Interesting Old Article about Diamond Hisotry and Prices

[richipat]

Surfing the net and found this older (1980''s) and long article about the history of diamonds, how DeBeers created marketplace desire for different sizes, etc. and a dire prediction about the future.

http://www.theatlantic.com/doc/198202/diamond

It raised an interesting question for me. Based on the idea that there are more and more diamond mines and possible more diamonds on the market, could that explain why now there is such a drive for the newer pave settings that use more diamonds?

Food for thought

 

[oldminer]

1980 was a crazy period for diamonds. Diamonds had been at their height of value and crashed afterwards.

The drive in the market comes from rising standards of living in Asia. It also comes from new technology allowing the setting of diamonds into wax before casting. This saves lots of time and labor. It allows more mass production.

People in rising countries like diamonds but can''t all afford single stones yet. they are into tiny diamonds, set in groups, to flesh out their jewelry. They will graduate to larger diamonds in time.

There are probably more diamonds than places to sell them, but the market is very smartly run to prevent oversupply from becoming evident and driving down prices or filling up the demand.

 

[Cehrabehra]

Date: 4/27/2007 11:50:49 AM
Author: oldminer
1980 was a crazy period for diamonds. Diamonds had been at their height of value and crashed afterwards.

The drive in the market comes from rising standards of living in Asia. It also comes from new technology allowing the setting of diamonds into wax before casting. This saves lots of time and labor. It allows more mass production.

People in rising countries like diamonds but can''t all afford single stones yet. they are into tiny diamonds, set in groups, to flesh out their jewelry. They will graduate to larger diamonds in time.

There are probably more diamonds than places to sell them, but the market is very smartly run to prevent oversupply from becoming evident and driving down prices or filling up the demand.

this comment reminded me of something a bit off topic for this thread perhaps but amusing nonetheless... at thanksgiving I was visiting with family and I confided to my hosting aunt my stone (I showed no one else there) and she was like wow, how big is that? and I said almost 3 carats (I rounded up hehe - she doesn''t know points anyway) and now my aunt loves diamonds - has had a few diamond rings made.... but she said, "that must have been expensive, what, three thousand dollars?" LOL! I laughed... then she scoffed and said oh well I''d rather have a ring all covered in little diamonds than just one big one. I smiled. Apparently she thinks that if the stones she buys are 1000 a carat, so must mine be. She has no intention to graduate to a larger diamond. To her a thousand facets are better than 58

 

[yellowsparkles]

Speaking of articles....

Anyone remember the article in National Geographic about Diamonds? There was a photo of tiny diamonds with a strawberry.... the diamonds were as diny as the black dots on a strawberry. I just thought that was incredible. Can you imagine cutting those?

 

[diagem]

Date: 4/27/2007 11:50:49 AM
Author: oldminer
1980 was a crazy period for diamonds. Diamonds had been at their height of value and crashed afterwards.

The drive in the market comes from rising standards of living in Asia. It also comes from new technology allowing the setting of diamonds into wax before casting. This saves lots of time and labor. It allows more mass production.

People in rising countries like diamonds but can't all afford single stones yet. they are into tiny diamonds, set in groups, to flesh out their jewelry. They will graduate to larger diamonds in time.

There are probably more diamonds than places to sell them, but the market is very smartly run to prevent oversupply from becoming evident and driving down prices or filling up the demand.

You are right about that there are way more Diamonds mined today...
But I am not sure that there are more Diamonds than places to sell them at..., especialy in the larger high quality category...

As far as I am informed..., DeBeers are marketing everything that comes out of the ground these days...
And rumors are: that the "Sight-Holder" list will shrink substantially in 2008...

 

[Cehrabehra]

Date: 4/27/2007 12:20:08 PM
Author: DiaGem

You are right about that there are way more Diamonds mined today...
But I am not sure that there are more Diamonds than places to sell them at..., especialy in the larger high quality category...

As far as I am informed..., DeBeers are marketing everything that comes out of the ground these days...
And rumors are: that the ''Sight-Holder'' list will shrink substantially in 2008...

what does this mean?

 

[richipat]

Sara, basically it means that rough diamonds are sold from the mine to specific groups -- about 80 major diamond cutting firms that take the rough and progress the diamond thorugh the marketplace from there.

a quote:

"It is important to dispel a popular misconception. Some diamond retailers suggest that they buy their diamonds directly from diamond mines and that this results in significant cost savings to you, the consumer. In the first place, most of the retailers who make this claim are not diamond cutters. They do not have the capacity to manufacture finished diamonds from rough stones produced in the mines. Also, for the most part, the distribution of rough diamonds is strictly controlled. An international monopoly known as the DeBeers Corporation buys and distributes approximately 60% of the world's uncut, rough diamonds and controls the prices of the remaining diamond rough indirectly. DeBeers Corporation's "single-channel" marketing of diamonds determines the price of rough diamonds and makes it almost impossible for diamond manufacturers or others to "beat the system" by purchasing rough diamonds at prices significantly below DeBeers' established prices.....

