Review - Rapaport "State of the Diamond Industry" JCK 2008

[Clark McEwen]

Date: 6/13/2008 2:38:35 PM
Author: John Pollard

Date: 6/9/2008 1:44:53 AM

Author: DiaGem


John..., just as you mentioned that: ''...I think we already have an all-access US pricing guide apart from Rap. It''s called Blue Nile. Another is Pricescope....'',


DeBeers and other major rough producers have a new and improved ''Worldwide pricing guide'' tool the get the information necessary...


Its called ''tenders''..., you have been to them..., a great tool for the rough producers who chose not to follow DeBeers (DTC) old pricing system..


No more guess work..., throw some rough at a hungry market and answers would follow...

Some will say it is not the true pricing level..., and I agree..., but if you study DeBeers''s (Diamdel) new tendering system, you will notice a birth of a new and potentially efficient system which will bring the numbers closer to their reality....

In a world of tenders and auctions do you think the big players would try and price the others out of the game? (I know the largest players also carry the largest debt so this may not be practical). Still, if that were to happen, wouldn''t the de facto result be the return to a limited collection of buyers with financial power; sightholders for all practical purposes?

Hey John,

I''ve been watching this topic with interest and have a comment to make with regards to tenders.

Being the guy that got BHPB to start tendering a portion of their goods I have some experience with this. I think that any producer that shifts their whole production over to this mode of distribution is making a huge mistake. Tenders like window sales or regular customer sales (Sightholders, Core Customers, Select Diamantaires) are tools to be pulled out of the tool box when necessary but are not to be used exclusively or in a vacuum. Sure they are good when things are hot but what happens when the market cools or how do you sell the cheap goods when nobody wants them? A healthy diamond distribution policy includes all avenues available in various combinations depending on the temperature of the market.

Cheers,
Clark

 

[strmrdr]

Date: 6/13/2008 3:24:56 PM
Author: Clark McEwen



Being the guy that got BHPB to start tendering a portion of their goods I have some experience with this. I think that any producer that shifts their whole production over to this mode of distribution is making a huge mistake. Tenders like window sales or regular customer sales (Sightholders, Core Customers, Select Diamantaires) are tools to be pulled out of the tool box when necessary but are not to be used exclusively or in a vacuum. Sure they are good when things are hot but what happens when the market cools or how do you sell the cheap goods when nobody wants them? A healthy diamond distribution policy includes all avenues available in various combinations depending on the temperature of the market.


Cheers,

Clark

How is forcing people to buy something they don''t want good for the industry?
If there is a market for them people will buy them.
If the current cutters don''t want them someone will spring up to take advantage of the opportunity.
Then there will be growth in the industry which is very very good.
Forcing cutters to take them limits the opportunity for new players and in the end shrinks the market.

 

[Clark McEwen]

How is forcing people to buy something they don''t want good for the industry?

If there is a market for them people will buy them.

If the current cutters don''t want them someone will spring up to take advantage of the opportunity.

Then there will be growth in the industry which is very very good.

Forcing cutters to take them limits the opportunity for new players and in the end shrinks the market.



[/quote]
If a distribution system is setup and run properly there is NO forcing...it is give a take. DTC sightholders are making a killing today, don''t ever think that at the end of the day a regular allocation doesn''t make you money...it does!! This is why the lists to become regular customers to any of the producers are so long.

In-order for the producers to remain profitable and consequently motivated to spend billions on exploration and infrastructure (once there has been a discover) they have to be able to sell all of their production and in-order to do this they can''t just sell the cream on it''s own. This selling of "mixed goods" allows the mines to sell everything they produce which in turn makes the diamond and jewelery manufacturers become more creative with this broader mix which in turn puts new and different products into the market which in turn expands the overall offering which in turn creates new customers....now that was a mouthful!

Potentially a greater issue is the need for companies to have regular supply in order to create programs or offer a regular supply to their customers....unlike most other industries we cant'' just make more diamonds (or maybe we can

) so there is this constant chasing of the prices (artificially pushing them up) in order to secure that regular supply.

Cheers,

 

[John P]

Date: 6/13/2008 3:24:56 PM
Author: Clark McEwen

Date: 6/13/2008 2:38:35 PM
Author: John Pollard


In a world of tenders and auctions do you think the big players would try and price the others out of the game? (I know the largest players also carry the largest debt so this may not be practical). Still, if that were to happen, wouldn't the de facto result be the return to a limited collection of buyers with financial power; sightholders for all practical purposes?

Hey John,

I've been watching this topic with interest and have a comment to make with regards to tenders.

