De Beers undercuts the man made diamond price

[Texas Leaguer]

If they can make perfect H&A diamonds on a uniform basis, then there is no need to grade them, but this is not the case at the moment.

What I think will happen is that De Beers will sell I2/I3, good or fair cut diamonds, with some colour to them. They won't sell anything as nice as a super ideal or even triple excellent natural stone, because that would defeat their objective!

That's why I still think there will be a niche for lab graded, high quality MMDs. People will pay more than $800 for those!

It will be interesting to see if this theory proves correct. How much will people really be willing to spend for a product that one must expect wil continue falling in price and which has no stored value? And how many of those people will there be?

Now I agree that diamonds have preferable attributes to other synthetics, but in each case the synthetic gemstone market has been a one-way march to the bottom. They have arrived at different price-points, e.g. flame fusion corundum pennies, flux or hydrothermal up to hundreds of dollars. But pricing ends up being determined by the market forces in terms of downward production cost pull and demand side push.

Where LGD will eventually end up is still to be determined, but it is logical to assume it will follow a similar trajectory. This would eventually be the case had Debeers not entered the space. They are simply hastening the process and guiding it. Some see them as the Evil Empire, but you can make the argument that they are helping the consumer (lowering prices), and helping the natural industry by better defining the value proposition of the two products. Evil Empires are not usually known for win/win solutions

 

[DaytonaG]

It will be interesting to see if this theory proves correct. How much will people really be willing to spend for a product that one must expect wil continue falling in price and which has no stored value? And how many of those people will there be?

Now I agree that diamonds have preferable attributes to other synthetics, but in each case the synthetic gemstone market has been a one-way march to the bottom. They have arrived at different price-points, e.g. flame fusion corundum pennies, flux or hydrothermal up to hundreds of dollars. But pricing ends up being determined by the market forces in terms of downward production cost pull and demand side push.

Where LGD will eventually end up is still to be determined, but it is logical to assume it will follow a similar trajectory. This would eventually be the case had Debeers not entered the space. They are simply hastening the process and guiding it. Some see them as the Evil Empire, but you can make the argument that they are helping the consumer (lowering prices), and helping the natural industry by better defining the value proposition of the two products. Evil Empires are not usually known for win/win solutions

It will be good for consumers as long as the same quality MMD stones are available in the market as there are now. From the consumer's perspective, it's good to have choices! That's ultimately why anti-trust / competition laws exist.

 

[Texas Leaguer]

It will be good for consumers as long as the same quality MMD stones are available in the market as there are now. From the consumer's perspective, it's good to have choices! That's ultimately why anti-trust / competition laws exist.

I agree. And I expect that eventually there will be a wide selection of LGD in very nice quality with interesting shapes and facet patterns. Choices will explode as the material becomes cheaper. Competition will not go away. Remember, synthetic diamond is much more important to other industries than it is to the jewelry trade, so there will continue to be a race to produce it bigger, better and cheaper.

So all the talk about anti-trust is a bit of a tempest in a tea cup in my opinion. Debeers is simply projecting into the future market, much like an oil company that plans major drilling projects with feasibility and budgeting pegged to a predicted price of oil at some point years before the project will be completed and actually pumping oil. Debeers' goal is not necessarily to put people out of business, but rather to have a hand in defining the parameters of that future business by shaping the narrative around the product. And it is important to them to invest LGD because they have a vested interest in the natural product. It just makes good business sense for them to be doing this.

A few growers who would like to be getting ROI now are certainly not happy about the move, but future consumers should be happy, and millions of people in the natural diamond industry should be happy that Debeers his taking a leading role in the making of this new market.

 

[HDer]

We are talking technology..., even if it’s not applicable yet (not at all sure it’s not yet), I am certain that in the near future all synthetic diamonds could be D IF, or perhaps you could type in a LMN and produce one?
Why grade such? I agree with De Beers.

I think there's this temptation by both consumers and producers to ascribe super powers to De Beers.

These super powers generally come in three categories:
1. Technology: Element 6 has state of the art tech that can get the costs down way below other producers.
2. Scale: De Beers is going to produce so many diamonds that they will have massive economies of scale.
3. Money: De Beers has really deep pockets so can afford to lose lots of money while driving everyone else out of business.

