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OT: Diamonds = Rip-off??

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vir0n

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I finally made the dive aand bought the ERing. I paid what I budgeted and got pretty much what I wanted. It''s a custom setting so a couple weeks time will tell if a REALLY got what I wanted.

I can''t help by feel like, regardless of what I paid, I am getting ripped off. It just seems like the diamond/jewelery industry is just so tainted and manipulated it makes me wonder. Okay, so you can''t put a price on love and its symbols, blah blah. However, you can put a price on a diamond...are we honestly really getting something that is truly worth $XXXX dollars? Let''s face it, compared to how much they go for, diamonds cost next to nothing to pull out of the ground.

Comments?
 
Most rough diamonds you dig out off the ground cannot be used for jewelry. You have to move tons of dirt to uncover usable stones. And then there is the time a cutter spends on your diamond to turn it into a sparkly stone.

When I started looking for engagement ring diamonds I had the same feeling. I saw price differences for the same 4Cs of $3000. Once I found PriceScope and looked around through eight B&M jewelers that changed.
Now I see diamonds as a wonderful mixture of beauty (sparkle, H&A) and science (proportions, HCA).
 
Is that how you are going to feel about your lady''s ring every time you look at it? If so, then my opinion is that you needed a serious talk with her about this matter.

My BF felt exactly the same way you did. He did not mind spending any amount on our symbol, but he was very uneasy about spending it on a diamond. We''ve talked about what it meant to me, what it meant to him, what we both wanted, and we came up with a solution. We are both equally excited about the ring and the journey we will be traveling together for the rest of our live. If you are interested, here is a glimpse of my ring to be.

I am truly sorry that you feel this way about your purchase, and if I were your GF, I would be unable to enjoy the ring knowing how you see it. I do think you should have talked to her about it.
 
No, I haven''t had a serious discussion about this particular aspect with her. I''ve "joked" about the blood diamond thing (which is no laughing matter).

I suppose I''m an EXTREMELY practical person. Weddings, rings, honeymoons mean nothing to me. What matters most is the person who I will be sleeping next to, raising a family with, growing old with, etc. As generous as her family is, I rather take the money and invest it. Yes, I''ve told her this, yes we will compromise.
 
Date: 4/17/2008 10:43:11 PM
Author:vir0n
I finally made the dive aand bought the ERing. I paid what I budgeted and got pretty much what I wanted. It''s a custom setting so a couple weeks time will tell if a REALLY got what I wanted.

I can''t help by feel like, regardless of what I paid, I am getting ripped off. It just seems like the diamond/jewelery industry is just so tainted and manipulated it makes me wonder. Okay, so you can''t put a price on love and its symbols, blah blah. However, you can put a price on a diamond...are we honestly really getting something that is truly worth $XXXX? dollars Let''s face it, compared to how much they go for, diamonds cost next to nothing to pull out of the ground.

Comments?
Click to expand...
That''s irrelevant. The question YOU should ask is: "Am *I* really getting something that is truly worth $XXX?" This, of course, is more than just a financial question, and only YOU can answer it for yourself. What value do you put on HER enjoyment of it? What are the perceived negative consequences of her (and you) NOT having an ER, for whatever reason? etc., etc. (I am assumoing the OP is male -- but the idea holds either way).

Think about it ... are braces worth it? Are luxury cars worth it? Is cable TV worth it? .. and so on and so on.

--ECQ.
 
Date: 4/17/2008 11:12:37 PM
Author: vir0n
No, I haven't had a serious discussion about this particular aspect with her. I've 'joked' about the blood diamond thing (which is no laughing matter).


I suppose I'm an EXTREMELY practical person. Weddings, rings, honeymoons mean nothing to me. What matters most is the person who I will be sleeping next to, raising a family with, growing old with, etc. As generous as her family is, I rather take the money and invest it. Yes, I've told her this, yes we will compromise.
Click to expand...

