dont understand

[diamondbank]

Date: 2/8/2009 6:56:10 AM
Author: Serg
Diamondbank,


do you have any relationships with DODAQ?

Only interest. Im looking to sound out from the forum what people think about DODAQ, before i make any investment decisions. Because its new i wanted to know what sort of open interest there is on the investment qualities of diamonds.My main reservation before getting involved is i cant understand why there is not already a centralized market for round polished diamonds.

 

[ejv207]

I feel like Bill Murray in ''Groundhog Day'' when I read the updates to the thread.

I''m sorry if you''re having trouble understanding the positions of the forum experts. Maybe you should read through the thread again, because you keep touching on points already covered. Even though you don''t have a relationship with DODAQ, you sound like an advertisement for the exchange which leads to a credibility issue with most people on PS.

You posed questions, received credible answers from the diamond pros, and yet you claim ignorance and ask the questions again. The thread title is inappropriate. It should be ''dont understand and probably never will''

You''re a precious metals trader, so let me put in your terms: IMHO this DODAQ is pyrite.

Why don''t you look into raising Alpacas as an investment?
I love alpacas

"I got you babe.....I got you babe...."

 

[diamondbank]

Date: 2/8/2009 6:21:03 AM
Author: Stone-cold11

Date: 2/8/2009 6:06:14 AM

Author: diamondbank


I believe that they are offering different markets for different Labs. So there would be a GIA exchange and there would be a AGS exchange both trading @ different price per carat.


So i in your opinion, the GIA exchange would have a higher price per carat than the AGS exchange?

No, in the example given, the GIA stone is graded VGVGEX, but the cutting of the stone is close enough that AGS could give it a I/EX/I grade. So in effect, if both lab exchange has the same price for the same grade, I would be buying a tier 2 cut stone from the hypothetical GIA exchange, at cheaper price, get it graded at AGS and sell it as a tier 1 cut graded stone at the hypothetical AGS exchange. How is that fungible to you?


Same thing could happen with color and clarity grading especially stones with borderline grades, low F or high G for example. If a stone graded by AGS as a G, but a savy buyer think that it could be a F, send it in to GIA for a grading, comes back a F, the stone gains in value at the GIA exchange? No way is that fungible.

How am i meant to understand to understand borderline G (its a trade fallacy from what i hear) surely im paying the price for a G, thats what the cert says, thats how that stone is priced no?.

I agree that GIA/AGS cert are not fungible so thats why they would have to trade under two different exchanges and probably have two different prices per carat.

 

[Serg]

Date: 2/8/2009 7:20:10 AM
Author: diamondbank

Date: 2/8/2009 6:56:10 AM
Author: Serg
Diamondbank,


do you have any relationships with DODAQ?

Only interest. Im looking to sound out from the forum what people think about DODAQ, before i make any investment decisions. Because its new i wanted to know what sort of open interest there is on the investment qualities of diamonds.My main reservation before getting involved is i cant understand why there is not already a centralized market for round polished diamonds.

Because two diamonds with identical grading reports are not identical at all . Price for two diamonds with identical grading report cold have fluctuation up to 20%.
Such fluctuation , such difference between diamonds block any centralized market.
Before DODAQ show critical difference between two diamonds wit identical grading reports, DODAQ can not be centralized market system

Other problem is transportation. Main stock operations with Gold or other commodities are virtual operations with virtual goods. It is possible because gold is identical in any place. You can buy Gold on London exchange and receive gold in your local bank. Bank does not need delivery 1 kilo gold from London specially for you. London exchange does not need have gold at all.

 

[stone-cold11]

Date: 2/8/2009 7:54:58 AM
Author: diamondbank

How am i meant to understand to understand borderline G (its a trade fallacy from what i hear) surely im paying the price for a G, thats what the cert says, thats how that stone is priced no?.

I agree that GIA/AGS cert are not fungible so thats why they would have to trade under two different exchanges and probably have two different prices per carat.

So? What is to prevent a buyer from getting the stone and send it to another lab to regrade it and getting a better grade and then reselling it to the market?

EDT:
So now the stone has 2 identity, a report by GIA and one by AGS, resulting in a stone, the same stone having 2 different values on two different markets, how fungible is that? Dose that makes any sense at all in terms of trading commodity?

 

[denverappraiser]

Date: 2/8/2009 4:06:35 AM
Author: diamondbank

Neil Im sorry if you feel ignored, iv tried to explain throughout many posts and i will try again.

Can you give me a logical reason why these two stones should trade at different price per carats.