I would disagree with this superpowers assessment in each of these cases:
1. Technology: CVD is a well understood technology at this point. I highly doubt De Beers has tech that will reduce the cost by 50% or more over other producers.
2. Scale: De Beers plans on growing 500K carats a year in rough. While that's a lot, the market now is growing multiple millions of carats, so their scale advantage is not that big.
3. Money: De Beers has made it clear that this is a money making, not money-losing business. And they're not alone in having deep pockets. Diamond Foundry has raised 100 million in funding to date for example. Also, as many people have mentioned it's not like the diamond industry (I'm including synthetics here) has incredibly high margin, so whatever margins De Beers may be targeting to cut are small, not large.

So if I'm right, and De Beers doesn't have any super powers then I have a few predictions:

1. De Beers is going to produce a lot of crappy diamonds. This is due to a combination of things: 1) their rough yield estimates are very high according to other trade members, 2) they're not submitting the diamonds for grading (yes, De Beers is marketing this as a "feature" of synthetics but it's just as likely that their diamonds will suck 4Cs wise), and 3) since they are only selling direct to consumer they need to get their diamonds to very specific size. A 0.4 carat diamond doesn't do them any good if they're only selling 0.5 carat studs.
2. The one carat white pendants will be sold out very quickly. Regardless of the quality 900 dollars for a one carat is most likely going to lose De Beers money, based on the prices other producers are charging. Most likely De Beers will stock and sell a few of them, but they'll try to steer customers towards the smaller, more profitable diamonds.
3. Don't bother unsetting the solitaire pendants. De Beers marketing implies that they're not selling rings for strategic reasons, but they could. A just as likely explanation is that the diamonds they are planning to sell are going to be so included and cut poorly that they won't look very nice up close and work better at larger viewing distances in earrings or pendants.
4. While some of the less financially stable MMD producers will die, this won't kill the top producers. What De Beers has done with their marketing masterstroke is cause MMD producers to lose 3-6 months of revenue while people wait and see. That's going to hurt but ultimately once people figure out that De Beers isn't going to supply the D IF ideal cut diamonds for 800 that they were hoping for, they'll go back to buying engagement rings from other producers.

 

[Angelwk]

I thought about jumping in this thread for awhile. Because I know my opinion is not necessarily popular. The diamond industry is basically a bunch of rich powerful men who decided hey. We can capitalize on this. Because girls like Shiney things and guys can prove how much they love them. Because of this, something of no value is suddenly so valuable
Don't get me wrong I also love Shiney things But I got a moissanite as an orginal ring. And hand me down diamonds. I just cannot wrap my head around the diamond industry. I feel it's a huge scam. And I don't need my husband to spend 20+ thousand dollars to prove he loves me. And I don't think other stones or synthetic stones are fake. It's not fake it's just a different rock. The diamond industry has us so. Brain washed to the point where we cant see pass it. And I still love diamonds. That's how hypocritical I can be.
And yes de beers basically have super powers to shift the market. Because the market and the world is controlled by honestly a few super rich individuals..we are pyions to them. This is sounding super negative. But it's the truth

 

[Gussie]

Why would you label it a scam? The diamond industry has created a demand for a luxury item. People want it and do buy it. It's not a scam, much like any other luxury item is not a scam. You don't need it; you want it. And if you are posting on a diamond forum, then you are swayed by the marketing. No one is forcing anything.

 

[Angelwk]

Why would you label it a scam? The diamond industry has created a demand for a luxury item. People want it and do buy it. It's not a scam, much like any other luxury item is not a scam. You don't need it; you want it. And if you are posting on a diamond forum, then you are swayed by the marketing. No one is forcing anything.

First of all. I'm not trying to offend you in anyway. I said myself I still can't get over diamonds either because they're pretty and Shiney and beautiful.
The reason I say it's a scam is because prior to 150years ago, it's not even a thing. De beers saw an opportunity and capitalized it in poor countries. Of course I am swayed by marketing. We live in it, I live in it. But it's not a way to ignore facts. Marketing it is self is a scam, it's propaganda to make people buy things. Some companies do very well such as de beers. So that's what I mean by the scam. So chill. I never said I was exempt.