Being the guy that got BHPB to start tendering a portion of their goods I have some experience with this. I think that any producer that shifts their whole production over to this mode of distribution is making a huge mistake. Tenders like window sales or regular customer sales (Sightholders, Core Customers, Select Diamantaires) are tools to be pulled out of the tool box when necessary but are not to be used exclusively or in a vacuum. Sure they are good when things are hot but what happens when the market cools or how do you sell the cheap goods when nobody wants them? A healthy diamond distribution policy includes all avenues available in various combinations depending on the temperature of the market.

Cheers,
Clark

You're that guy? Watch out for the silent black helicopters and guys rappelling down in nomex suits (wearing the DTC logo). Or do you Sarasota guys have amnesty?

Can you comment on the spot market BHPB launched for melee and small goods last year Clark? Also, if the tender system does continue to grow, do you have any ideas about how the above could be mitigated? Some tenders offer mixed parcels exclusively; so you must take chaff with the wheat. In some ways isn't that model like a sight with multiple bids?

 

[Clark McEwen]

Date: 6/13/2008 4:46:09 PM
Author: John Pollard

Date: 6/13/2008 3:24:56 PM

Author: Clark McEwen

Date: 6/13/2008 2:38:35 PM

Author: John Pollard



In a world of tenders and auctions do you think the big players would try and price the others out of the game? (I know the largest players also carry the largest debt so this may not be practical). Still, if that were to happen, wouldn''t the de facto result be the return to a limited collection of buyers with financial power; sightholders for all practical purposes?

Hey John,


I''ve been watching this topic with interest and have a comment to make with regards to tenders.


Being the guy that got BHPB to start tendering a portion of their goods I have some experience with this. I think that any producer that shifts their whole production over to this mode of distribution is making a huge mistake. Tenders like window sales or regular customer sales (Sightholders, Core Customers, Select Diamantaires) are tools to be pulled out of the tool box when necessary but are not to be used exclusively or in a vacuum. Sure they are good when things are hot but what happens when the market cools or how do you sell the cheap goods when nobody wants them? A healthy diamond distribution policy includes all avenues available in various combinations depending on the temperature of the market.


Cheers,

Clark

You''re that guy? Watch out for the silent black helicopters and guys rappelling down in nomex suits (wearing the DTC logo). Or do you Sarasota guys have amnesty?

Can you comment on the spot market BHPB launched for melee and small goods last year Clark? Also, if the tender system does continue to grow, do you have any ideas about how the above could be mitigated? Some tenders offer mixed parcels exclusively; so you must take chaff with the wheat. In some ways isn''t that model like a sight with multiple bids?

Twenty years ago you may have been right...the helicopters and stuff I mean.

I think what BHPB is trying to do has merit and is heading in the right direction. I can see them using the spot market to establish a price that in turn would be used to price the goods that are being supplied to regular customers under "long" term contracts. Basically, you commit to taking goods for lets say two years and the price will be set by the results of the spot market.

The difference between mixed parcels being tendered and a "sight" is the second point of my previous answer...regular supply. A "sight" or a long term contract allows a customer to forget about having to source the goods and they can get on with developing the rest of their business. This is crucial if you are trying to setup regular businesses with your customers. I can remember being in Antwerp and going months without being able to buy a single parcel of rough even though I had the money and was looking to buy. Sometimes what you need is simply not available and it is tough to have to tell your customer "sorry I can''t help you this month" due to the fact that you can''t find the rough.

Cheers,
Clark

 

[diagem]

Date: 6/13/2008 2:38:35 PM
Author: John Pollard

Date: 6/9/2008 1:44:53 AM
Author: DiaGem

John..., just as you mentioned that: ''...I think we already have an all-access US pricing guide apart from Rap. It''s called Blue Nile. Another is Pricescope....'',

DeBeers and other major rough producers have a new and improved ''Worldwide pricing guide'' tool the get the information necessary...

Its called ''tenders''..., you have been to them..., a great tool for the rough producers who chose not to follow DeBeers (DTC) old pricing system..

No more guess work..., throw some rough at a hungry market and answers would follow...

Some will say it is not the true pricing level..., and I agree..., but if you study DeBeers''s (Diamdel) new tendering system, you will notice a birth of a new and potentially efficient system which will bring the numbers closer to their reality....

In a world of tenders and auctions do you think the big players would try and price the others out of the game? (I know the largest players also carry the largest debt so this may not be practical). Still, if that were to happen, wouldn''t the de facto result be the return to a limited collection of buyers with financial power; sightholders for all practical purposes?

