Diamond Prices to go UP??

[strmrdr]

btw where are the reports of the flash and particle plating techniques that have cut the electronic uses of gold by over 1/2 on a per board basis.
Some of the super-conductive research materials will likely replace it in 3 years that will free up tons of gold onto the market.
The demand for plat by automakers is way down also, it priced itself out of the market and is getting replaced by cheaper elements in catalytic converters and spark plugs.
The hold up is government approval but there are dozens of replacements on the horizon.

Prices just don''t continue too rise as the hacks would want you too believe.
If your so sure of it how much gold do you have in your vault at home?
Gold is infamous for flash in the pan increases that last a few years.

 

[strmrdr]

Date: 11/6/2007 7:22:52 PM
Author: DiaGem

Perhaps..., but now you added the electronics industry into the mix..., ok

The reality is: Gold/Plat/silver/Diamonds/colored gems prices have been moving up ''steadily''!!!
Could be a conspiracy between the ''hacks'' and the media who produce the press releases

The media doesn''t do their jobs and just quote the hacks, prime example the article John linked above.
You cant consider the price of elements in a vacuum.
They will eventualy price themselves out of the market and the correction can be painful :}
How may pounds of Gold and plat do you have stockpiled if your so sure its going to skyrocket? :}

 

[diagem]

Date: 11/6/2007 7:27:19 PM
Author: strmrdr

Date: 11/6/2007 7:22:52 PM
Author: DiaGem

Perhaps..., but now you added the electronics industry into the mix..., ok

The reality is: Gold/Plat/silver/Diamonds/colored gems prices have been moving up ''steadily''!!!
Could be a conspiracy between the ''hacks'' and the media who produce the press releases

The media doesn''t do their jobs and just quote the hacks, prime example the article John linked above. (your opinion!)
You cant consider the price of elements in a vacuum.
They will eventualy price themselves out of the market and the correction can be painful :}
How may pounds of Gold and plat do you have stockpiled if your so sure its going to skyrocket? :}

True..., but for some reason it looks (to me at least) that since commodities are becoming a safe-haven for the plummeting Dollar..., prices have still some way''s to go for them to become realistic.

I wouldn''t stock precious metal these days for speculations..., but in my opinion Diamonds have still a way to go to reach the levels of the metals...

 

[WinkHPD]

RE: Another example is the dslr they said they would never reach mass market status yet they are the fastest growing segment with the p&s market stagmented with 50 billion models confusing the market place.
================================

Okay, I give up, what is a dslr and a p&s market and why is it stagnated with 50 billion models?

Wink who is a jeweler and knows not what the heck you are talking about...

 

[strmrdr]

Date: 11/6/2007 7:41:39 PM
Author: Wink
RE: Another example is the dslr they said they would never reach mass market status yet they are the fastest growing segment with the p&s market stagmented with 50 billion models confusing the market place.
================================

Okay, I give up, what is a dslr and a p&s market and why is it stagnated with 50 billion models?

Wink who is a jeweler and knows not what the heck you are talking about...

dslr == digital slr camera, looks like the old large film cameras with detachable lens. example: canon eos 40d
p&s == point and shoot == the common digital camera with a non-removable lens. too many examples to list.

 

[strmrdr]

Date: 11/6/2007 7:35:35 PM
Author: DiaGem

I wouldn't stock precious metal these days for speculations...,

point set and match too storm :}

 

[diagem]

Date: 11/6/2007 8:13:25 PM
Author: strmrdr

Date: 11/6/2007 7:35:35 PM
Author: DiaGem

I wouldn''t stock precious metal these days for speculations...,

point set and match too storm :}

Not quit yet!!!

I said "I" wouldn''t stock metal for "speculation"!!! It does not mean prices are not continuing their trend up!

I enjoy your opposition/resistance..., keep up the "good" work!

 

[strmrdr]

Date: 11/7/2007 3:04:25 AM
Author: DiaGem
Not quit yet!!!

I said ''I'' wouldn''t stock metal for ''speculation''!!! It does not mean prices are not continuing their trend up!