 

[Angelwk]

You cannot possibly live in a capitalist society where marketing takes over and not think it's at least a little unethical. We find in other countries what we need/want and go and take it. Then package it up like it's something amazing. So basically it's whether or not you want to look at marketing as a scam or not. It's up to the individual. I have nothing against people who want a real diamond and are willing to. Pay the price for it, it's just not for me.not only that they have the complete monopoly on the price and cost of diamonds. Instead of freaking out about cost and demand. Do some research and find out why there is a "demand" in the first place

 

[Gussie]

Lol, I am not offended at the marketing debate. The chill comment was a bit offensive but that's the nature of the Internet and I still use it. I guess I am also a true capitalist (and realist) in that I see the diamond industry employing many people in many countries (marketing included) so it's not as bad as it's made out to be.

 

[Angelwk]

Lol, I am not offended at the marketing debate. The chill comment was a bit offensive but that's the nature of the Internet and I still use it. I guess I am also a true capitalist (and realist) in that I see the diamond industry employing many people in many countries (marketing included) so it's not as bad as it's made out to be.

well it's just perspective right? and the chill part, im in my 20s, im a true millennial and i meant no offense by that either. different people have different views on marketing and of course you have your own views and i respect that.

 

[Angelwk]

ugh but i just NEED to say one more thing about the employment part. the mining conditions for 3rd world countries is just a whole other topic that we don't have to get into. yes there are pros and cons, but there is no way we can say that it's all good, there is nothing wrong with the diamond industry or a capitalist society

 

[Cocopuffs]

Excited to see how the pink and blue MMDs will look like! It will be the new fav candy store!

 

[WinkHPD]

ugh but i just NEED to say one more thing about the employment part. the mining conditions for 3rd world countries is just a whole other topic that we don't have to get into. yes there are pros and cons, but there is no way we can say that it's all good, there is nothing wrong with the diamond industry or a capitalist society

I have lived in several countries in my lifetime and have perhaps a different perspective than you do.

I will agree that not all is perfect in a capitalist society, but in my experience, it is a whole lot better than a dictatorship, under military rule, or in a communist state. Even the communists no longer live in true communist states, they just did not work. (Fortunately, I never lived in one of those! I would surely have been purged as non compliant.)

De Beers Consolidated Mines was formed in 1888 by the merger of the companies of Barney Barnato and Cecil Rhodes. This is only 130 years ago and they are a company that many have loved to hate for as long as I have been in the business. In his 1982 book, "The Rise and Fall of Diamonds" Edward J Epstein predicted the end of De Beers was coming.

He was not the first to predict it even then and it has been predicted many times since, yet De Beers is still here and still making a waves in the industry that I love.

In 1947 N.S. Ayer came up with the tagline, "A Diamond is Forever" and diamond marketing hit the big time, with De Beers pouring millions into the campaign every year. Even though De Beers quit supporting advertising for the entire industry decades ago, the tagline is still in common use in jewelry stores around the world.

I think things are better today than they were in 1975 when I got my gemological degree, and I encourage you and others to continue to work to make our world a better place. There is much to be done. Good luck to you on your journey!

Wink

 

[pearaffair]

I think it’s safe to say that this debate has many different facets

I’m also seeing a lot of brilliance and fire in the comments! Haha! Loving it! You guys Rock

Ok I’m done now. I think I’ve made my point so I’m just going to culet.

 

[Dancing Fire]

As an internet retailer, I can tell you that our margins are quite small. We all would love it if we could make even a few more points. Hundreds of site holders and cutters have gone bankrupt in the past two decades, and not because of huge margins.
Wink

Wink
I'd believe you that the margins are quite small these days.. The 150% markup of 30yrs ago are long gone.

 

[Dancing Fire]

And I don't need my husband to spend 20+ thousand dollars to prove he loves me.

Agree, so I spent $20K on myself b/c I love myself more.

 

[Angelwk]

I have lived in several countries in my lifetime and have perhaps a different perspective than you do.

I will agree that not all is perfect in a capitalist society, but in my experience, it is a whole lot better than a dictatorship, under military rule, or in a communist state. Even the communists no longer live in true communist states, they just did not work. (Fortunately, I never lived in one of those! I would surely have been purged as non compliant.)

De Beers Consolidated Mines was formed in 1888 by the merger of the companies of Barney Barnato and Cecil Rhodes. This is only 130 years ago and they are a company that many have loved to hate for as long as I have been in the business. In his 1982 book, "The Rise and Fall of Diamonds" Edward J Epstein predicted the end of De Beers was coming.

He was not the first to predict it even then and it has been predicted many times since, yet De Beers is still here and still making a waves in the industry that I love.