Thats exactly what the big players are trying..., but with opposite effect in my opinion...
Tender participation is one of my avenues to acquire specials..., I cant help but notice that small(er) players are the ones that come up with innovative solutions to add the correct value to these pricey goods

.

I cant tell if in all the qualities..., but first quality assortments (I dont include DTC allocations) distributed via sight-holder systems by (other than DTC) big rough producers are priced higher than top prices made at tenders..., and in my opinion cant be profitable by cutting standard shapes and cuts...

Please study DeBeers''s (Diamdel) new tendering system..., it smells *smart*

 

[Paul-Antwerp]

Date: 6/13/2008 3:38:27 PM
Author: strmrdr

Date: 6/13/2008 3:24:56 PM
Author: Clark McEwen

Being the guy that got BHPB to start tendering a portion of their goods I have some experience with this. I think that any producer that shifts their whole production over to this mode of distribution is making a huge mistake. Tenders like window sales or regular customer sales (Sightholders, Core Customers, Select Diamantaires) are tools to be pulled out of the tool box when necessary but are not to be used exclusively or in a vacuum. Sure they are good when things are hot but what happens when the market cools or how do you sell the cheap goods when nobody wants them? A healthy diamond distribution policy includes all avenues available in various combinations depending on the temperature of the market.

Cheers,

Clark

How is forcing people to buy something they don''t want good for the industry?
If there is a market for them people will buy them.
If the current cutters don''t want them someone will spring up to take advantage of the opportunity.
Then there will be growth in the industry which is very very good.
Forcing cutters to take them limits the opportunity for new players and in the end shrinks the market.

You have to understand the position of a miner (official term: rough producer). They need to make the best out of what the mine gives them, and hopefully achieve a positive return on the huge investment for exploration and infrastructure (exploitation sounded weird here).

If nobody wants the industrial diamonds, which is the bulk in weight, this has to be offset by higher prices in other qualities.
If for instance the market for small natural fancy-colour stones suddenly drops because of the success of MMD''s, this has to be offset by higher prices in other qualities.

If the miner does not succeed in obtaining these higher prices, running the mine might become unprofitable, and we can say bye-bye to that supply. What is more, it even reduces the energy to explore for new finds. Maybe, the extremely high prices in other mined commodities already reduces current exploration for diamond mines.

In this way, the diamond market is not operating in a vacuum, and in the same way, specific parts of the industry are influenced by others. In this way, I love huge sales of smaller mall-quality stones and of industrial rough, since it creates extra profit for the miners, without affecting my part of the market. And I also love low sales of higher size lower cut-quality stones, since it will make me more competitive when trying to buy rough.

Live long,

 

[Paul-Antwerp]

Date: 6/13/2008 4:09:02 PM
Author: Clark McEwen


How is forcing people to buy something they don''t want good for the industry?

If there is a market for them people will buy them.

If the current cutters don''t want them someone will spring up to take advantage of the opportunity.

Then there will be growth in the industry which is very very good.

Forcing cutters to take them limits the opportunity for new players and in the end shrinks the market.

If a distribution system is setup and run properly there is NO forcing...it is give a take. DTC sightholders are making a killing today, don''t ever think that at the end of the day a regular allocation doesn''t make you money...it does!! This is why the lists to become regular customers to any of the producers are so long.

In-order for the producers to remain profitable and consequently motivated to spend billions on exploration and infrastructure (once there has been a discover) they have to be able to sell all of their production and in-order to do this they can''t just sell the cream on it''s own. This selling of ''mixed goods'' allows the mines to sell everything they produce which in turn makes the diamond and jewelery manufacturers become more creative with this broader mix which in turn puts new and different products into the market which in turn expands the overall offering which in turn creates new customers....now that was a mouthful!

Potentially a greater issue is the need for companies to have regular supply in order to create programs or offer a regular supply to their customers....unlike most other industries we cant'' just make more diamonds (or maybe we can

) so there is this constant chasing of the prices (artificially pushing them up) in order to secure that regular supply.

Cheers,
[/quote]
Clark clearly explains here the need for regular supply for the cutters and the need for selling their complete run-of-mine of the producers.

Lately, we have experienced a period of volatility, because the producers are regularly re-organizing their supply. For years, De Beers'' supplied the huge majority of goods, and there were few changes to their list of sightholders (customers). In fact, new sightholders were regularly added, but hardly none lost their sight.

This changed with the introduction of Supplier-of-Choice, where the sightholders suddenly had to compete with their peers in order to secure their future sights. This resulted in over-buying and in an expansion of industry-debt, as well as foolish investments into various marketing-initiatives, of which few proved to work.