If I sound offending, it is not my intent. To me, your post sound like "Look at me! I'm so different! I'm not materialistic at all! Here me, here me!". Truth is, There are plenty of people who think like you. How you go about it is up to you.
I told my BF exactly what I've highlighted. He was delighted. If you say you do compromise, then I'm sure you two will find an agreeable solution. Good luck!
 
Date: 4/17/2008 11:22:34 PM

That's irrelevant. The question YOU should ask is: 'Am *I* really getting something that is truly worth $XXX?' This, of course, is more than just a financial question, and only YOU can answer it for yourself. What value do you put on HER enjoyment of it? What are the perceived negative consequences of her (and you) NOT having an ER, for whatever reason? etc., etc. (I am assumoing the OP is male -- but the idea holds either way).


Think about it ... are braces worth it? Are luxury cars worth it? Is cable TV worth it? .. and so on and so on.


--ECQ.
Click to expand...


Of course she would like an ER. Of course I want to see her happy - there is no questions about that. But from my personal viewpoint, I just don't see where the actual value of a diamond comes from. What gives it it's price? Aside from some very few industry applications, I just don't see where the value comes in. Last I checked, diamonds weren't traded on a commodity exchange.

Look, there is some obvious misunderstanding about my post. I am not someone who wags his fingers at people saying "shame on you for spending all that money when you could have donated that to starving African children in the communities surrounding diamond mines." I appreciate the finer things in life like the next person: I enjoy fine food, fine wine, fine clothes, etc.
 
Date: 4/18/2008 12:36:55 AM
Author: vir0n
Of course she would like an ER. Of course I want to see her happy - there is no questions about that. But from my personal viewpoint, I just don't see where the actual value of a diamond comes from. What gives it it's price? Aside from some very few industry applications, I just don't see where the value comes in. Last I checked, diamonds weren't traded on a commodity exchange.

Look, there is some obvious misunderstanding about my post. I am not someone who wags his fingers at people saying 'shame on you for spending all that money when you could have donated that to starving African children in the communities surrounding diamond mines.' I appreciate the finer things in life like the next person: I enjoy fine food, fine wine, fine clothes, etc.
Click to expand...
To answer the highlighted question directly, my guess is the law of supply and demand artificially created by smart marketing personnels around the 20's.
It's all changing though. People are getting more educated, and even with the convenience of internet the price isn't going down THAT much. So my other guess is either large, beautifully cut diamond have a genuinely low supply, or there are more "uneducated" buyers out there than I imagine.
 
"I just don''t see where the value comes in. Last I checked, diamonds weren''t traded on a commodity exchange. "


To be honest, to answer this question with much substance or merit, you would probably either have to do alot of your own reserach into both diamonds and economics, or take a course at the GIA!
I''m not being sarcastic, its just a very broad Q.
As to the blood diamond thing, you will find that despite common understanding due to hollywood constructs mainly, you will be hard pressed to come across conflict diamonds. The Kimberley Process and other practices that I''m not familiar with are there to prevent that kind of trading.
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I just don''t see where the actual value of a diamond comes from. What gives it it''s price? Aside from some very few industry applications, I just don''t see where the value comes in. Last I checked, diamonds weren''t traded on a commodity exchange.
Click to expand...

Actually, diamonds are becoming more and more "commoditised".

The thing that make diamonds so valuable is that they are a natural resource. As an allotrope of carbon, diamond is not rare in nature, however gem quality diamonds are very rare. Therefore, like any natural resource, the price is based on how much demand there is vs how much the earth can produce.

Similarly, gold doesn''t have a vast array of practical applications, however it''s rarity lead people to use it as a primary form of currency for many years.
 
Yes, I have a comment. What about other industries? Like the ones that measure their profit in the 10's of billions of dollars- like gas companies- like large retailers. Are we getting ripped off by them?

