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diamondbank

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I am precious metals trader looking to invest in diamonds. In these times of uncertainty i really like the diamond play. Can some of you experts answer me a few questions.

1) Where can i buy a diamond and sell back the next second for the same price?

2) Why is there no centralized market place to buy and sell ie trade certified diamonds electronically, like gold or stocks?

3) Why is their no real pricing mechanism in the industry, As a trader i would like to know my profit and loss in real time.

4) Why is 1 carat gvs2 gia nil triple x not worth the same as another 1 carat gvs2 gia nil triple x. Surely the value is in the certificate

I am fascinated by this industry and just frustrated that i cant find an investment angle on something that i believe is really worth something.

Any advice/comments would be appreciated

 

dominicr

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Diamonds have not been 100% commoditized like gold. An ounce of gold is an ounce of gold, doesn''t matter. And governments use it as a financial mechanism. There is much variation in diamonds, both physical and esoteric. Who''s selling, Tiffany vs. XYZ, who certified it, etc., etc. It''s been tried, recently with little success.
 

decodelighted

Super_Ideal_Rock
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I''m just a consumer ... not an expert ... but as to this:

Date: 2/6/2009 5:57:58 PM
Author:diamondbank
1) Where can i buy a diamond and sell back the next second for the same price?
Nowhere. There are HUGE markups on diamonds & they lose their value immediately after being purchased (like cars).

Many people believe that Debeers is sitting on a back stock of diamonds & that the market could be flooded at any time. Additionally, man made diamonds improve all the time. Doesn''t sound like the earmarks of an "investment" of any kind -- much less a "solid investment". JMHO.
 

diamondbank

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Surely verification is guaranteed by the Grading Labs and the participants/ sellers would be miners, manufacturers even possibly the privates. If I would be guaranteed what im buying ie sealed cert and their was an electronic resale market, I think there would be enough interest but more importantly a market. Which company is trying it and is it based on market principles like the metals market?
 

diamondbank

Rough_Rock
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Feb 6, 2009
Messages
53
Would it not be positive for the industry if it could be traded like gold it would attract people to hold a portfolio of diamonds. Obviously liquidity is an issue however iv read that most diamonds are below 1 carat is that correct? As people are already buying diamonds off the net ie without seeing them, it seems that diamonds are already commoditized but not centralized.


 

diamondbank

Rough_Rock
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Feb 6, 2009
Messages
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Iv been on rapaport. A few issues on his sight he does not mention anything about vaulting the diamonds so i cant hold a portfolio with him, and his system seems to work like ebay. To get the investors it will need a bid and ask price/spread. Ie the best price someone is willing to pay for a particular diamond certificate and what someone is willing to sell the same certificate for. That way we can find the fair value on that cert.
 

suchende

Brilliant_Rock
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Apr 14, 2008
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1,001
I''ve often wondered the same thing.

To be fair, it doesn''t exactly matter that Tiffany or Zale''s is selling the diamond, but rather who made the setting the diamond was sold in. So... it''s totally beyond me why diamonds aren''t bought and sold like other commodities.
 

John Pollard

Ideal_Rock
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Date: 2/6/2009 5:57:58 PM
Author:diamondbank
I am precious metals trader looking to invest in diamonds. In these times of uncertainty i really like the diamond play. Can some of you experts answer me a few questions.
All very logical questions.

1) Where can i buy a diamond and sell back the next second for the same price?
You can’t. I don’t agree that there are huge markups on diamonds: Upstream prices continued to rise while margins downstream have shrunk tremendously - with the advent of the internet especially. But it’s unrealistic to expect to sell a diamond for what you paid, as long as diamond retailers can still buy them for less than what you paid. Here is a thorough article on the realities people face when reselling diamonds.

2) Why is there no centralized market place to buy and sell ie trade certified diamonds electronically, like gold or stocks?
Rapaport tried an auction. It didn’t take. Discussion here: https://www.pricescope.com/community/threads/rappaport-to-start-online-diamond-auction.68185/

3) Why is their no real pricing mechanism in the industry, As a trader i would like to know my profit and loss in real time.
The best pricing mechanism we have is reality. The Pricescope search engine is a very “real” way of seeing a snapshot of low-end consumer pricing at a given moment.

4) Why is 1 carat gvs2 gia nil triple x not worth the same as another 1 carat gvs2 gia nil triple x. Surely the value is in the certificate
Let’t try it this way:

1ct GVS2 triple ex
57 41.6 35.0 80 50

1ct GVS2 triple ex
60 41.4 32.0 80 50

1ct GVS2 triple ex
58 40.4 34.0 80 50

1ct GVS2 triple ex
56 40.8 34.5 80 50

There is a significant difference in value between the four examples above, even on their face. Now factor in:

* Cut consistency - even pristine averages can have swings in angles, causing performance issues
* Cut precision - cutting with precise optical symmetry brings a premium in some markets
* Actual measurements - averages on reports are rounded

And we did not even begin to address differences in clarity here, or face-up color influenced by cut quality.