I enjoy your opposition/resistance..., keep up the ''good'' work!

It has been fun your a worthy representative of the evil diamond overlords j/k :}

 

[WinkHPD]

Date: 11/6/2007 8:12:11 PM
Author: strmrdr

Date: 11/6/2007 7:41:39 PM

Author: Wink

RE: Another example is the dslr they said they would never reach mass market status yet they are the fastest growing segment with the p&s market stagmented with 50 billion models confusing the market place.

================================


Okay, I give up, what is a dslr and a p&s market and why is it stagnated with 50 billion models?


Wink who is a jeweler and knows not what the heck you are talking about...

dslr == digital slr camera, looks like the old large film cameras with detachable lens. example: canon eos 40d

p&s == point and shoot == the common digital camera with a non-removable lens. too many examples to list.

Ahh. Knowledge!

Thanks.

Wink

 

[Paul-Antwerp]

I have been reading this discussion with great interest and with a lot of wondering. In the end, the whole discussion is useless, since it concerns a prediction of the future, where apparently, if one person brings along good arguments for his prediction, the other person pulls the cord to his side by adding other IF''s and WHEN''s that totally change any prediction.

What is the current reality however?

There are a high number of sub-markets in the diamond-industry, and each has its own pricing-dynamics. As such, some of these sub-markets might have a stable pricing, some are going down and others going up. There is no overall index for all these sub-markets, only some efforts to create an index for a part of these sub-markets.

In this way, we have totally diferent pricing-dynamics for rough at the producer-level, rough at the cutter''s level, polished at the wholesale-level and polished at the consumer''s level. All these subgroups are again divided in different segments of sizes, qualities and colour/clarity. As a professional, it is already very difficult to work with the pricing-dynamics of the subgroup that you are specializing in, and therefore any discussion here about the basics for the industry overall are basically useless.

Last week, for instance, De Beers'' has raised prices by 3 to 5% on specific areas of rough. This reality might not have any impact on what we buy as cutters, since it is probably a correction between older De Beers'' prices and current market prices for that rough. So, while prices are going up, this might not have any impact further down the chain.

Another reality however, in our segment of rough, is that prices are strong, and higher than in the past years. On the selling-side, we see not a lot of opportunity to raise prices, definitely not in the same scale. Margins are dropping for everybody in the pipeline, from cutters to wholesalers and retailers. So, increasing rough prices and relatively stable (slightly increasing) retail polished prices are squeezing everybody in the market, and are forcing us to become more efficient. Those in the industry, that are too slow in improving their efficiency are forced out.

However, in the medium term, there are certain dynamics that can be foreseen and predicted.

One, at the level of cutters buying rough, we have a specific demand in order to satisfy our customer base, and in order to keep our factories running. The availability of rough for us will however decrease, with De Beers'' mines producing less, and with local ''beneficiation'' eating up part of the rough, before it reaches us. Therefore, we will definitely be looking at higher prices of rough next year.

Two, at a more global level, if diamond-demand remains the same (predictions are that it will rise moderately), it is clear that the supply of rough diamonds will decrease. Most mines are getting older, and it is only logical that most mines first exploit the most promising areas. In the same way, some major mines are moving into underground-mining, which generally yields less output for the same effort. And it is a fact that no major mine has been discovered in the past five years. So, we can definitely foresee that prices of most rough at the producer-level and at the cutter''s level will continue to rise in the next years.

In the past, De Beers'' used to have an enormous buffer-stock of rough, and this would dampen the increase of prices at the cutter''s level, when there would be such a period of limited rough supply. This stock is no more, however, and has been replaced by a stock of polished goods floating with wholesalers and retailers. This excess-stock of polished (not in all sub-segments, I should add) will reduce the price-increase effect for consumers for some time. In the meantime, you will see us complaining and struggling and will hear about major diamond companies going bankrupt.

Which brings us to the last reality: It is not because prices rise, that everybody in the industry is happy. It is not so that when we try to charge more, we automatically earn more. Even if we manage to earn the same amount of dollars, it is percentage-wise a lower return-on-investment.

