- Joined
- Dec 12, 2000
- Messages
- 670
BOB'S FLASHES – HOW DIAMONDS ARE PURCHASED IN THE INDUSTRY AND HOW THAT HAS AN EFFECT ON THE CONSUMER
When Mr. Diamond Cutter goes to buy rough diamonds he might get what he wants but he will have to also purchase what he does not want.
Here is the deal. It works for both rough and polished diamonds. The man holding the diamonds has, let’s say 500 round brilliant cut diamonds. Let us also say the diamonds range in size from 4.00 to .50 ct, E to K, VVS1 to I1. Buyer A has $100K to spend and buyer B has $500K to spend. The diamond dealer will not let either of them just pick the preferred material because if he did that, he would be left with the lower quality diamonds. The seller has a huge amount of money wrapped up in those diamonds and he needs to sell all of them equally. If his stock gets off balance with diamonds that are not moving, he is unable to buy more goods. The buyer spending $500K will get a better price and a larger choice than the buyer with $100K.
The buyer spending $500K will have a better price and a larger choice than the buyer with $100K.
Moving on to the next step in the chain. The $500K buyer paid maybe 5% less per carat than the other buyer, therefore he has three choices: he can pass the savings on to who buys from him, he can make more profit and sell at the same price that the other buyer sells his for or he can do a little of each. The volume buyer anywhere has the advantage as long as they can move the goods.
Right now higher quality (D-F, IF-VS1 with fine make) goods are in short supply. 1.25-1.75 carat higher quality goods are in very short supply. Put those numbers into the Pricescope – Search by Cut Quality and you will find FIVE diamonds; two AGS H&A diamonds and three GIA ideal cut diamonds. Very short supply. There is a very big demand for these diamonds and they get sold very quickly. If you put those same numbers into the Pricescope regular round diamonds with ideal table and depth %, you get 256 diamonds. Those are still high quality diamonds but not the cream of the crop.
Right now we are selling the high quality diamonds that are in the pipe-line either at the factory or at the lab, before they even land in our offices.
The B&M stores and the internet vendors can buy in quantity but they can only sell one diamonds at a time. If you sell only your higher end diamonds, you are left with the others and are stuck if there are no higher end diamonds available to buy for stock.
When a consumer starts his or her diamond search only a month before the ring is needed he may run into a little problem if he is looking for certain diamonds. Some ethnic groups demand IF-VVS1 D-E diamonds only. It is ok that you want those diamonds and can afford them but they may not be available when you want them. The moral of the story is, if you have specific, well defined characteristics for the diamond you are planning on buying, don’t wait for the last minute!
When Mr. Diamond Cutter goes to buy rough diamonds he might get what he wants but he will have to also purchase what he does not want.
Here is the deal. It works for both rough and polished diamonds. The man holding the diamonds has, let’s say 500 round brilliant cut diamonds. Let us also say the diamonds range in size from 4.00 to .50 ct, E to K, VVS1 to I1. Buyer A has $100K to spend and buyer B has $500K to spend. The diamond dealer will not let either of them just pick the preferred material because if he did that, he would be left with the lower quality diamonds. The seller has a huge amount of money wrapped up in those diamonds and he needs to sell all of them equally. If his stock gets off balance with diamonds that are not moving, he is unable to buy more goods. The buyer spending $500K will get a better price and a larger choice than the buyer with $100K.
The buyer spending $500K will have a better price and a larger choice than the buyer with $100K.
Moving on to the next step in the chain. The $500K buyer paid maybe 5% less per carat than the other buyer, therefore he has three choices: he can pass the savings on to who buys from him, he can make more profit and sell at the same price that the other buyer sells his for or he can do a little of each. The volume buyer anywhere has the advantage as long as they can move the goods.
Right now higher quality (D-F, IF-VS1 with fine make) goods are in short supply. 1.25-1.75 carat higher quality goods are in very short supply. Put those numbers into the Pricescope – Search by Cut Quality and you will find FIVE diamonds; two AGS H&A diamonds and three GIA ideal cut diamonds. Very short supply. There is a very big demand for these diamonds and they get sold very quickly. If you put those same numbers into the Pricescope regular round diamonds with ideal table and depth %, you get 256 diamonds. Those are still high quality diamonds but not the cream of the crop.
Right now we are selling the high quality diamonds that are in the pipe-line either at the factory or at the lab, before they even land in our offices.
The B&M stores and the internet vendors can buy in quantity but they can only sell one diamonds at a time. If you sell only your higher end diamonds, you are left with the others and are stuck if there are no higher end diamonds available to buy for stock.
When a consumer starts his or her diamond search only a month before the ring is needed he may run into a little problem if he is looking for certain diamonds. Some ethnic groups demand IF-VVS1 D-E diamonds only. It is ok that you want those diamonds and can afford them but they may not be available when you want them. The moral of the story is, if you have specific, well defined characteristics for the diamond you are planning on buying, don’t wait for the last minute!
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