Surely verification is guaranteed by the Grading Labs
GIA is certainly considered an authority, but even they don't make guarantees. See bottom right "This report is not a guarantee..."

http://lgdl.gia.edu/pdfs/diamond_grading_with_cut2.pdf
 

diamondbank

Rough_Rock
Joined
Feb 6, 2009
Messages
53
If that man in Africa was running a credible and real time diamond exchange which can store the diamonds i bought from him through a credible vaulting company and at the same time was working with a credible bank, then i would take his account number.Surely its possible?
 

suchende

Brilliant_Rock
Joined
Apr 14, 2008
Messages
1,001
John, you mention that mark-up on diamonds is not that high, yet consumers seem to have to sell diamonds for far less than they paid (even before the economy really started to take a turn for the worse). Why is it so hard to sell a diamond that''s "used"? Why aren''t jewelers/brokers/whoever willing to buy stones from consumers for prices closer to what they paid?
 

diamondbank

Rough_Rock
Joined
Feb 6, 2009
Messages
53
Stop the press, anybody knows about this?

http://www.business-standard.com/india/news/indian-jewellers-may-look-to-online-diamond-bourse-for-round-stone/00/09/348024/

 

diamondbank

Rough_Rock
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Feb 6, 2009
Messages
53
Panel of experts has anybody heard of this company dodaq offering two way auctions. Are they for reel?, i see they are new.Is Malca-Amit a big name in the business, trustworthy?
 

diamondbank

Rough_Rock
Joined
Feb 6, 2009
Messages
53
Iv had a short look went on their demo, it looks solid, frankly im amazed this has never be done before. I found it by googling diamond investments on google news. Is this as new to me as to you..This at first glance seems to be a stock market for polished diamonds not ebay not rap it has a standard competing bid/ask spread (never seen two way auction for diamonds before), you cant short this thing but thats not an issue. . This could change the business. Wheres the market?
 

strmrdr

Super_Ideal_Rock
Joined
Nov 1, 2003
Messages
23,295
one of the experimental diamond funds set up just lost its shirt in the economic downturn the ability to cash out the diamonds at anywhere near what was paid is 0 and they have access to the wholesale market.
If they had spent the entire amount they raised they would be sunk but they only spent something like 20% so far so they are still around but burning money left and right.
 

diamondbank

Rough_Rock
Joined
Feb 6, 2009
Messages
53
Your right your talking about a diamond fund Diamond Circle Capital .They are invested in big stones bought at the top as you say still 80% in cash. Diamond Circle Capital are in a different market in terms of goods.

What dodaq is offering is seems to be quite different they are saying thats its a real cash market for the most liquid part of the industry small round based on a system which at first glance seems to be the same mechanism of the stock market, gold market ect.

Impressive
 

diamondbank

Rough_Rock
Joined
Feb 6, 2009
Messages
53
Im getting itchy fingers, i could set the price of diamonds here.This is heavy.I could put bids in @ minus 55 see if theres any sellers. Why not?

 

diamondbank

Rough_Rock
Joined
Feb 6, 2009
Messages
53
Found the link “Rock of Love”

https://www.pricescope.com/community/threads/more-dreamers.105926/
 

asforhim

Rough_Rock
Joined
Feb 4, 2009
Messages
81
For the same reason there is no oil painting commodities market or sculpture commodities market... diamonds are a work of ART!. Sure, they have a certain value for their rarity (clarity, color, etc) as does gold, platinum or even uranium. But, a great diamond is COMPLETELY dependent on the quality of its CUT, which is a product of the artistic expertise of the cutter. Uranium is worthless without the mind of the scientis to create the nuclear reactor....
 

Dancing Fire

Super_Ideal_Rock
Premium
Joined
Apr 3, 2004
Messages
31,507
something strange about this thread.
 

diamondbank

Rough_Rock
Joined
Feb 6, 2009
Messages
53
How can you compare a great piece of art or any peice off art to a polished diamond does not make sense. Theres are standardized standards in polishing diamonds meaning that if they were all polished the same they would all look the same except for the size. There are no standards in making a one piece of art other than the imagination of the artist. Putting great or unique large diamonds aside wich make up probably less than a percent of the whole market,

I challenge anybody to state a better case as two why small certified plished diamonds are not traded like any other commodity.
 

diamondbank

Rough_Rock
Joined
Feb 6, 2009
Messages
53
The strangest thing about this thread is that it seems the diamond advisers here do not seem understand the realities of the very product they are selling.That is the fundemental error of the business.