It seems to me there should be a balance between the interests of producers, consumers, and employees. Is there a good balance among the interests in all involved in the jewelry industry? I don't know. I know diamonds are beautiful when cut well and described accurately and I know I want one.
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diamonds are kewl what other reason is needed too buy one?
Bright shiny rocks have been prized pretty much forever as gifts for a guys gal.
Look into the history of trade beads and the American Indians.
Shells used as money..
Throughout history there are millions of examples.

http://en.wikipedia.org/wiki/Shell_money

http://www.thefurtrapper.com/trade_beads.htm

http://en.wikipedia.org/wiki/Slave_beads

http://www.sciencedirect.com/science?_ob=ArticleURL&_udi=B6WH8-4FJKWPX-2&_user=10&_rdoc=1&_fmt=&_orig=search&_sort=d&view=c&_acct=C000050221&_version=1&_urlVersion=0&_userid=10&md5=b307bda513b2aa341d0525b84b41f2b2

http://books.google.com/books?id=mBs2AAAAMAAJ&pg=RA1-PA421&lpg=RA1-PA421&dq=roman+beads&source=web&ots=ZVUVF63e2a&sig=J3kV25VSL-4JU6LBjzY6oYJEaKM&hl=en#PRA1-PA421,M1

http://books.google.com/books?id=wvIwsjvDAvgC&pg=PA80&lpg=PA80&dq=roman+beads&source=web&ots=lLnjVDoA3b&sig=OTET52rdkGdhkUPhjuuMzymIUGs&hl=en
 
Do you drive a car? How do you feel about the fact that a $20K car is worth less every year? How about the fact that it will be worth about $18K less than you paid for it after 15 years?

Just something to think about if you''re "value" oriented. Other than real estate (and lately that can be debated) there are few items you purchase that hold their value.

I bought myself a 2 carat diamond and every time I look down at my finger I smile. My condo and my car don''t bring me nearly the same feeling of pleasure. One small luxurious, impractical purchase can bring a lot of happiness
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Wow...I really hope your future fiance doesn't get a whiff of your feelings about her diamond ring. If she knows that's how you feel, she probably won't like the ring (or maybe even you) that much.

Furthermore, if you did your research and bought an ideal cut diamond online or at a competitively priced B&M store, you didn't get ripped off. You paid a fair price, comparatively speaking, for a quality product. If you bought at an overpriced B&M, well, it's your fault for not doing the research.

P.S. Something tells me it doesn't cost "next to nothing" to pull a gemstone quality diamond out of the ground, cut it and polish it into an attractive diamond, get the diamond to a wholesaler and then to a retailer.

ETA that you write that you "got what I wanted." Did you get what your future fiance wants? I hope so.
 
This is a pretty common thought process for men. Most just don’t value the symbolism of diamonds in the same way that women do. Although diamonds actually hold their resale value better than most of the things you buy, it’s not a financial asset and ‘value’ is not a concept that is carved in stone. What makes them valuable is that people seem to like them. As Storm points out so eloquently, it’s because they’re kewl.

Lets go back to the symbolism issue because that’s the heart of the issue. If she can look at her finger and be reminded every day for the rest of her life that she is loved then you got good value for your money, not matter what you spent. If it reminds her that she’s proud to be married to you instead of some other schmo then you got your money’s worth. A plain silver band can have this affect but it all depends on her thought processes. The difference is in her heart, not on her hand. What you’re doing here is fulfilling one of her dreams at a significant expense and that’s of no direct benefit to you. That says something too. You've already answered the question yourself.

Date: 4/18/2008 12:36:55 AM
Author: vir0n
Of course she would like an ER. Of course I want to see her happy - there is no questions about that.
Click to expand...

That’s what makes diamonds valuable.

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

See this month''s issue of Trader Monthly. Sounds like they will be soon. And I''ll trade ''em!

I''m also a very practical person who is a trader by profession and very sensiitve to the "value" of something.

My solution is I buy my own diamonds and jewelry. My husband is happy and I''m happy!
 
Date: 4/17/2008 10:43:11 PM
Author:vir0n
Let''s face it, compared to how much they go for, diamonds cost next to nothing to pull out of the ground.
Click to expand...
Funny you should say this. My father is actually in the business of "pulling them out of the ground" and I won''t say it costs next to nothing. I know very little about it to be honest, but I know there were costs of machines to pump water out of ponds, dig up gravel, wash them, filter them, etc. Oil price to run these machines are considerable in Africa. Labor is cheap but still adds up. Plus travelling fees, and other misc costs, etc and it''s a small investment.