We can now see the same going on with other producers. With Alrosa, which wants to reduce their client-list to a number around 20, the current tenders are used by cutters to prove how strong they are. Result: exaggerated pricing, and probably giving up current profit in order to obtain a regular future supply.

The same can be seen in many other tenders, where a major producer uses the tender as a window. Most major cutting-firms consider such tenders as political, and gladly over-pay in order to be on the first row, when the producer decides upon the long-term-supply-agreements.

In the past years, we have also seen that most producers prefered to sell to cutting-houses and were less willing to sell to rough-traders. Rough-traders are actually companies who take a very diverse sight, and re-sort and compose new parcels, and then each new assortment to specialised cutters. I have the impression that producers are gradually realising the value of such rough-traders.

Personally, I love the tender-system, since it might be a way to give more power to the buyer, who knows what he is doing, as opposed to the buyer with the deepest pockets. But I also like the rough-trader with a sight, who understands in which areas I can constantly pay more than others, and who adapts his assortments to that.

Live long,

 

[strmrdr]

Date: 6/14/2008 11:15:51 AM
Author: Paul-Antwerp
But I also like the rough-trader with a sight, who understands in which areas I can constantly pay more than others, and who adapts his assortments to that.


Live long,

This is exactly what I am talking about would be the right way to do it rather than say you want these G-I vs potential you have to take this J-K I1-I2 potential rough instead sell them to the people that can best add value to the rough.
That will maximize profits for everyone and in the end result in a stable system.
The lot of the better stones wont get dragged down by the lower qualities and the lower end rough will go to someone with the contracts and ability to move it who can pay more for it.
I think eventually it will move that way but the market will have to evolve some more first.

 

[strmrdr]

Lets take this to the next step,
There is 1000 pieces of broken crystals that the tops broke off that will only yield one stone.
Now for someone who is doing rounds or even worse princess cuts this rough is reduced in value.
But to someone cutting high crowned Asschers this rough is worth a small premium because they have less waste by not paying for the broken off parts.
Everyone wins including the end consumer and the mine owner by the right people getting this rough.

 

[Paul-Antwerp]

Date: 6/14/2008 11:44:45 AM
Author: strmrdr

Date: 6/14/2008 11:15:51 AM
Author: Paul-Antwerp
But I also like the rough-trader with a sight, who understands in which areas I can constantly pay more than others, and who adapts his assortments to that.


Live long,

This is exactly what I am talking about would be the right way to do it rather than say you want these G-I vs potential you have to take this J-K I1-I2 potential rough instead sell them to the people that can best add value to the rough.
That will maximize profits for everyone and in the end result in a stable system.
The lot of the better stones wont get dragged down by the lower qualities and the lower end rough will go to someone with the contracts and ability to move it who can pay more for it.
I think eventually it will move that way but the market will have to evolve some more first.

Actually, it is different than that.

My suppliers love me because I can use colours down to M (even the odd lower colour than that), because I can use I1-s and fluorescent stones and because I can do wonders with part of the crystal-rough in turning this into princess-cuts.

Live long,

 

[strmrdr]

Date: 6/14/2008 12:00:03 PM
Author: Paul-Antwerp

Actually, it is different than that.


My suppliers love me because I can use colours down to M (even the odd lower colour than that), because I can use I1-s and fluorescent stones and because I can do wonders with part of the crystal-rough in turning this into princess-cuts.


Live long,

Ok, but the main point is getting the rough you can add the most value to into your hands and can pay more for raises profits for everyone involved.
Now imagine that happening industry wide.

 

[diagem]

Date: 6/14/2008 11:55:46 AM
Author: strmrdr
Lets take this to the next step,
There is 1000 pieces of broken crystals that the tops broke off that will only yield one stone.

Its way more complicated than that storm..., even then, you are talking about a pricey and extremely rare high quality segment..., most crystals even when whole/complete in structure (with no broken tops) need to be either cleaved or sawed because of the internal inclusions and many other problems!

Now for someone who is doing rounds or even worse princess cuts this rough is reduced in value.
But to someone cutting high crowned Asschers this rough is worth a small premium because they have less waste by not paying for the broken off parts.
Everyone wins including the end consumer and the mine owner by the right people getting this rough.

Storm..., you are talking about something that exists rarely...
Most crystals have other obstacles when matching the right rough shape to the polished Diamond shape you are planning/considering as a cutter...

For example..., un-even edges (girdle heights) which effect the spread of the outcome...
indented type naturals like trigons that effect much the yield...

And loads more....

