, they are not yet a major factor in other areas of the jewelry business. They are buying houses, raising kids, paying off student loans. But eventually they will be back with money in their pocket deciding where to spend it. And still looking for information, value and transparency.

For saavy shoppers today, understanding that that there are going to be cycles going forward and recognizing times like this where the industry has hit a speed bump, there are great opportunities to max out the bling for the buck .

 

[Garry H (Cut Nut)]

Maybe HoF are on to something?
A NEW GENERATION is getting engaged and starting their jewelry collections – yes, it’s those Millennials again – and so it’s time for a different kind of ad campaign. Hearts on Fire, which proclaims its product The World’s Most Perfectly Cut Diamond, is going full steam ahead by unleashing a multimedia campaign next month in top fashion and bridal magazines, TV, digital and social media that says something much different about diamonds than has traditionally been said in the past.
click for the entire article
http://instoremag.com/homepage/shin...kes-up-the-traditional-with-new-campaign.html

 

[diagem]

Maybe HoF are on to something?
A NEW GENERATION is getting engaged and starting their jewelry collections – yes, it’s those Millennials again – and so it’s time for a different kind of ad campaign. Hearts on Fire, which proclaims its product The World’s Most Perfectly Cut Diamond, is going full steam ahead by unleashing a multimedia campaign next month in top fashion and bridal magazines, TV, digital and social media that says something much different about diamonds than has traditionally been said in the past.
click for the entire article
http://instoremag.com/homepage/shin...kes-up-the-traditional-with-new-campaign.html

But it's still aimed at "RB's" only......

Different? How so?
By offering perfection which we all know doesn't exist in Diamond cuts?

 

[therainbowradish]

Does this mean there is room for negotiations or are these lower prices already being reflected? I am only interested in old cuts and wondering whether they are shielded from this situation or if everything currently available is less expensive than normal?

 

[gr8leo87]

Specialty cuts, branded cuts, proprietary cuts et al haven't seen the price cut that generic and traditional cuts have seen. I also see a varying pattern of prices among different cutters and sightholders which usually used to have comparable pricing. This indicates the varying degree of liquidity crunch among suppliers and those offering specialty cuts or better cuts continue to sell their inventories at about similar prices before the dilemma.

Old cuts cut today IMO will continue to hold prices and any price drop whatsoever will come at a later stage when rough procured today at a lower price will be cut, certified and marketed. However, the syndicates control the rough prices and have allowed the sightholders to leave upto 75% of sight on table which will bring some stability and comparability in the polished prices.

 

[Texas Leaguer]

Does this mean there is room for negotiations or are these lower prices already being reflected? I am only interested in old cuts and wondering whether they are shielded from this situation or if everything currently available is less expensive than normal?

As a general statement, there is usually some room for negotiation in the diamond/jewelry world. It can be a little or a lot, depending on many factors. The key is to understand the market value of the piece you are considering, based upon its quality, size, associated benefits, etc. Older cuts may be harder to gauge in this regard. But unless you have a good idea of the value before you attempt to negotiate, you will not know if the price you offer is good, bad or neutral.

Just because the general market may be lower does not mean some kind of end to negotiation. In fact, a merchant may be more inclined to adjust price if it is an older stone priced from a higher market cost basis. Merchants are often not quick re-price to market. Especially when the market moves down (ouch!). Again, this is why knowing the market and what comparable stones are selling for is vital to your ability to negotiate effectively.

 

[pyramid]

As sight holders are now allowed to leave 75% of sight on table will that mean they will change what they bought to different color and clarity or size of rough diamonds or just less of each type? I know Garry said D to F, IF to VVS goods will be less popular so will they perhaps buy grades further down the scale and leave them behind?

 

[diagem]

As sight holders are now allowed to leave 75% of sight on table will that mean they will change what they bought to different color and clarity or size of rough diamonds or just less of each type? I know Garry said D to F, IF to VVS goods will be less popular so will they perhaps buy grades further down the scale and leave them behind?

Bit of context, sightholders are allowed to defer up to 75% of their allocation translated to sightholders being able by choice to purchase any if at all.
It's not by DeBeers choice or a gesture of good will. It's a free market dictation. It's a new world.
These are the signs of major changes going on and is currently controllable by the rough purchasers themselves.

It's a sign of a new order....

Interesting times ahead.