In 1947 N.S. Ayer came upd with the tagline, "A Diamond is Forever" and diamond marketing hit the big time, with De Beers pouring millions into the campaign every year. Even though De Beers quit supporting advertising for the entire industry decades ago, the tagline is still in common use in jewelry stores around the world.

I think things are better today than they were in 1975 when I got my gemological degree, and I encourage you and others to continue to work to make our world a better place. There is much to be done. Good luck to you on your journey!

Wink

I will agree with you that capitalism is better than dictatorship, military rule, and Communist state. You and I have different views on such subjects of course and you know more about gems and history etc much more than I do and I very much respect that. However, nowhere on earth is perfect, to think that the US isn't a military state is a little too optimistic. There are people being suicide and the billions of dollars that's pouring into military to obtain what we want is a whole separate issue. Yes, we are fortunate ones that don't live in many many places in the world. I aim to make the world a better place and I hope this generation can see the faults and downside of capitalism and banking. It's difficult because not many people are willing to accept the faults and want to live in a fantasy land where everything is perfect. it is not. Thank you for your information, have a great day

 

[Angelwk]

Agree, so I spent $20K on myself b/c I love myself more.

you're hilarious. again, i have no problem with people willing to spend that money because they love it. if it brings value and happiness to your life, do it. congrats on your rock!

 

[Dancing Fire]

you're hilarious. again, i have no problem with people willing to spend that money because they love it. if it brings value and happiness to your life, do it. congrats on your rock!

I have been "rockless" for almost two months now.

 

[Johnbt]

"to think that the US isn't a military state is a little too optimistic"

Looking at the out of control crime rate in major cities such as Chicago and Baltimore - among many, many others - I'd have to say we've failed as a military state. And the military has failed at controlling the press too. You know, I think you need to look up the definition of military state before you use it again.

And why is it nobody overseas ever complains when we send young people to die to protect them from their enemies?

 

[Angelwk]

"to think that the US isn't a military state is a little too optimistic"

Looking at the out of control crime rate in major cities such as Chicago and Baltimore - among many, many others - I'd have to say we've failed as a military state. And the military has failed at controlling the press too. You know, I think you need to look up the definition of military state before you use it again.

And why is it nobody overseas ever complains when we send young people to die to protect them from their enemies?

Firstly, for us to debate this on a GEM forum is outrageous and secondly the definition of a military state is "fiscal-military state is a state that bases its economic model on the sustainment of its armed forces, usually in times of prolonged or severe conflict. Characteristically, fiscal-military states will subject citizens to high taxation for this purpose."

why do you think the US dumps trillions of dollars into the military and why do you think your paycheque is taxed 40% and where does it go? to the military
the controlled crime rate is a different issue, unless you want the military to start kicking in civilians' doors and then you think that's the full definition of a military state you are very wrong my friend. And people DO complain, just because you don't see it doesn't mean it doesn't happen.

 

[blueMA]

fiscal-military state is a state that bases its economic model on the sustainment of its armed forces

= NOT U.S.

to debate this on a GEM forum is outrageous

Agreed.

 

[Angelwk]

= NOT U.S.


Agreed.

Like I DID NOT WANT to get into the debate on this forum its ridiculous. And I only copy and pasted the definition since he needed it. There are variation. So let's just keep our opinions to ourselves. Look at pretty rocks. And enjoy this forum. OK?

 

[blueMA]

Like I DID NOT WANT to get into the debate on this forum its ridiculous. And I only copy and pasted the definition since he needed it. There are variation. So let's just keep our opinions to ourselves. Look at pretty rocks. And enjoy this forum. OK?

O.K.

 

[TreeScientist]

Like I DID NOT WANT to get into the debate on this forum its ridiculous. And I only copy and pasted the definition since he needed it. There are variation. So let's just keep our opinions to ourselves. Look at pretty rocks. And enjoy this forum. OK?

Engages in debate. Uses the wrong definition to support their argument. Says they do not want to debate...

By the way, did you actually read the definition before you posted it? It says right in the definition that a fiscal military state is a state that bases its economic model on the sustainment of its armed forces.

...The U.S. spends between 3-4% of its GDP on the military. That's a far cry from a military state. A fiscal military state would be one that spends about 50% or more of its revenues for the maintenance of the army. Saudi Arabia comes closest to this at about 10% of GDP spending currently, but still a far cry from what most would call a fiscal military state.

