Rand_alThor
Rough_Rock
- Joined
- Jan 27, 2004
- Messages
- 82
I have a few comments to add based on what Bob said in a previous post.
I''ve spoken to several B&M stores and am hearing the same common theme amongst them all. Good quality stones these days are hard to come by. On furthur iniquiry I was told that the phenomenon is artificially induced (De Beer cartel anyone?). Meaning the siteholders are holding back on selling the premium stones to unload the existing inventory of average diamonds.
Even the saleswoman at "Tiffanys" told me that they were having a hard time locating good quality stones. IMHO if a store like Tiffanys is having a tough time finding good stones to cut, the effect on the smaller shops must be even more drastic. Meaning, if a slighly above average stone comes to the market more consumers request the same stone; demand exceeds the supply, driving prices upwards. Everyone in the chain, but the consumer profits from this scenario. Additionally the standard or quality of stones that the average consumer expects to see is lowered while prices drive upwards.
A clear example is the price disparity quoted on the same stone offered for sale by various vendors including highly recommended vendors by people on this board. I will not name names, but I have a list of 18 stones and each stone is being offered at different sperads. (I define spread as the difference between the highest and the lowest asking price on the same stone). As these stones in my list are being seen multiple times I notice that the same spreads are widening. (Meaning dealers are raising the asking prices for the same stone.)
Another phenomenon that I want to briefly mention is the effect of "changing hands". In this scenario the more times the stone changes hands, the higher its quoted price. A clear example would be if you were to walk into an automobile dealership and ask for a very specific car. Sometimes the dealership does not have the exact car that you are looking for, but can swap cars from a nearby dealership if it meets your specifications. The auto dealer cannot give you a good price because he/she is paying a higher price to get the same car. If you buy the stone from their inventory, it is almost always cheaper. The same applies to diamonds. If you go to a dealer and they dont physically own it and have to get it from another retailer or dealer, you are paying a premium. In some instances it is necessary to pay that premium. So allow for that in your budget.
Add to the melting pot, the effect of the already weaking dollar to this equation and suddenly more investors begin to put their money in commodities like gold, silver, diamonds andforeign currency. This effect, furthur serves to drive up the prices of these assets.
Additionally, I theorize that most siteholders (non US based) are waiting for the dollar to strengthen before loosening up their inventory. This is because I believe these siteholders may get paid in US dollars. If the US dollar is weak, then the pricing power of the same 500K is not the same as it would be were the US dollar stronger. At the moment they may be focus on selling their premium supply to those markets whose cuurency is stronger, thereby maximising their profit.
In conclusion, the question I ask myself is, whether this is the right time to buy a diamond in today''s market. I would not recommend the fancies unless there is an absolutely must. There are still some great deals out there for the exacting buyer, but those deals, like the perfect radiant diamond I promise to get for you nicrez, are rare.
It is my belief that we will see an increased supply of diamonds in the coming months. In that lot we''ll see the premium stones and the not so premium stones and when they are gone, the cycle will repeat itself. In the meanwhile whats an average buyer to do?
My humble advice: Keep your ears to the ground and keep looking and never settle!!
I''ve spoken to several B&M stores and am hearing the same common theme amongst them all. Good quality stones these days are hard to come by. On furthur iniquiry I was told that the phenomenon is artificially induced (De Beer cartel anyone?). Meaning the siteholders are holding back on selling the premium stones to unload the existing inventory of average diamonds.
Even the saleswoman at "Tiffanys" told me that they were having a hard time locating good quality stones. IMHO if a store like Tiffanys is having a tough time finding good stones to cut, the effect on the smaller shops must be even more drastic. Meaning, if a slighly above average stone comes to the market more consumers request the same stone; demand exceeds the supply, driving prices upwards. Everyone in the chain, but the consumer profits from this scenario. Additionally the standard or quality of stones that the average consumer expects to see is lowered while prices drive upwards.
A clear example is the price disparity quoted on the same stone offered for sale by various vendors including highly recommended vendors by people on this board. I will not name names, but I have a list of 18 stones and each stone is being offered at different sperads. (I define spread as the difference between the highest and the lowest asking price on the same stone). As these stones in my list are being seen multiple times I notice that the same spreads are widening. (Meaning dealers are raising the asking prices for the same stone.)
Another phenomenon that I want to briefly mention is the effect of "changing hands". In this scenario the more times the stone changes hands, the higher its quoted price. A clear example would be if you were to walk into an automobile dealership and ask for a very specific car. Sometimes the dealership does not have the exact car that you are looking for, but can swap cars from a nearby dealership if it meets your specifications. The auto dealer cannot give you a good price because he/she is paying a higher price to get the same car. If you buy the stone from their inventory, it is almost always cheaper. The same applies to diamonds. If you go to a dealer and they dont physically own it and have to get it from another retailer or dealer, you are paying a premium. In some instances it is necessary to pay that premium. So allow for that in your budget.
Add to the melting pot, the effect of the already weaking dollar to this equation and suddenly more investors begin to put their money in commodities like gold, silver, diamonds andforeign currency. This effect, furthur serves to drive up the prices of these assets.
Additionally, I theorize that most siteholders (non US based) are waiting for the dollar to strengthen before loosening up their inventory. This is because I believe these siteholders may get paid in US dollars. If the US dollar is weak, then the pricing power of the same 500K is not the same as it would be were the US dollar stronger. At the moment they may be focus on selling their premium supply to those markets whose cuurency is stronger, thereby maximising their profit.
In conclusion, the question I ask myself is, whether this is the right time to buy a diamond in today''s market. I would not recommend the fancies unless there is an absolutely must. There are still some great deals out there for the exacting buyer, but those deals, like the perfect radiant diamond I promise to get for you nicrez, are rare.
It is my belief that we will see an increased supply of diamonds in the coming months. In that lot we''ll see the premium stones and the not so premium stones and when they are gone, the cycle will repeat itself. In the meanwhile whats an average buyer to do?
My humble advice: Keep your ears to the ground and keep looking and never settle!!
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