In a perfect world you would be 110% correct..., but we all know we dont live in a perfect world...

 

[strmrdr]

Date: 6/14/2008 1:10:35 PM
Author: DiaGem


Storm..., you are talking about something that exists rarely...

Most crystals have other obstacles when matching the right rough shape to the polished Diamond shape you are planning/considering as a cutter...


For example..., un-even edges (girdle heights) which effect the spread of the outcome...

indented type naturals like trigons that effect much the yield...


And loads more....


In a perfect world you would be 110% correct..., but we all know we dont live in a perfect world...

true my example was over simplified but it can be expanded to meet the real world.
The more efficient the system is at getting the right rough to the right people the better it will work for everyone.
It works the same way on the other side, Paul can pay more for the rough he wants because he has grown a market and an efficient distribution channel backed up by manufacturing capability to meet the demand and quality level.
In fact he has become so good at it he can afford to hire someone full time to work on expansion and education.
That he made the perfect choice of who he hired to do that is another topic :}

 

[Paul-Antwerp]

And organisationally, for a producer, it is undoable to just open an enormous supermarket, where everybody can offer the highest possible price for what he desires. It is not satisfying their goal of selling everything on a continuous basis.

If you want, Antwerp as a trading-market could take up the role of such a supermarket for rough. And maybe, the AWDC should consider organising weekly tenders of rough, where all traders can present their rough in. That could serve as a very efficient secondary market for rough, being beneficial for the producers, the cutters and ultimately consumers.

Live long,

 

[strmrdr]

Thank you Paul, Clark and DiaGem it''s been an interesting and educational chat.
I see both sides and it will be interesting to see how it plays out.

 

[Clark McEwen]

Hi All,

I''d like to add one thing...a tender system works when you have customers for ALL of the goods. In most cases very few actually want the bulk of what is produced (cheap smaller goods) today (even the Indians now want the larger better goods)so the "carrot" of getting the better goods if you buy the cheaper goods is a strong motivator. And as Paul has pointed out in an earlier post, if nobody buys the cheaper goods the price of the better goods HAVE to go up or the mine simply becomes "unprofitable" and nobody gets anything. A system that allows the producer to sell ALL of the production is not only necessary but crucial for the long term health of the industry.

As far as getting the right goods into the right hands...the sight system tries to do just that. Nobody gets ROM they get a combination of goods that is geared towards their business.

I do like the BHPB model...use the monthly spot market to set the prices charged to customers that have committed to a specific contract period. This way a customer has a chance at regular supply but is also paying the price that the market is setting.

Cheers,
Clark

 

[Clark McEwen]

Date: 6/14/2008 1:36:52 PM
Author: Paul-Antwerp
And organisationally, for a producer, it is undoable to just open an enormous supermarket, where everybody can offer the highest possible price for what he desires. It is not satisfying their goal of selling everything on a continuous basis.


If you want, Antwerp as a trading-market could take up the role of such a supermarket for rough. And maybe, the AWDC should consider organising weekly tenders of rough, where all traders can present their rough in. That could serve as a very efficient secondary market for rough, being beneficial for the producers, the cutters and ultimately consumers.


Live long,

Paul,

How does tendering all the goods allow the producers to "sell everything on a continuous basis"? Again tenders are great for the producer in the good times but terrible in the slow times. I''ve known tenders that haven''t sold a single stone due to the reserves set and at the end of the day the producer is then left scrambling for customers....ask Trans Hex!

Cheers,
Clark

 

[Paul-Antwerp]

Hey Clark,

A reply from late Saturday Antwerp-night, so you appreciate the context.

I was not suggesting a complete tendering system for the producers, but an Antwerp tendering secondary market. In which I can put up for tender the goods that I do not really want from my purchases, and the same for anybody else, be they sightholders, rough traders, cutters, whatever.

Live long,

 

[diagem]

Date: 6/14/2008 5:16:52 PM
Author: Paul-Antwerp
Hey Clark,

A reply from late Saturday Antwerp-night, so you appreciate the context.

I was not suggesting a complete tendering system for the producers, but an Antwerp tendering secondary market. In which I can put up for tender the goods that I do not really want from my purchases, and the same for anybody else, be they sightholders, rough traders, cutters, whatever.

Live long,

Paul..., I think you can offer your un-wanted rough to some private tenders that work out of Antwerp...

Unless you are talking about bad rejections (which I dont believe is your case...)

 

[Clark McEwen]

Date: 6/15/2008 4:25:39 AM
Author: DiaGem

Date: 6/14/2008 5:16:52 PM

Author: Paul-Antwerp

Hey Clark,


A reply from late Saturday Antwerp-night, so you appreciate the context.