Traders make money between themselves arguing where the black spot is on the diamond, thats about as far teir minds will allow them to go.

The industry needs to grow out of this archaaic way of doing business. There is no future in the way we trade small diamonds currently its a hustle and the industry is almost hustling the consumer with this "diamonds are unique" "two diamonds with the same characteristics are not the same" "above rap" "below rap" "its a good vs2, its a bad vs2" I mean what a load of tosh.

Correct me if im wrong the consumer is buying the stone based on

1) The price

2) The cert

3) The only added value there is is the sellers brand and everything it stands for.

jewelers do your customers come to you with a loupe and more importantly do you state where the black spot is on a vs2. Do you say to them that its on the middle, on the side or even better "on the side but we have covered it using the metal that surrounds the stone"

The answer is most likely to be no and therefore for that and many other reasons which have been stated in this topic.

Diamonds are a commodity and therefore should be traded like one.

Do your research industry participants its going that way, so we might as well all begin to learn how to trade diamonds for what they truly are.


 

ejv207

Rough_Rock
Joined
Jan 9, 2009
Messages
33
Don't you have your answer diamondbank? The DODAQ exchange I believe is based in Antwerp. Aren't they trying to commoditize diamonds? Looks legit, I read about it on JCK and other sites.

"Correct me if im wrong the consumer is buying the stone based on

1) The price

2) The cert

3) The only added value there is is the sellers brand and everything it stands for"

CORRECTION: YOUR WRONG

You're trying to oversimplify the buying process. The above are important factors, but not the only ones to take into account when a consumer buys a diamond. Go take a look at a few diamonds yourself under a 10x loupe, and you will appreciate cut and clarity. I have yet to see two identical polished stones.

Certification is another issue. No two labs are alike. DODAQ only takes into account GIA, HRD, and IGI.

Labs grade the same stone differently. Humans are doing the grading, and thus a diamond certification contains subjective opinion. Symmetry and cut grade standards vary from lab to lab. See the grading survey between GIA, EGL, and AGS.

http://grading.pricescope.com/



I like the fact you are interested in investing in diamonds and would love to know how you're diamond play turns out. Polished diamonds do not meet the definition of an investment commodity that can be bought and sold on an exchange, the infinite variations and the major players guarantee an inefficient market. IMO, your money is better off invested elsewhere.
 

Wink

Ideal_Rock
Trade
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Messages
7,471
Date: 2/6/2009 6:58:15 PM
Author: suchende
John, you mention that mark-up on diamonds is not that high, yet consumers seem to have to sell diamonds for far less than they paid (even before the economy really started to take a turn for the worse). Why is it so hard to sell a diamond that''s ''used''? Why aren''t jewelers/brokers/whoever willing to buy stones from consumers for prices closer to what they paid?
Some do, most don''t.

With the small margins allowed to be competitive on diamonds these days it takes a huge volume to just pay the bills. If jewelers were to buy back at what they sold for a downturn in the economy could bankrupt them quickly. This was quickly demonstrated in Japan where the competitive norm became an offer to buy back a diamond at its selling price. (Even then some complained that it was unfair that they were not paid the current price since diamonds always appreciated.)

When the Japanese economy turned South, there were floods of remorseful buyers turning in their diamonds and many of the top names in the Japanese jewelry business were forced into bankruptcy. Because diamonds are NOT a commodity, in spite of the best efforts of many, including Martin Rapaport, as well apparently of the starter of this thread, there is no place for the jeweler to offload his excess inventory, making the buy back problamatic for the average jeweler who in spite of the public''s opinion is NOT AWASH with excess capital waiting to be used.

It takes either a very stong retailer, or a retailer operating in conjunction with a stong cutter to offer a reasonable buy back. I know of very few who do.

Wink
 

Wink

Ideal_Rock
Trade
Joined
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Messages
7,471
Date: 2/6/2009 6:51:54 PM
Author: John Pollard

Date: 2/6/2009 5:57:58 PM
Author:diamondbank
I am precious metals trader looking to invest in diamonds. In these times of uncertainty i really like the diamond play. Can some of you experts answer me a few questions.
All very logical questions.


1) Where can i buy a diamond and sell back the next second for the same price?
You can’t. I don’t agree that there are huge markups on diamonds: Upstream prices continued to rise while margins downstream have shrunk tremendously - with the advent of the internet especially. But it’s unrealistic to expect to sell a diamond for what you paid, as long as diamond retailers can still buy them for less than what you paid. Here is a thorough article on the realities people face when reselling diamonds.


