Diamond pricing in South Africa

[Shay]

First let me say, this absolutely infuriates me.

Diamonds are mined in South Africa, lots and lots of diamonds. Diamond prices here are on average higher than in America.

Every site I''ve looked at doesn''t even bother to put their prices in Rands, just Dollars. And when they do put their prices in Rands they first up the price and put a dollar pricetag on and then convert THAT amount back to Rands. At an exchange rate of 6,5 Rands to the Dollar that''s quite hefty. Never mind that local maul stores that will charge you about 10 times the insurance value of any jewellery.

I find this ridiculous.

To give you an idea of pricing lets have a look at this one:
1.27 Brilliant Diamond L/M VVS1 - R89,000 (US$9 800)

Now the US Dollars may not seem unreasonable, but in Rands that is a University educated professionals YEARLY salary! And the colour is not even very good!

It breaks my heart that I come from a diamond producing country and yet it will probably be cheaper for me to buy with an American online vendor. All I want is a semi - eternity diamond band that Facets sells for $900. To buy that at home (where both the diamonds AND the gold are mined) will cost me about 6 months salary.

I love my country, but this just plain sucks!

 

[mdx]

Shay
While we feel for your frustration, you must bear in mind that South Africa has a very small cutting industry. Most of the production is exported as rough with very little cut locally.

Johan

 

[Maya Moonstone]

Hi Shay

I am a South African living in Seattle. This is eye opening!

I always thought that SA may be cheaper with regards to jewelery!!! A lot of my friends surely think so. They buy jewelery when they go home to SA. The reason we think it is cheaper in SA, is because of cheaper labour. Any service that involves a person''s creativity and craftmanship is much more expensive in the US than in SA.

We also buy jewelry when we visit SA, but we negotiate in Afrikaans and rarely tell them that we live and work in the US, because the price may be much higher then!

Maya

 

[Shay]

MDX, what you say does make sense, I never thought about the cutting. I just assumed if we had such a wealth of diamonds we would have built up the infrastructure to process them. Although Southern States being encouraged to provide raw materials to Northern States and then buy back the finished product for a huge premium is one of the oldest complaints about colonialism, I suppose I should be used to it by now. Hmmm if there are so few cutters in South Africa maybe there is a gap in the market... I could fancy myself a diamond baroness

Maya, yay another South African. I thought I was the only one on these boards. Very clever negociating in Afrikaans, unfortunately since tourism took off here, any shop merchant or tour guide even smells a foreigner and the prices treble.

The reason it is cheaper for you and your friends to buy jewellery here is because you are earning in dollars and buying in rands, the exchange rate is most definatley on your side there. My complaint is from one earning in Rands and paying in Rands for something based in price on dollars.

 

[Spear]

Date: 5/25/2005 2:36:37 AM
Author: Shay
The reason it is cheaper for you and your friends to buy jewellery here is because you are earning in dollars and buying in rands, the exchange rate is most definatley on your side there. My complaint is from one earning in Rands and paying in Rands for something based in price on dollars.

I tend to agree with you.
The exchange rate really play''s a big role in diamond prices here in South Africa.

I saw in an article in the newspaper, that South Africa cutters wants the goverment to force De Beers to sell directly to them.
This would make diamonds more affordable here because local cutters would not have to rely on international distribution canals in order to get their rough.
So far negotiations have not been really successful.
Have you compared prices with the local online vendors?

 

[denverappraiser]

Blame it on the government.

Unlike most products, the costs to move diamonds from one market to another are close to zero as a percentage of the value of the stones. Since merchants are eager and able to do this with blinding speed in exchange for a remarkably small profit, the result is stones travel across international borders quickly and quite easily.

The biggest difference between the markets in different countries is the legal environment, regulations, the social environment, corruption, and taxes. There are, of course, also value added components by the merchants in different places in the form of things like custom design, financing, convenient location, warranties etc.

Many US merchants, especially the internet based merchants, work on a very small profit margin when compared to their overseas competitors. They do this because the laws do a fairly good job of protecting both the merchant and the consumer, the taxes are low and there is easy access to the services that they require like labs, overnight shipping, appraisers, insurance, security, sensible banking services and the like. Merchants who set up elsewhere find that shortfalls in one or more of these areas will drive up their costs and consequently their prices. As the internet style of distribution grows, this difference is likely to improve but the US has a considerable advantage over most countries on this kind of issue. In the retail internet market, the labor component of a diamond isn’t all that high and at the mining and manufacturing level, the location isn’t all that important. The result is that the mining is done wherever the ore is, the manufacturing is done wherever the appropriately skilled labor is cheapest and the distribution is done in the US.

Neil Beaty
GG(GIA) ISA NAJA
Independent Appraisals in Denver

 

[Shay]

Thanks DenverAppraiser, that was a very clear and helpful response. Of course it makes perfect sense when you put it that way.

Hey Spear, wow another South African! I really hope the diamond cutters succeed in getting forcing De Beers to sell to them directly, it seems only fair. They are making a fortune out of our resources, the least they can do is give something back.

In terms of local online vendors they price all their diamonds in $, the price next to that in R is literaly the $ amount times 6,5! Not a great plan at all I''m afraid.

I''ve found one site for a local cutter that ONLY sells direct to South African public (woo hoo

).
Unfortunatley the link to contact them doesnt seem to be working

. I''ll keep trying though, a resource like that would be invaluable.

I''ll put it here for anyone who is interested.
Diamonds Online South Africa