Interesting article on diamond''s value from Straight Dope

[phoenixgirl]

http://www.straightdope.com/columns/040903.html

From the article:

"I''ll focus on whether diamonds are worth the exorbitant sums charged for them. Answer: Of course not. Prices are kept high by a cynical cartel that preys on vanity and stupidity."

I generally consider the Straight Dope to be a good source of trivia. How does his analysis hold up with the experts?

 

[denverappraiser]

Worth is in the eye of the customer.

Some people seem to be happy to pay what I consider exorbitant amounts of money to watch basketball games because a price structure that is supported by a cynical cartel that preys on vanity and stupidity.

Oops, wrong cartel.

Neil Beaty, GG ISA
Independent Appraisals in Denver

 

[Garry H (Cut Nut)]

What tripe.

This is from our new tutorial:

Some people feel synthetic diamonds are a solution to the conflict diamond trade in West Africa and child labor in India. I disagree, but then I am against rich nation trade barriers because they hurt poor countries. Diamonds play a vital employment, revenue and development role in Africa, and they provide nearly 1 million well (relatively) paid jobs in India. Rich nation tariffs on cotton and sugar cause far greater suffering. Canada (in my opinion) should stop marketing its diamonds as "non-conflict" and divert their efforts into helping African nations market "development diamonds". New Kimberley Process import/export laws are making diamond smuggling increasingly costly. Diamonds are smuggled to avoid mining and export taxes, but if we, as consumers, demanded to be sold tax paid diamonds mined and polished in poor nations, our dollars will stop illicit diamond trading and benefit the poor.

De Beers were near insolvent 5 years ago.

They ''control'' just over 1/2 diamonds - and mine about 1/3rd themselves. they are under a lot of commercial pressure from BHP, Riotinto and Russia.

Lev Liveve is pushing them out of Africa. The business world is alive and as tough as hell.

 

[Jolie]

Now I''m second-guessing my decision to buy a diamond. Maybe I should have bought the beenie babies after all.

 

[windowshopper]

personal adornment and appreciation for precious gems etc is as old as the human race

 

[strmrdr]

Date: 11/10/2004 6:59:51 PM
Author:phoenixgirl
http://www.straightdope.com/columns/040903.html


From the article:


''I''ll focus on whether diamonds are worth the exorbitant sums charged for them. Answer: Of course not. Prices are kept high by a cynical cartel that preys on vanity and stupidity.''


I generally consider the Straight Dope to be a good source of trivia. How does his analysis hold up with the experts?

I coulda wrote that and dont disagree.
its all marketing.

 

[Richard Sherwood]

'I'll focus on whether diamonds are worth the exorbitant sums charged for them. Answer: Of course not. Prices are kept high by a cynical cartel that preys on vanity and stupidity.'

I generally consider the Straight Dope to be a good source of trivia. How does his analysis hold up with the experts?

Well, all I can say is that I've probably forgotten more than this fellow has ever known about diamonds, and I still enjoy buying them.

Some people will never appreciate beauty no matter how smart they are, or how much they learn. We've all met them, the individual who just can't understand why someone would choose a gorgeous 2 carat diamond when they could take that money and buy a car, or truck, or something they consider much more worthy of the money.

More power to them. They march to the beat of a different drummer (or is it we?).

I do wish they would have more class than to label me vain or stupid though.

 

[strmrdr]

Date: 11/10/2004 7:50

5 PM
Author: Garry H (Cut Nut)

What tripe.

This is from our new tutorial:

Some people feel synthetic diamonds are a solution to the conflict diamond trade in West Africa and child labor in India. I disagree, but then I am against rich nation trade barriers because they hurt poor countries. Diamonds play a vital employment, revenue and development role in Africa, and they provide nearly 1 million well (relatively) paid jobs in India. Rich nation tariffs on cotton and sugar cause far greater suffering. Canada (in my opinion) should stop marketing its diamonds as 'non-conflict' and divert their efforts into helping African nations market 'development diamonds'. New Kimberley Process import/export laws are making diamond smuggling increasingly costly. Diamonds are smuggled to avoid mining and export taxes, but if we, as consumers, demanded to be sold tax paid diamonds mined and polished in poor nations, our dollars will stop illicit diamond trading and benefit the poor.