Round GIA 1.05 Gvs2 xxx None

Round GIA 1.04 Gvs2 xxx None

If you could give the readers a valid explanation for this it would be appreciated.

If you read my posts correctly i am talking about ROUND BRILLIANTS being fungible.


By definition a commodity 'is an article of trade or commerce' which retains an intrinsic value. It is hard to argue that a diamond does not fulfill this criteria. Therefore, it is the challenges of standardization that currently inhibit the logical conclusion of commoditisation.

Here are some attributes, other than those that appears on a current GIA brand lab report, that can affect the price of a round brilliant cut natural diamond at both the consumer and dealer level.

Variations within the individual grades (especially with regard to cutting and clarity but also others. There are certain grades, like the VG cut, the SI2 clarity or the Strong fluorescence that encompass an extremely wide range of stones and attributes that people seem to consider desirable or not)

Physical attributes not described on the report (for example hearts and arrows patterning or ‘digging’, both of which are routinely discussed here on the forum).

Location

Payment and delivery terms

Errors on the lab report

Condition

Ownership history

Mine and/or country of origin

External pressure to either buy or sell quickly

Reliability of information (both sellers and buyers prefer to do business with folks that they consider reliable and trustworthy)

Information and market access by both buyer and seller

Presentation

Access to recourse in the case of problems

Access to additional goods and services (for example, the only way that Tiffany & Co will sell a genuine Tiffany ring it to buy it already mounted with a Tiffany diamond)


Neil Beaty
GG(GIA) ICGA(AGS) NAJA
Professional Appraisals in Denver

 

[Moh 10]

It only took a 5 second google search to find DODAQ’s website.
They really do exist and are trying to get investors to invest in diamonds as a commodity.

We all know diamonds cannot be a commodity for reasons posted in this thread.
But . . .
Might they succeed, and if so, how will it affect diamond the market for well-cut diamonds (since they sell for a justifiable premium)?

I know a thing or two about the piano market.
In pianos there are two markets, the informed market and the uninformed market.
It is unfortunate but the uninformed market is huge.

Pros know that a 1910 Steinway (size X) with all original parts is worth only around $7000 because it needs tens of thousands of dollars of parts and labor to bring it up to the standards of a well-functioning musical instrument in keeping with the Steinway name.
After a high-quality rebuild the fair price will be about $30,000.

But there are zillions of uninformed people who will pay $20,000 or more for that same poorly-functioning worn out piano, especially if the case looks good and all keys make a sound and only a few hundred dollars are spent fixing it up.
The Steinway mystique is that powerful and seductive.

Now back to diamonds.
Is it possible there are enough uninformed people who can be convinced that diamonds are a commodity to create a significant, if not vibrant, uninformed market for DODAQ?

Or will this "financial" vehicle self destruct as their “investors” inevitably loose their shirts?

How worried should cutters and vendors of ideal cut diamonds be about this attempt to commoditize diamonds?
Could these uninformed people actually hurt the well-cut diamond industry if the public perception swings in favor of diamonds being a commodity?
They will come to believe that all of the price-determining data is on the report.
People are led to believe lots of stuff that is not true. (Don't get me started.)

 

[officefan]

Date: 2/7/2009 2:32:41 PM
Author: diamondbank
Wink a question whats the difference between your ONLINE shop and there electronic diamond exchange. Interested in your reply.

Well this is an interesting topic. I''m not sure if anyone has directly answered this question, but I''ll add my $.02.

Full disclosure - I''m in the midst of buying a ring from Wink.

1. I have a bachelors degree in finance and economics and am working on an MBA part-time in finance. I also work in the financial data industry. With that said I know a little bit about markets (however, I''ve come to realize that the more I learn the more I realize the less I know!!). This thread has answered the question of "why can''t a diamond be traded as a commodity?" multiple times in layman terms. If DB claims to be a "precious metals trader" I''d expect him to understand that two identical stones on paper would/could perform differently. A bushel of corn is a bushel of corn is a bushel of corn.

2. I''ve heard of this DODAQ thing. It will never, repeat never, be liquid. Any savvy investor worth his weight in salt will know that diamonds can not be a commodity. I''d compare this exchange to Pink Sheets.

3. Like I said earlier, I''m in the midst of buying an engagement ring from Wink(can''t wait!!). The difference between a consumer going through a DODAQ type of market compared to a reputable jeweler is clear. A jeweler will guide you through your purchase. When I contacted Wink he reviewed my wants and my financial constraints, then made a few recommendations. We review the recommendations and Wink shipped me two stones to take a closer look at, and I made my choice. This exchange doesn''t provide the knowledge of diamonds that a traditional jeweler does.