Of course it''s nothing compared to the final price of the stones, but regardless they don''t pop out of the ground by themselves either
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Diamonds have a "value" due to having a demand from people who wish to own them. A lot of this demand has been driven by marketing, but in other parts of the world where the banking systems are weak or the governments are too strong, diamonds, gems, gold, etc represent transportable wealth which is far more difficult to confiscate and regulate than cash in a local bank. Being in our free environment here makes one forget that not everyone lives the way we do.

Also, the idea of being ripped off when you willingly pay for something is pretty funny. No one makes you do it. You have reasons, maybe some you dislike, but still reasons, why you decide to take the plunge on any luxury item. If you want to pay less, you have ways to find better prices, but buying from a retailer, even a low mark-up, Internet one, is not the cheapest way. You can find cheaper prices yet from private sellers with used stones. It is more chancy, but you can do better rather than gripe about the reality of buying new and paying retail. Get over it or do something about it, would be a better suggestion that may actually save you money. It won't save any time however and time is money to most of us.

Remember, money does not disappear once it has been spent or made on an item. It goes to pay other's bills, put into the banks for loaning to others, invested in future projects which give employees income to spend. Money is much like water. It is an endless cycle although through polution or inflation we can screw both of these endless cycles up pretty well. The huge money paid to oil companies today goes for future oil drilling and progress to extract more from a declining supply. The "profits' go to tax, salaries, creditors, stockholders and back into the stream of commerce. It does not go into a box and become burried. Without spending money, it really has no value.

I hope you find some peace with the way things are. Thinking the process through leads to a broad understanding of the great position we are fortunate enough to be in. Sure, things can be better, but they could be much, much worse. Our glass is way more than 1/2 full.
 
What is anything worth? Cars, stocks, an ounce of gold, a dinner...? The price someone is willing to pay for it. If someone is really so concerned about the financial aspect and feeling like the industry is ripping them off, they should probably be looking on the secondary market. If you do your research, odds are you won''t take a bath if/when you sell it. I mean, if someone else will pay you what you paid, that pretty much defines being "worth the money," ... jmho
 
Date: 4/18/2008 8:45:54 AM
Author: thing2of2
Wow...I really hope your future fiance doesn''t get a whiff of your feelings about her diamond ring. If she knows that''s how you feel, she probably won''t like the ring (or maybe even you) that much.

Furthermore, if you did your research and bought an ideal cut diamond online or at a competitively priced B&M store, you didn''t get ripped off. You paid a fair price, comparatively speaking, for a quality product. If you bought at an overpriced B&M, well, it''s your fault for not doing the research.

P.S. Something tells me it doesn''t cost ''next to nothing'' to pull a gemstone quality diamond out of the ground, cut it and polish it into an attractive diamond, get the diamond to a wholesaler and then to a retailer.

ETA that you write that you ''got what I wanted.'' Did you get what your future fiance wants? I hope so.
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I''m with thing 2 of 2 on this subject and your attitude toward it. If you''re just being a sh** disturber, that''s one thing, but if you truly mean what you say, I''d advise your fiancee-to-be to race as fast as she can away from you.
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HI:

I know how you feel b/c I feel exactly the same way about all the plasma TV's, computers and satallite dishes in our household. Ripped off from cheesy big box stores, products that are outdated in less than a year after purchase.

But it makes my DH very happy--and b/c I do not agree with it does not make it valueless. Sometimes things like this are not congruent with our personal value systems, but it is for others therefore we just have to accept it. And gripe on public forums
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cheers--Sharon
 
You know what *I* think is a total waste of $$$ ... concerts & baseball season tickets. I''d wager that we''ll spend more in our lifetime (as a couple) on THOSE eye-rolling, money burners than was spent on my ER.

Everyone values things differently. But its important to start considering what SHE values ... as you''ll be doing it for a long, long time to come. Want to talk practical? How practical would it be to see her look a lovingly a million times a day at an ideal-cut sparkly masterpiece that she''s probably been dreaming of since she was old enough for fairytales ... and know that you wanted her to have it. That you put her wants above your own self-interest & "nature" in this particular case.
 