So, all in all, I personally am not happy if prices go up, but there is nothing that I can do to stop it. On the other hand, I am happy about the side-effect, where it pushes inefficient competitors out of the industry.

Live long,

 

[WinkHPD]

Ahhh! Knowledge with a real meat and potatoes helping of common business sense! I appreciate your thorough explanation of this little understood area. Absolutely amazing what even we diamond professionals do not know of our own business! Especially those of us further down the distribution chain who are essentially isolated from your part of the business.

Wink

 

[strmrdr]

Hi Paul,
Well written post thank you.
I am happy that the industry is getting more efficient.
If we the consumers just sucked it up and were willing to pay ever skyrocketing prices it wouldn''t happen.
Its going too be painful and has been painful for a lot of the trade but it was bound too happen it is just happening later in the diamond industry than in others.
The smart and the swift will survive and thrive.
I think you will agree that a lot of people in the industry are going to get a reality check in the near term.
I firmly believe a better industry will be the end result.

As you can tell from my posts I think most predictions are a joke and don''t take them seriously.
In my industry there are a lot of people that learned that lesson the hard way and lost billions of dollars.

As far as price increases 2%-3% a year I don''t complain too much.
Some where in the pipeline someone gets greedy and we see 8%-10% again then well thats a different story. Last time DeBeers pulled that I was all set too call a boycott untill Wink talked me out of it for the time being.

 

[WinkHPD]

LOL! I had NO idea I was so persuasive!

Wink

 

[strmrdr]

Date: 11/7/2007 7:43:01 AM
Author: Wink
LOL! I had NO idea I was so persuasive!

Wink

https://www.pricescope.com/community/threads/national-dont-buy-a-diamond-week.18673/

 

[diagem]

Date: 11/7/2007 6:48:07 AM
Author: Paul-Antwerp
I have been reading this discussion with great interest and with a lot of wondering. In the end, the whole discussion is useless, since it concerns a prediction of the future, where apparently, if one person brings along good arguments for his prediction, the other person pulls the cord to his side by adding other IF''s and WHEN''s that totally change any prediction.

What is the current reality however?

There are a high number of sub-markets in the diamond-industry, and each has its own pricing-dynamics. As such, some of these sub-markets might have a stable pricing, some are going down and others going up. There is no overall index for all these sub-markets, only some efforts to create an index for a part of these sub-markets.

In this way, we have totally diferent pricing-dynamics for rough at the producer-level, rough at the cutter''s level, polished at the wholesale-level and polished at the consumer''s level. All these subgroups are again divided in different segments of sizes, qualities and colour/clarity. As a professional, it is already very difficult to work with the pricing-dynamics of the subgroup that you are specializing in, and therefore any discussion here about the basics for the industry overall are basically useless.

Last week, for instance, De Beers'' has raised prices by 3 to 5% on specific areas of rough. This reality might not have any impact on what we buy as cutters, since it is probably a correction between older De Beers'' prices and current market prices for that rough. So, while prices are going up, this might not have any impact further down the chain.

True..., but the 3-5% hike is compared to last month''s sight..., Its true that cutters that cut (the range 0.50 cts. to approx. 2 carats in most gem qualities) fancies or rounds were barely affected by this hike... (on the condition of receiving direct supply from DTC!!!)
Others (mostly cutters of higher end) I am afraid would have to pay a pretty hefty premium on the DTC boxes or simply give up cutting these type of goods..., as it''s almost impossible to locate homogeneous high end rough on the open market lately.

Another reality however, in our segment of rough, is that prices are strong, and higher than in the past years. On the selling-side, we see not a lot of opportunity to raise prices, definitely not in the same scale. Margins are dropping for everybody in the pipeline, from cutters to wholesalers and retailers. So, increasing rough prices and relatively stable (slightly increasing) retail polished prices are squeezing everybody in the market, and are forcing us to become more efficient. Those in the industry, that are too slow in improving their efficiency are forced out.

True..., no room for primitiveness. (period)

However, in the medium term, there are certain dynamics that can be foreseen and predicted.