I was not suggesting a complete tendering system for the producers, but an Antwerp tendering secondary market. In which I can put up for tender the goods that I do not really want from my purchases, and the same for anybody else, be they sightholders, rough traders, cutters, whatever.


Live long,

Paul..., I think you can offer your un-wanted rough to some private tenders that work out of Antwerp...


Unless you are talking about bad rejections (which I dont believe is your case...)

You are right...Mr. Elliot would appreciate the business...Again the point that I was trying to raise was the fact that tenders work great in good times but aren''t so good in the slower times...so the best distribution channel for producers is a combination of outlets that can be varied depending on the market conditions. As far as small producers or people trying to sell their rejection...there is less of a need for them to get the top dollar because they have usually put top dollar on the goods that they are keeping so the tender is more of an outlet to get rid of the goods than it is a money maker, as I''m sure it is with you Paul. You would rather sell these slightly under the market price just to move them.

BTW Paul lay off of the Kwak...

Cheers,
Clark

 

[John P]

Date: 6/15/2008 9:26:32 AM
Author: Clark McEwen

You are right...Mr. Elliot would appreciate the business...Again the point that I was trying to raise was the fact that tenders work great in good times but aren't so good in the slower times...so the best distribution channel for producers is a combination of outlets that can be varied depending on the market conditions. As far as small producers or people trying to sell their rejection...there is less of a need for them to get the top dollar because they have usually put top dollar on the goods that they are keeping so the tender is more of an outlet to get rid of the goods than it is a money maker, as I'm sure it is with you Paul. You would rather sell these slightly under the market price just to move them.

BTW Paul lay off of the Kwak...

Interestingly our approach is profitable right now. Since we cut only two shapes - and only one geometry for each - we're left with material that can be highly desirable to others. The fact that we entertain one-of deals is attractive too. This approach takes time and energy though (and it does create friends, which is why there is often La Chouffe in Paul's Saturday Antwerp nights

) Of course in the past there have been outlets for every conceivable category within a block, but you alluded to the changing trends. A secondary market as Paul proposes would reveal the viability of what will-and-won't move.

 

[Garry H (Cut Nut)]

Date: 6/15/2008 1:14:01 PM
Author: John Pollard

Date: 6/15/2008 9:26:32 AM
Author: Clark McEwen

You are right...Mr. Elliot would appreciate the business...Again the point that I was trying to raise was the fact that tenders work great in good times but aren''t so good in the slower times...so the best distribution channel for producers is a combination of outlets that can be varied depending on the market conditions. As far as small producers or people trying to sell their rejection...there is less of a need for them to get the top dollar because they have usually put top dollar on the goods that they are keeping so the tender is more of an outlet to get rid of the goods than it is a money maker, as I''m sure it is with you Paul. You would rather sell these slightly under the market price just to move them.

BTW Paul lay off of the Kwak...

Interestingly our approach is profitable right now. Since we cut only two shapes - and only one geometry for each - we''re left with material that can be highly desirable to others. The fact that we entertain one-of deals is attractive too. This approach takes time and energy though (and it does create friends, which is why there is often La Chouffe in Paul''s Saturday Antwerp nights

) Of course in the past there have been outlets for every conceivable category within a block, but you alluded to the changing trends. A secondary market as Paul proposes would reveal the viability of what will-and-won''t move.

How is this for a crazy but free idea - put up a website with ability to upload 3D scanned files of the rough and a description of the clarity and colour, and perhaps a photgraph. I know people would still need to view the stone, but it might facilitate a service.
In fact I think i know just the operator to do this - Elmyr.
What do you think Paul?

 

[John P]

On the original topic:

Whitehall Considers Bankruptcy Protection
http://www.jckonline.com/article/CA6570946.html?nid=2054&source=title&rid=1997254392

 

[Clark McEwen]

Date: 6/18/2008 1:27:02 PM
Author: John Pollard
On the original topic:


Whitehall Considers Bankruptcy Protection

http://www.jckonline.com/article/CA6570946.html?nid=2054&source=title&rid=1997254392

The following is a piece that I wrote a while back for my monthly column in ADL magazine and gives my perspective on what has and is happening far too regularly in our trade.....


Once bitten, twice shy...