Actually, I think its fair to say that diamonds have an intrinsic value greater than currency. The government can print as many $100 bills as it wants. The bill only has value because we perceive is as having value. Diamonds on the other hand are relatively scarce. There is a finite supply and we don''t know where they are (precisely). No one can simply decide to make 1000 4ct D IF stones tomorrow.

Worldwide, you can trade diamonds for good and services. With a little work, you could probably find someone who would accept monthly rent in diamonds in most major cities. In addition to being valued for their beauty, diamonds have many practical uses as well.

However, that is not to say that retail price equals the intrinsic value. Clearly the retail price includes other factors including production costs, marketing, profits, etc. Clearly diamonds have historically had their costs artificially supported by restricting supply while attempting to increase demand.

Compared to $700 purses, $200 shirts and $60/mth phone bills, diamonds actually seem to be a pretty reasonable value, at least in my opinion.

To the poster who said that gold doesn''t have many practical uses, I''d say that while you may not see many practical uses for gold, its probably in all of your electronic circuits and may even be in your mouth.
 
Value in your question can mean a lot of things.

You can put a value on an item by its use, like a car, which could warrant a value because it transports you to where you want to be. With diamonds (jewellery-diamonds, I mean) not having an intrinsic use, one could argue that they have no value at all, as opposed to industrial-quality diamonds, because they serve an economic or technical purpose.

In another way, value can be the amount of money consumers are willing to pay for an item. For cultural reasons, possibly enforced by publicity and marketing, there is a worldwide demand for diamonds, and that is growing. Again, you could argue that this is an artificial demand, but the fact of the matter is that it exists. And others in this thread have already pointed out other consumables of which the value is also defined by culture only.

Finally, a third way of looking at value is considering the cost of bringing an item to your doorstep. Here, your view of the value of diamonds might be incorrect because of the history of diamonds, where a monopoly used to create an artificial shortage (compared to consumer demand). This practice is not current anymore, so we can look at the actual cost right now. And then, it becomes complicated.

Diamonds worldwide are traded in one currency, the USDollar. However, most diamond mining countries have another currency. With the overall devaluation of the American currency, many diamond producing countries see their output going down in value these last years. This goes up to a number of mines just not being profitable anymore. You must consider that mining is not a cheap operation. It involves a considerable investment in equipment and personnel, and miners naturally first develop the most promising areas with the highest and cheapest production, and as a mine gets older, costs of mining go up while production goes down. Even in alluvial artisanal digging operations, this same effect plays. There is a high investment cost of removing a first layer of non-diamond-bearing ground and as the operation gets older, production generally goes down.

With no major diamond-finds in the past decade, all mines are running into a higher cost for their production. Of course, some mine are highly profitable still, compared to the average price of rough, but this is also an incentive to keep prospecting for new finds. A negative aspect in this comparison is in the field of industrial diamonds. Most diamond-production is not for jewellery but for industrial use. But in the past decades, industry has slowly moved away from using natural diamonds towards using synthetic diamonds. Because of this, the value of industrial diamonds has not risen with the economy, and the value of jewellery-diamonds becomes more and more important for miners.

When a retailer buys a polished diamond from a wholesaler or a cutter, 70 to 75% of the value is defined by the cost of the rough diamonds. Add to this the added value of cutting and of marketing it worldwide.

The markup of the retailer is mostly defined by his efficiency. Retailers who turn their inventory once a year or even more slowly have to work with a very high markup in order to survive. Very efficient retailers, who turn their inventory very quickly, can afford to be very competitive with a low mark-up.

So, if you look at value as a cost-issue, you will see that you have considerable value if you buy from an efficient and very competitive retailer.

Live long,
 
To what Paul as said I will add only a little. (I am guessing it would not be appropriate for me to merely sigh and say, "my Hero!)