De Beers were near insolvent 5 years ago.

They 'control' just over 1/2 diamonds - and mine about 1/3rd themselves. they are under a lot of commercial pressure from BHP, Riotinto and Russia.

Lev Liveve is pushing them out of Africa. The business world is alive and as tough as hell.

Good they should be pushed out its about time they were stopped from stealing another countries natural resources.
I would chear if De Beers went under tomorrow.

 

[strmrdr]

Date: 11/10/2004 9:46:17 PM
Author: Richard Sherwood

''I''ll focus on whether diamonds are worth the exorbitant sums charged for them. Answer: Of course not. Prices are kept high by a cynical cartel that preys on vanity and stupidity.''


I generally consider the Straight Dope to be a good source of trivia. How does his analysis hold up with the experts?

Well, all I can say is that I''ve probably forgotten more than this fellow has ever known about diamonds, and I still enjoy buying them.

Some people will never appreciate beauty no matter how smart they are, or how much they learn. We''ve all met them, the individual who just can''t understand why someone would choose a gorgeous 2 carat diamond when they could take that money and buy a car, or truck, or something they consider much more worthy of the money.

More power to them. They march to the beat of a different drummer (or is it we?).

I do wish they would have more class than to label me vain or stupid though.

Hmmm he thinks diamonds are way overpriced so he dont appriciate beauty?
Thats a wierd conclusion to come to.
I think diamonds are very beautiful AND way overpriced.
They arent mutualy exclusive.

 

[Hest88]

The only things in this world of real value are the things critical to life, and oddly enough they are the cheapest.

Of course diamonds aren''t worth it. Neither are yachts or publically-traded companies or designer clothes or rare stamps or those $16.99 CDs. Yet we pay what we think they''re worth, don''t we? It''s called, uh, capitalism.

At least with diamonds, unlike companies or yachts or CDs, you have an item that has been valued since man first discovered those pretty stones and will continue to be beautiful long past the time when the companies has folded, the yacht as rotted and the CD obsolete.

On another note, I actually think the whole diamond outrage has an element of sexism associated with it. It''s a major market aimed for the most part toward adorning women, and so is considered a vanity. Diamonds are thus frivolous and useless, while any number of men''s toys escape scrutiny.

 

[Garry H (Cut Nut)]

Hey Hest, what about surgical uplifts and enlargements?

Is that a product of avaricious surgeons? Should we ban or bankrupt medico''s who do them?

And lawyers, and what a rip off - priests and the like - all because they will get us into heaven

?

Gee the whole world is a rip off!

Stop - I want to get off

 

[valeria101]

My English is not perfect...

Can anyone explain what "overpriced" means here ?

 

[valeria101]

Date: 11/10/2004 7:505 PM
Author: Garry H (Cut Nut)

This is from our new tutorial:

The more I hear about this new, new Pricescope thing, the more I love it

When is it due, Garry ?

BTW, surely youve seen that article by Hughes on the ban on Burma LINK . The criticism of the trade practice rings pretty close to yours.

 

[Paul-Antwerp]

It is so easy to attack De Beers'', and surely, over their history of about 100 years, they have definitely used some tricks that today are considered unacceptable.

But hey, we have almost forgiven the Germans for what they did over 60 years ago, we are doing more business with China than ever before, so can we start looking at De Beers'' as the company of today, and not that of colonial Cecil B. Rhodes?

To sum it up, this company is indeed still a strong player in this small business, but one can hardly call it a vicious cartel that controls prices.

As for the value of diamonds, I still know some potential diamond mines or alluvial diamond-containing areas. Good quality too. The only problem is that the cost of extracting them out of the earth is higher than the current value of these diamonds. Many observers often forget this: it is not because a diamond is a mineral, that you can find, that there is no cost attached. At this point in time, a number of South African mines are limiting their production, because changes in currency levels made them unprofitable.