U.S. monetary policy is based on the aggressive application of free market capitalism. It is not a military state.

And I agree with @Johnbt, if the U.S. is trying to be a military state, then it is failing miserably at it. In military states, you simply "disappear" when you say something negative against the government or ruling class. I don't see that happening much in the U.S., but maybe I'm just missing the action.

 

[blueMA]

I'm looking forward to checking out the stones this Fall. I doubt that De Beers would be so stupid to offer terrible cuts to sabotage its own product line.

I'm hoping the stones will be cut as good as many Swarovski CZ stones. Looking at the stones (click to magnify), I'm seeing visible decent arrows.

The smaller stones are really not being offered at good price at all, and you can get similar pricing through Amazon right now for the smaller MMD studs or it's competing with lesser quality smaller mined diamonds in 14K at that price level. I agree with @HDer that 1 carat stones will sell the quickest.

 

[Angelwk]

Engages in debate. Uses the wrong definition to support their argument. Says they do not want to debate...

By the way, did you actually read the definition before you posted it? It says right in the definition that a fiscal military state is a state that bases its economic model on the sustainment of its armed forces.

...The U.S. spends between 3-4% of its GDP on the military. That's a far cry from a military state. A fiscal military state would be one that spends about 50% or more of its revenues for the maintenance of the army. Saudi Arabia comes closest to this at about 10% of GDP spending currently, but still a far cry from what most would call a fiscal military state.

U.S. monetary policy is based on the aggressive application of free market capitalism. It is not a military state.

And I agree with @Johnbt, if the U.S. is trying to be a military state, then it is failing miserably at it. In military states, you simply "disappear" when you say something negative against the government or ruling class. I don't see that happening much in the U.S., but maybe I'm just missing the action.

Engages in debate. Uses the wrong definition to support their argument. Says they do not want to debate...

By the way, did you actually read the definition before you posted it? It says right in the definition that a fiscal military state is a state that bases its economic model on the sustainment of its armed forces.

...The U.S. spends between 3-4% of its GDP on the military. That's a far cry from a military state. A fiscal military state would be one that spends about 50% or more of its revenues for the maintenance of the army. Saudi Arabia comes closest to this at about 10% of GDP spending currently, but still a far cry from what most would call a fiscal military state. The fact that you can come out sounding correct that the US in fact not a failed military state. They're very successful in doing so and covering it up. If you think people aren't getting killed

U.S. monetary policy is based on the aggressive application of free market capitalism. It is not a military state.

And I agree with @Johnbt, if the U.S. is trying to be a military state, then it is failing miserably at it. In military states, you simply "disappear" when you say something negative against the government or ruling class. I don't see that happening much in the U.S., but maybe I'm just missing the action.

The US spends an unknown amt of gdp on their military, didn't they just `misplace some 2.3 trillion? Do you think that went into education or
Civil services? the argument that by definition the US is not a military state is fine if you literally think a govt needs to spend a certain % of gdp in order to be a military state. When you have the Highest incarceration rate in the world, and a military presence in all corners of the world, I consider this a military state, even if we don't meet an arbitrary percent of gdp spending. Let me ask you, what does the world think of first when you mention the US? I'll tell you, it's the military. If you think people don't just disappear for political reasons than they are in fact extremely successful at being a military state. In fact not only or silence within the US but we are actually able to do so outside of the US and in other countries. When other countries are overthrown their dictators or when their opposition parties disappear it's often if not by the and resources of the United States of America. Amount of military spending so getting off topic if we don't meet a certain amount of military spending then I can see that you are correct by that definition. After traveling the world and meeting people from all over the place when they think us they think military. The fact that you can say this and most people would agree with you just goes to show that they are absolutely successful and being a military state.

 

[mrsgreeneyes]

Somehow we managed to have civil discussion about MMDs on a diamond forum, but it all blew to hell over the definition of military state.

 

[Angelwk]

https://giphy.com/gifs/j9djzcMmzg8ow/html5


Somehow we managed to have civil discussion about MMDs on a diamond forum, but it all blew to hell over the definition of military state.

That's why I said let's leave it. But people just cannot. Hahaha.

 

[Angelwk]

Engages in debate. Uses the wrong definition to support their argument. Says they do not want to debate...

Do not condescend me with your false information. Be a sheep. And it's not the wrong definition. You just don't know how to define things properly so yeah maybe you are out of the loop