One, at the level of cutters buying rough, we have a specific demand in order to satisfy our customer base, and in order to keep our factories running. The availability of rough for us will however decrease, with De Beers'' mines producing less, and with local ''beneficiation'' eating up part of the rough, before it reaches us. Therefore, we will definitely be looking at higher prices of rough next year.
Local beneficiation is 10%..., am I correct? But since DTC is loosing market-share on a regular basis..., I feel the war on finding steady rough suppliers is moving to all the other producers (Canada/Russia etc. etc...), and I am a strong believer it will be safer to connect to other producers as DeBeers are still trying to find which SoC (I, II or perhaps III) model to use..., rumors I have been hearing lately are:
Actual cutters of DTC boxes (not the box sellers) are not smiling lately

Two, at a more global level, if diamond-demand remains the same (predictions are that it will rise moderately), it is clear that the supply of rough diamonds will decrease. Most mines are getting older, and it is only logical that most mines first exploit the most promising areas. In the same way, some major mines are moving into underground-mining, which generally yields less output for the same effort. And it is a fact that no major mine has been discovered in the past five years. So, we can definitely foresee that prices of most rough at the producer-level and at the cutter''s level will continue to rise in the next years.

In the past, De Beers'' used to have an enormous buffer-stock of rough, and this would dampen the increase of prices at the cutter''s level, when there would be such a period of limited rough supply. This stock is no more, however, and has been replaced by a stock of polished goods floating with wholesalers and retailers. This excess-stock of polished (not in all sub-segments, I should add) will reduce the price-increase effect for consumers for some time. In the meantime, you will see us complaining and struggling and will hear about major diamond companies going bankrupt.

One of the reasons as you yourself wrote above:
"On the selling-side, we see not a lot of opportunity to raise prices, definitely not in the same scale."

The polished market is still pretty saturated with Diamonds (although it is slimming down dramatically as we can witness in the large Diamond segment) that originated due to DeBeers out-selling their "ENORMOUS BUFFER-STOCK" for the purpose of going private...
We need to remind ourselves that the Diamond-pipeline is longer and deeper than we can imagine.
I think the future of Rough Diamond supply will be in the hands of mega-companies or small innovative/niche companies.

Which brings us to the last reality: It is not because prices rise, that everybody in the industry is happy. It is not so that when we try to charge more, we automatically earn more. Even if we manage to earn the same amount of dollars, it is percentage-wise a lower return-on-investment.

On the contrary..., most members of this industry are actually suffering these days..., I agreed with CaptAubrey when he said:
"The money to be made nowadays is in mining, not manufacturing..."
But this is bound to change eventually!!!

So, all in all, I personally am not happy if prices go up, but there is nothing that I can do to stop it. On the other hand, I am happy about the side-effect, where it pushes inefficient competitors out of the industry.

On one hand..., we are not happy with prices going up..., but you are a 100% right..., the side effects of this volatile situation is becoming more and more interesting..., it eliminates inefficient companies (I dont call them competitors as they have no right of existence in their current business model...), and as I said many times in the past...

"small people/companies with big ideas will out-shine BIG people/companies with small ideas in the future of this business"
No wonder all these big mega-companies are in an effort to recruit creative workers/partners...

Live long,

Needless to say..., nicely written and explained Paul.

I guess Storm finds your writing more readable than mine...

 

[JohnQuixote]

 

[Nicrez]

Not divulging any business secrets here but that could be why T&Co opened their online business in China just recently with much success. The demand was extraordinary, and is increasing from Asia for larger high quality goods in general. Literally they are eating them up before they hit the market.

I agree with Paul, prices will increase, and as such am frightened to think we will get to the point where people are unmounting old stones and recutting them for current demands...

I hope we don't get to a point where that becomes rule over exception...

Oh and Joh..., the Hong Kong Area has two major golfing course I know of: The Fanling in Sheung Shui, and Deep Water Bay in...Deep Water Bay. Not sure who designed them. but I am told they are patterned after Souther English style... Wear a sweater, I hear it gets chilly at Deep Water Bay...