DeBeers sells these rough diamonds to approximately 80 "sightholders" (generally, major diamond cutting firms) which are the only companies authorized to buy rough diamonds directly from DeBeers. The sightholders are invited to attend a "sight" held at DeBeers Central Selling Organization in London, England approximately ten times a year (acceptance of the invitation is mandatory). Each sightholder is given a box of diamonds. The price of the diamonds is fixed by DeBeers and is not subject to negotiation. Even rough diamonds marketed outside of DeBeers are priced in accordance with the price structure established by DeBeers' Central Selling Organization.

From 2002 through the beginning of 2005, DeBeers has reduced the number of sightholders from approximately 120 to 80, as a part of it's "Supplier of Choice" program."

to read the rest, go here.

http://www.dimonz.com/diamondmarket.htm


DeBeers is a mighty machine, with a powerful marketing arm, that has been super successful over the years in controlling diamonds and their prices.
I find it fasinating, because now, they are getting a little competition from Canada and Russia and Australia.

 

[Richard Sherwood]

Date: 4/26/2007 6:10:57 PM
Author:richipat
Surfing the net and found this older (1980''s) and long article about the history of diamonds, how DeBeers created marketplace desire for different sizes, etc. and a dire prediction about the future.

http://www.theatlantic.com/doc/198202/diamond

In my opinion, this article was one of the most poorly researched, sensationalistic and irresponsible articles I have ever read in regards to the diamond industry.

 

[RockDoc]

Date: 4/28/2007 12:36:52 AM
Author: Richard Sherwood

Date: 4/26/2007 6:10:57 PM
Author:richipat
Surfing the net and found this older (1980''s) and long article about the history of diamonds, how DeBeers created marketplace desire for different sizes, etc. and a dire prediction about the future.

http://www.theatlantic.com/doc/198202/diamond

In my opinion, this article was one of the most poorly researched, sensationalistic and irresponsible articles I have ever read in regards to the diamond industry.

Curious Richard........

What parts of the article do you believe are poorly researched?

I read it and thought that much of it was pretty factual of the happenings of what I remember. I will grant you the author picked some buyers that typically tried to offer maybe really low prices, but generally when an article is written and "professionally" published, the publisher has a staff of fact checkers that verify the author''s claims.

Articles where I''ve been referred to in previous publications, I''ve actually had the fact checking staff of the publications contact me about how whatever I quoted in articles verified independently.

I suppose not every publication would do this, but I think the "larger" ones do as an ongoing practice.

In my own research and experience with many who buy used jewelry, the offers are more often than not, are pretty low.

Regards,

Rockdoc

 

[JohnQuixote]

Mr. Epstein is better known for his more ‘tabloid’ work; “The Diamond Invention” (originally published as “The Rise & Fall of Diamonds.”). Discussion in this thread.

CaptAubrey put it well:

Date: 7/31/2006 12:58:34 PM
Author: CaptAubrey

Epstein's work is--how shall we put this?--enthusiastic but not entirely unbiased. It's worth reading but definitely needs to be put in perspective with other research. That book especially is wildly out of date now--it's been years since I read it, but I seem to recall that he was predicting imminent collapse of the whole diamond industry and that by now diamonds would be as cheap as dirt. Obviously it hasn't worked out quite that way.

Richipat, the piece you linked is not as extreme but it was also written at a time when things were much different.

Since then new sources have resulted in a vast increase in global production. In the mid 1980s only 50 millions of carats were being produced per year, with over 80% of supply controlled by the CSO/DeBeers.Now the industry produces more than 120 million carats annually.Other players like Rio Tinto and BHP Billiton have assumed control of a big chunk of the market.Mines controlled by DeBeers still account for 40% of world production by value but the ‘legendary’ days of the Syndicate and CSO are in the past. By 2000 DeBeers was forced to reinvent themselves, launching consumer-level promotions, revising practices with their sightholders and even actively entering the retail market (which is another story).The CSO became the DTC and instead of driving supply the company's aim is to drive demand.

I’ve planned to give a webinar on this. How Oppenheimer ‘saved’ DeBeers during the depression, the NW Ayer campaign and the rise of the CSO are an iconic story!The geopolitical & economic changes since 1990 which have changed the landscape of the modern diamond industry are a worthy sequel.

 

[richipat]

John,

Thanks so much for the link and additional information. All in all doing lots of reading it seems that everytime something new comes around -- a new mine, a new way to create diamonds in the lab, people predict the fall of the diamond market. And so far, it hasn''t fallen yet. I will definelty check out the resources you mentioned.

As far as diamonds being dirt cheep -- that would probably be a jeweler''s nightmare, but it would be a girl''s dream come true.

Can I join your webinar?

Thanks
Pat