I thought that I had seen it all but I was wrong. Earlier this week I received a copy of a letter that was sent out to the “unfortunate” suppliers of a major retail chain that has recently declared bankruptcy. The letter started off in the typical manor for such letters by stating that the company had entered Chapter 11 bankruptcy and because of this all outstanding invoices would be considered null and void and therefore “regrettably” would not be paid. The letter went on to say that not only would the company not be paying for product that had been received and invoiced for it also would not be returning any of the goods that it had in it’s possession.
You may ask what is so unique about this as these things happen from time to time. But what came next was mind-boggling!
After informing their loyal, faithful and trusting suppliers that their invoices would not be paid, their goods would not be returned and by the way that included goods that had been sent to them on memo … the company had the unmitigated audacity to make the following statement…”However we have good news to announce”.
What is this good news you ask?
Was it that the management team had been replaced and a new team was working towards meeting their predecessor’s obligations or maybe it was that the management team had been replaced and the company would be paying cash until it could re-establish it’s credit and ultimately the trust of the suppliers … guess again!
The good news was the fact that the company would be adding more stores which would mean a “great opportunity” to its suppliers as the business expanded into many new locations. To further add to the ludicrous nature of the letter, the company states that it is preparing to order new product for the upcoming season and it would hope that the same terms, co-op and other support that was so generously offered by its suppliers in the past would still apply to the new orders.
And if that wasn’t enough the letter was signed by the head of the Jewelry Buying Division that I would surmise placed and or approved the previous unpaid orders.
Is it just me or is there something desperately and fundamentally wrong with this picture. It will be interesting to watch and see how many suppliers will buy into this rhetoric, cut a new deal and by doing so show their support of this type of behavior or will the old adage “Once bitten, twice shy” apply here.

 

[JogiaDiamonds]

Is it just me or is there something desperately and fundamentally wrong with this picture. It will be interesting to watch and see how many suppliers will buy into this rhetoric, cut a new deal and by doing so show their support of this type of behavior or will the old adage “Once bitten, twice shy” apply here.

Part of the blame rests with the dealers giving stones out on credit for so long. Sure, credit terms may be needed, especially when the finished product may take a month to manufacture, but when these wholesalers give more than 30 days of credit, they become bankers, and very poor ones at that.

 

[Garry H (Cut Nut)]

Date: 6/19/2008 3:27:55 PM
Author: Clark McEwen

Date: 6/18/2008 1:27:02 PM
Author: John Pollard
On the original topic:


Whitehall Considers Bankruptcy Protection

http://www.jckonline.com/article/CA6570946.html?nid=2054&source=title&rid=1997254392

The following is a piece that I wrote a while back for my monthly column in ADL magazine and gives my perspective on what has and is happening far too regularly in our trade.....


Once bitten, twice shy...

I thought that I had seen it all but I was wrong. Earlier this week I received a copy of a letter that was sent out to the “unfortunate” suppliers of a major retail chain that has recently declared bankruptcy. The letter started off in the typical manor for such letters by stating that the company had entered Chapter 11 bankruptcy and because of this all outstanding invoices would be considered null and void and therefore “regrettably” would not be paid. The letter went on to say that not only would the company not be paying for product that had been received and invoiced for it also would not be returning any of the goods that it had in it’s possession.
You may ask what is so unique about this as these things happen from time to time. But what came next was mind-boggling!
After informing their loyal, faithful and trusting suppliers that their invoices would not be paid, their goods would not be returned and by the way that included goods that had been sent to them on memo … the company had the unmitigated audacity to make the following statement…”However we have good news to announce”.
What is this good news you ask?
Was it that the management team had been replaced and a new team was working towards meeting their predecessor’s obligations or maybe it was that the management team had been replaced and the company would be paying cash until it could re-establish it’s credit and ultimately the trust of the suppliers … guess again!
The good news was the fact that the company would be adding more stores which would mean a “great opportunity” to its suppliers as the business expanded into many new locations. To further add to the ludicrous nature of the letter, the company states that it is preparing to order new product for the upcoming season and it would hope that the same terms, co-op and other support that was so generously offered by its suppliers in the past would still apply to the new orders.
And if that wasn’t enough the letter was signed by the head of the Jewelry Buying Division that I would surmise placed and or approved the previous unpaid orders.
Is it just me or is there something desperately and fundamentally wrong with this picture. It will be interesting to watch and see how many suppliers will buy into this rhetoric, cut a new deal and by doing so show their support of this type of behavior or will the old adage “Once bitten, twice shy” apply here.

Clark as I understand USA is rather unique in its approach to bankruptcy. Very very soft - the chapter 11 proceedings (not that I know much about it).

In many other countries the bankrupt company could swap its debt with 1 or 2 largest suppliers and be taken over, or be wipped out totally. In a ''normal'' market this would help bring real new blood into the running of companies and totally clear out any cronyism.