2) Why is there no centralized market place to buy and sell ie trade certified diamonds electronically, like gold or stocks?
Rapaport tried an auction. It didn’t take. Discussion here: https://www.pricescope.com/community/threads/rappaport-to-start-online-diamond-auction.68185/


3) Why is their no real pricing mechanism in the industry, As a trader i would like to know my profit and loss in real time.
The best pricing mechanism we have is reality. The Pricescope search engine is a very “real” way of seeing a snapshot of low-end consumer pricing at a given moment.


4) Why is 1 carat gvs2 gia nil triple x not worth the same as another 1 carat gvs2 gia nil triple x. Surely the value is in the certificate
Let’t try it this way:

1ct GVS2 triple ex
57 41.6 35.0 80 50

1ct GVS2 triple ex
60 41.4 32.0 80 50

1ct GVS2 triple ex
58 40.4 34.0 80 50

1ct GVS2 triple ex
56 40.8 34.5 80 50

There is a significant difference in value between the four examples above, even on their face. Now factor in:

* Cut consistency - even pristine averages can have swings in angles, causing performance issues
* Cut precision - cutting with precise optical symmetry brings a premium in some markets
* Actual measurements - averages on reports are rounded

And we did not even begin to address differences in clarity here, or face-up color influenced by cut quality.


Surely verification is guaranteed by the Grading Labs
GIA is certainly considered an authority, but even they don''t make guarantees. See bottom right ''This report is not a guarantee...''

http://lgdl.gia.edu/pdfs/diamond_grading_with_cut2.pdf
John,

You offer very stong and reasonable comments. From the posts after yours, I do not believe that is what our original poster is looking for.

Wink
 

dominicr

Rough_Rock
Joined
Jan 13, 2006
Messages
16
Don''t see a pure commodity market for diamonds anytime soon. One basic thing everyone is forgetting. Diamonds are still largely an Emotional purchase.
 

Wink

Ideal_Rock
Trade
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7,471
Date: 2/7/2009 6:29:32 AM
Author: diamondbank
The strangest thing about this thread is that it seems the diamond advisers here do not seem understand the realities of the very product they are selling.That is the fundemental error of the business.

We understand very well that a few would like to destroy the business and the joy of the business of many. Fortunately for us, and unfortunately for you, the ultimate users of the product are those who would memorialize an important event in their lives with a treasure that represents their love and joy in the giving.

When you throw in the fact that the diamonds and other gems that we sell are not fungible products, it becomes an impossiblity for the few to make these gems a commodity that would trade on a fraction of a percent margin and put all jewelrs out of business. This is good, because without jewelers you would have no one to sell your product, and thus your commodity would go down in price since there would be no end user. True commodities, such as gas, wheat, corn, oil, these are all consumed and replaced at a rapid rate and thus a market price per unit can be established and traded. (Which also leads to dramatic abuses, just look at the ridicules run up in the price of oil last year if you are searching for an example.)

Diamonds can last for generations, and many people will buy only one in their lifetime, (Sadly for us jewelers...)

I think we understand the realities MUCH better than you appear to.


Traders make money between themselves arguing where the black spot is on the diamond, thats about as far teir minds will allow them to go.

The industry needs to grow out of this archaaic way of doing business. There is no future in the way we trade small diamonds currently its a hustle and the industry is almost hustling the consumer with this ''diamonds are unique'' ''two diamonds with the same characteristics are not the same'' ''above rap'' ''below rap'' ''its a good vs2, its a bad vs2'' I mean what a load of tosh.

Correct me if im wrong the consumer is buying the stone based on

1) The price

2) The cert

3) The only added value there is is the sellers brand and everything it stands for.

You are wrong. You have completely ignored the comfort that the consumer has buying from someone that he trusts. I do not know of anyone who sells based on it is a good VS2 versus a bad VS2, that you think say we do leads me to believe that you are full of the tosh you accuse us of using. I think it is very telling that you use the comment " There is no future in the way WE trade small diamonds currently.

This would certainly imply that you are in the trade and fishing to get people to go look at this new and "wonderful" way to trade diamonds. Good luck with that, I think the people here are smarter than the average bear. (reference to old Yogy the bear cartoons I wasted so much of my youth on...)


jewelers do your customers come to you with a loupe and more importantly do you state where the black spot is on a vs2. Do you say to them that its on the middle, on the side or even better ''on the side but we have covered it using the metal that surrounds the stone''

The answer is most likely to be no and therefore for that and many other reasons which have been stated in this topic.

Diamonds are a commodity and therefore should be traded like one.

Do your research industry participants its going that way, so we might as well all begin to learn how to trade diamonds for what they truly are.

You are so wrong, hope you don''t loose too much money trying to beat this dead horse. Until diamonds become a fungible product, this will not happen. Each diamond is in fact unique, and that is a big part of the treasure of owning them.

Oh, and guess what? Diamonds will NEVER become a fungible product. Oops, there goes that commodity thingy.

Wink



 
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