Basically, if the value (what a consumer wants to pay) is higher than the cost of producing it, then it will be produced. If the value is lower, then the stone will remain in the ground.

Live long,

 

[Hest88]

Garry, sweetie, I think you misinterpreted my post. I have no problem with the whole thing; I do have a problem with people lambasting one industry without recognizing the same hypocrisies in other industries.

 

[canuk-gal]

Hi:

OKOK, I admit it: I am vain and stupid--this scourage upon my nature likely occuring long before I could read DeBeers ads--and for my part I suggest that is it all owing to Mattel. Heck, they must employ a whole cartel of (child) psychologists there too. Heaven forbid should this vanity (amongst females) and stupidity (amongst men) be too widespread, lest these same weakminded types try to run countries or something.

cheers---Sharon

 

[oldminer]

Men and women both enjoy their own "toys" and each give value to them. Diamonds are much more in the female domain of toys, but I must admit I do enjoy the diamond I wear daily, too. I have many toys that my wife fails to understand or fully appreciate, but she also has many toys I cannot begin to comprehend. The trick is to understand that these toys are of importance to that person and to give them a certain degree of respect as they mean a lot to the individual you do not need to understand why, only that you need to undertand that important toys are a reality.

Very few toys can be shared between the sexes. Maybe the family dog or cat loves us equally and allows both of us to share in our love with it. Few other toys are so well shared or understood. The trick is to respect your mate''s toys as important, even if you think they are somewhat foolish. This respect creates an atmosphere of mutual respect for your own crazy toys, even if they, too, seem ridiculous.

Gem quality diamonds are part of the world of toys. Their value is a perception we arrive at by fashion, tradition and excellent marketing. They are worth what they sell for or they would not sell. Now, many guys buy a diamond and feel the value is nowhere near what they must pay, but the girl who receives this diamond feels entriely different. This phenomenon is just the beginning of enlightenment a new future husband muswt go through in order to begin to know his future spouse. Women also must go through this rite of passage as they learn to properly respect their future husband''s collection of golf clubs and why he truly need yet another putter or driver in his collection. Why do I always need a new motorcycle, why does my wife need a sapphire necklace, a new cook top, marble countertops? It is our toys that allow us to view the large gulf of misunderstanding of what is important to the opposite sex.

If we lived in a less affluent society there are less toys, but items of importance are different for men and for women even in poor societies. Things have more value to one sex or the other. Things mean different things to one spouse or the other. It seems to be human nature.

Diamonds, in spite of all marketing and hype, mean something to people. To explain what they mean to someone they mean little to, is akin to yelling at a deaf person. It won''t transmit. If the need was not real or if the value was not genuine, no amount of hype or advertising would create such a large and stable market for such a long period of time. So diamonds do mean something even if we don''t all fully understand why..... Those that want them, want them badly enough to pay the asking price. So, go for it. Bite the bullet and make someone very happy.

 

[valeria101]

Date: 11/11/2004 11

6:35 AM
Author: Paul-Antwerp

Basically, if the value (what a consumer wants to pay) is higher than the cost of producing it, then it will be produced. If the value is lower, then the stone will remain in the ground.

I know you have much better things to do than go on with this. But the post quoted is a rare found here... so I could not resist bring it forth.

The statement is surely right: for diamonds, coal, gas, toothpaste... anything. Even with the latest hike of oil prices, some oil and gas deposits will never be drilled. Coal is case celebre for this. I am not familiar with other mining industries, but I would bet each has it''s unprofitable deposits.

How about gem minerals though? If I am not wrong, diamonds are the only gems coming from large scale industrial mining. This makes their prices a strange beast to talk about.