 

[diagem]

Date: 6/20/2008 11:05:32 AM
Author: Garry H (Cut Nut)

Clark as I understand USA is rather unique in its approach to bankruptcy. Very very soft - the chapter 11 proceedings (not that I know much about it).

In many other countries the bankrupt company could swap its debt with 1 or 2 largest suppliers and be taken over, or be wipped out totally. In a ''normal'' market this would help bring real new blood into the running of companies and totally clear out any cronyism.

Until you "might" get caught....

Then you read this type of news...., http://www.diamonds.net/news/NewsItem.aspx?ArticleID=22028


"...Two days ago law firm Kramer Levin Naftalis & Frankel LLP, in representing plaintiffs (Shared Assets Trust - agents for lenders) in the M. Fabrikant & Sons Chapter 11 case, filed a complaint with the court stating that: "In the 16 months preceding Fabrikant’s Chapter 11 filing, the Fortgang family, which owned and controlled Fabrikant, caused it to make fraudulent and preferential transfers totaling more than $100 million to affiliated companies that were themselves owned and controlled by members of the Fortgang family...."

 

[John P]

Date: 6/20/2008 11:05:32 AM
Author: Garry H (Cut Nut)

Clark as I understand USA is rather unique in its approach to bankruptcy. Very very soft - the chapter 11 proceedings (not that I know much about it).

In many other countries the bankrupt company could swap its debt with 1 or 2 largest suppliers and be taken over, or be wipped out totally. In a 'normal' market this would help bring real new blood into the running of companies and totally clear out any cronyism.

In late 2005 some of the rules changed. The federal government made it more equitable for creditors. Now with chapters 7 and 11 (for business) the means test is more dificult, there are fewer exemptions, the amounts have been reduced and a higher percentage must be paid back. There are more front and back end requirements too; all taxes must have been filed, P/L statements have to be submitted and credit counseling is required. What does this mean? Well, I’m told we're tougher than Canada now, fwiw.

Our historically soft system is why CC companies pumped up interest rates for everyone. If you miss one payment (regardless of credit history) some companies hike you from 9% to 24% interest immediately.

 

[John P]

Date: 6/19/2008 3:27:55 PM
Author: Clark McEwen

Date: 6/18/2008 1:27:02 PM
Author: John Pollard
On the original topic:


Whitehall Considers Bankruptcy Protection

http://www.jckonline.com/article/CA6570946.html?nid=2054&source=title&rid=1997254392

The following is a piece that I wrote a while back for my monthly column in ADL magazine and gives my perspective on what has and is happening far too regularly in our trade.....


Once bitten, twice shy...

I thought that I had seen it all but I was wrong. Earlier this week I received a copy of a letter that was sent out to the “unfortunate” suppliers of a major retail chain that has recently declared bankruptcy. The letter started off in the typical manor for such letters by stating that the company had entered Chapter 11 bankruptcy and because of this all outstanding invoices would be considered null and void and therefore “regrettably” would not be paid. The letter went on to say that not only would the company not be paying for product that had been received and invoiced for it also would not be returning any of the goods that it had in it’s possession.
You may ask what is so unique about this as these things happen from time to time. But what came next was mind-boggling!
After informing their loyal, faithful and trusting suppliers that their invoices would not be paid, their goods would not be returned and by the way that included goods that had been sent to them on memo … the company had the unmitigated audacity to make the following statement…”However we have good news to announce”.
What is this good news you ask?
Was it that the management team had been replaced and a new team was working towards meeting their predecessor’s obligations or maybe it was that the management team had been replaced and the company would be paying cash until it could re-establish it’s credit and ultimately the trust of the suppliers … guess again!
The good news was the fact that the company would be adding more stores which would mean a “great opportunity” to its suppliers as the business expanded into many new locations. To further add to the ludicrous nature of the letter, the company states that it is preparing to order new product for the upcoming season and it would hope that the same terms, co-op and other support that was so generously offered by its suppliers in the past would still apply to the new orders.
And if that wasn’t enough the letter was signed by the head of the Jewelry Buying Division that I would surmise placed and or approved the previous unpaid orders.
Is it just me or is there something desperately and fundamentally wrong with this picture. It will be interesting to watch and see how many suppliers will buy into this rhetoric, cut a new deal and by doing so show their support of this type of behavior or will the old adage “Once bitten, twice shy” apply here.

And...Whitehall files today.
http://www.jckonline.com/article/CA6572623.html?desc=topstory

It appears that they''re defaulting on credit agreements >$100m outstanding with their banks. Fabrikant

and Rosy Blue among those bitten.