Twenty years ago I was taken aside more than once by my peers and reprimanded since I was working out of a small office and charging only a 20% profit. Typical comments included nice things like "What the H*LL do you think you are doing you moron?" to more harsh comments about being too stupid to breathe if I did not know you needed to mark diamonds up at least 100% in order to be profitable.

One jeweler even threatened to sue me for accurately telling one of his "clients" that her J-I2 diamond that she won in an advertising promotion was not worth the 6,200 appraisal that came with it, nor even the $2k plus tax bill that she paid for winning a 6k stone. He said I was not even a REAL jeweler.

(Side note, he went bankrupt soon after, a victim of his own lack of ethics coupled with his lack of knowledge about his product. I know he was totally ignorant as he once told a client he was mounting one of my stones for that her D-VVS1 GIA papered diamond was a G-VS1 since we never got any thing higher than that in this country, the Arabs get all of the good diamonds. Apparently he was not only stupid, but racist as well.)

But I digress...

I contentedly went about my life selling diamonds and jewelry for a small markup, until the internet came along and suddenly I found myself wanting to tell the idiots selling diamonds that, "Hey, don''t you know you need to use at least a 20% markup to survive?"

Took me a couple of weeks to get my head unstuck and get back into the game and I look fondly at the time when I could make an exorbitant markup like 20%. Of course I now get to sell all over the world and not just in Boise, so it has MORE than evened out.

So as far as comments about us jewelers on the internet making too much money and are our diamonds really worth so much, well, I think you know my answer. Retailers with retail stores have higher overhead and need higher pricing, but even they have mostly come down to more realistic markups on the diamonds and make the majority of their profit on the mountings.

It is a competitive world out there and I am proud to be a part of it. And yes, Virginia, there is a Jeweler Clause, and he has great value for you in those sparklies that your ladies love. Wrap your heart around the value of the symbol as the symbol is where the real value lies, long after the minuscule profits that the vendor of that symbol are forgotten.

Wink
 
I KNOW prices on diamonds are artificially inflated, hence the Diamonds law suit agains the de beers that was mentioned in one of the posts recently. I KNOW it because my husband works for a lawfirm involved in the suit. That being said, I'm in the market for a nice stone right now. As long as people buy dimonds, they are worth it.
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Date: 4/19/2008 3:55:31 PM
Author: cectra79
I KNOW prices on diamonds are artificially inflated, hence the Diamonds law suit agains the de beers that was mentioned in one of the posts recently. I KNOW it because my husband works for a lawfirm involved in the suit. That being said, I''m in the market for a nice stone right now. As long as people buy dimonds, they are worth it.
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Click to expand...

I think perhaps the correct term, as illustrated by the comments of Herr Slegers is were.

Currently I do not believe "diamonds are artificially inflated," to be any longer a valid comment, but I am only a seller of these beauties, so it is possible I am wrong.

Wink
 
Date: 4/19/2008 3:55:31 PM
Author: cectra79
I KNOW prices on diamonds are artificially inflated, hence the Diamonds law suit agains the de beers that was mentioned in one of the posts recently. I KNOW it because my husband works for a lawfirm involved in the suit. That being said, I''m in the market for a nice stone right now. As long as people buy dimonds, they are worth it.
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Click to expand...
Correction: the lawsuit covers a period from 1994 through 2006, and is not talking about the current situation. And the experts in the lawsuit have calculated this artificial inflation at an overcharge by De Beers'' of 4.85% over that period.

For De Beers'', on its total sales, that is a huge amount of money. For a consumer, having bought a stone for 5,000 USD, in which say 50% accounts for the mark-up of the retailer and the added value of the cutting-distribution channel, the actual overcharge is 4.85% of 2,500, being just over 100 USD.

Live long,
 
They settled very very early to avoid even more bad publicity. In these kinds of cases, you never know what can be uncovered...
And of course they will tell you, oh maybe we did something long long time ago, but we do not do any bad things any more... Do you believe it? As a reseller, you''re eligible to enter the class... I''m definitely going to but it is irrelevant to this discussion. I really do hope they stopped their questionable practice, noone likes to think they were ripped off! LOL
 
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