I may be way outside the beaten track - but my mental image of ruby, sapphire and emerald mines are somewhat different than the diamond mining barges and crater-sized pits. Even if the recovery rate of diamond deposits is small, than there would be more mining - which is not the case, as you say. With that crater of a mine pit in mind, and some dusty mantra about price-fixing on top, no wonder diamonds ''sound'' overpriced. As if nothing happened between mine and jewelry box.

How many jewelers would be able to turn a lump of platinum and a rough diamond into a ring?

Lots of ado about the quality of diamonds as they come off the ground (=color, clarity, size) a bit more about jewelry metals (=platinum or bust!) but strangely little about what it takes to put two and two together. And that''s where the money goes, if I am not too wrong.

 

[Garry H (Cut Nut)]

Date: 11/11/2004 11:17:54 AM
Author: Hest88
Garry, sweetie, I think you misinterpreted my post. I have no problem with the whole thing; I do have a problem with people lambasting one industry without recognizing the same hypocrisies in other industries.

I was adding to your comments because I agree Hest

 

[strmrdr]

Paul, you know I respect you a lot but what your saying in this thread is not what you said in this other thread about DeBeers:
https://www.pricescope.com/
To help me understand better which is it?
Misunderstood DeBeers or Bad DeBeers?

 

[Paul-Antwerp]

Hi there, Storm,

Looking back at the other thread, and carefully reading your reaction, you were totally misreading my comment. That is somewhat logical, since you do not have my background information, and at the same time, you seem to be inclined to blame De Beers'' for anything.

For most of the background info, Leonid is planning to start some kind of Pricescope Journal, in which I would like to give more background info on the industry. In the current shape of this forum, one can quickly touch one side of an issue, but it is too cumbersome to give a complete picture.

To come back to the thread, that you are refering to:

A few years ago, De Beers'' was privatised, which resulted in a huge outstanding debt. At the same time, they had a huge stock of rough. This needed to be sold off, in order to bring down the debt, and make the company more efficient.

At the same time, sightholders were pushed to invest more in marketing.

In order to support them (who faced that extra cost of more marketing) and in order to bring down the excess stock, they sold at prices, clearly lower than the average market price.

However, a high number of sightholders did not cut the goods, but just re-sold the boxes. With De Beers'' stocks now very low (currency problem in South-Africa, local cutting in Africa, no real contract with Alrosa), they have adjusted their pricing to the market, especially since there is a risk that they cannot fulfill the demand of their current clients.

Basically, they did what they had to do. And indeed, it made our business more difficult, but since we had the stamina to fight this unfair situation, we now stand a lot stronger while the playing field is becoming level again.

For more background info, please wait for the Pricescope Journal.

Live long,

 

[Garry H (Cut Nut)]

In other words Storm, Good or Bad is insufficient to describe any comapny operating in a complex world.

But you enjoy it, so we will not get in the way of your pleasure; but beware you do not believe your own BS.

 

[strmrdr]

Thanks Paul I will look forward to reading it.
Sometimes it looks different looking in than it does when your are in it.

The net effect is the same the increased demand on rough they dont control raised the price of rough which allowed them to raise prices.
Otherwise the other rough wouldnt have been going for more than they were selling it for.
I think we can agree on that?

I tend to think they planned it that way and you think it just happened fair enough :}

 

[strmrdr]

Date: 11/12/2004 7:16:23 AM
Author: Garry H (Cut Nut)

But you enjoy it, so we will not get in the way of your pleasure; but beware you do not believe your own BS.

Gary,
If you disagree with something I say give me the facts to learn otherwise and I will look into it.
As to not believing that DeBeers had a plan to raise rough prices all along.
Well your wrong because I believe it and given their history it isnt a stretch to believe it either.

 

[pricescope]

Date: 11/12/2004 6:31:17 AM
Author: Paul-Antwerp

For most of the background info, Leonid is planning to start some kind of Pricescope Journal, in which I would like to give more background info on the industry. In the current shape of this forum, one can quickly touch one side of an issue, but it is too cumbersome to give a complete picture.

.....

For more background info, please wait for the Pricescope Journal.

The journal system is set up. We're waiting for your info, Paul