Shocking news a better cut costs money.

[strmrdr]

Lets for a second ignore the added labor for cutting an ideal cut diamond vs cutting for weight and just good on everything else vs. ideal,ideal.
The estimates are way to widely varied for me to remark on that area.

The way the diamond market works is the rough supplier estimates the recovered weight and projected color and clarity of the the finished stone and sets the prices accordingly based on wholesale price minus the cutters profit.

The cutter buys a 2ct rough that the supplier estimates 50% loss when cutting an average stone.
Lets say the projected wholsale price is $5000 and the supplier allows the cutter a 15% raw margin.
That means that the cutter ends up paying ~$4350 for an average cut 1ct diamond that sells for 5000 and his cutting costs have to come out of the $650 profit.

Now lets say he cuts it into an ideal cut diamond and loses an extra 10%, 60% total loss in cutting.
The finished ideal cut diamond now comes out at .8ct.
He still needs to sell it at $5000 to make the same profit as the average cut before cutting costs.
That comes out to a wholesale price of:
$5000 per ct for the good cut
$6000 per ct for the ideal cut
before the increased cutting cost is even considered.

note: the other thread on this was deleted by my request for flaming.

 

[strmrdr]

Paul-Antwerp posted a very good comment that I am going to quote here:

"Now, add a second reality. The cutter sees his second option (nice cut of 0.80Ct) and realizes that, because, it is under a magic weight, he cannot possibly sell it at the same price as the first option (a mediocre 1Ct.).

Therefore, he will choose for the first option. That is why you find so few super-ideals in the 0.85-0.99 Ct-range, or in the 1.25-1.49-range for that matter.

The reason is that a cutter can make more profit (or no loss for that matter) by cutting a heavier mediocre stone. It is a sign that the majority of the market is still not aware of the value of a great cut, since they are technically paying more for a lower cut.

Of course, they get a stone that is heavier. But its surface-area will be the same."

 

[fire&ice]

Thing is carat weight is more important than cut.

I didn't think that the cutters buy the rough. Don't "houses" buy them & hire cutters to cut?

Also, do the rough sellers evaluate what can be done w/ the rough? I'm sure that they evaluate as to what's possible; but, common sense would dictate that the cutter, whose specialty is evaluating rough, would ultimately decide what *he* can do w/ the rough.

Just answering questions with questions.

I've seen the cutter cut. You can watch either in Amsterdam or Belguim (can't remember which country it was as we visited both). It's a pretty tense situation. I was only 13 or 14; but, the image is burnt into my brain. I remember one guy just looking & looking & looking. Another nearly threw a stone against the wall. He broke bad.

 

[strmrdr]

exellent questions I will take a shot at answering them and the real experts can currect any mistakes.

When I say cutters Im refering to the companies that cut stones and the actual people they employ to do the cutting as a group.
It seems to be the terminalogy that a lot of the vendors here use.

The shape of the rough determines the shape of the finished diamond more than anything else.
Where the cutters have to make very carefull decisions is on rough that would make several different shapes.
Which would sell for more and which is easier to sell would have to be balanced against what they paid for it.

The hardest decisions are likely with rough that would make a larger si stone or a smaller vvs stone this is the area that would seperate the ones that know there stuff and those that dont.
The wrong pick can cost thousands of dollars off the bottom line.

 

[WinkHPD]

Storm Rider,

You make a good point about deciding what to cut from a given piece of rough.

Once when I was visiting Antwerp I was in the office of a cutter with my daughter.

When we arrived they were discussing a stone that we had watched them polish a window in during our visit to the factory the day before. They decided to ask my daughter some questions about what to do, as if they really needed any help at all... I may be remembering the exact numbers incorrectly, but the essence is the same and the difference in value I remember quite clearly.

Diamond ofice (DO): Cissy, what shall we do with this stone? We can cut it to either a 2.78ct marquise, or a 2.10ct round brilliant.

Cissy Jones (CJ): Which stone has more value?

DO: The marquise is worth $100 more than the round.

CJ: Which stone will sell quicker?

DO: Ah, this is the problem. The round is sold within a week, maybe two. The marquise might sell in a week, or maybe not for six months.

Cissy: Well then I would cut a round and reinvest the money several times in the time it would have taken you to sell the marquise.

DO: What a great answer, that is what we had just decided to do when you came in.

(Fade to proud dad!)

It is often an issue. Can we make a little more on this stone if we cut it differently? Yes, but how long will it take to sell. I think if the stone would have cut a round that was a thousand dollars less than the marquise, that the decision would have been different, but for $100 and the odds of selling the marquise before you had sold six or seven rounds from the same investment, I think the decision was fairly easy.

Wink

 

[fire&ice]

Very interesting Wink. Your daughter has good inate business savvy!

I admire the cutters. That's what got me going on the "poster that shall not be named". These guys aren't some shmoes sitting in the corner making $5.00 an hour. They are true artists who see diamonds in the rough for real. I would imagine they could make and/or break money. Common sense would dictate that they weild quite a bit of respect. And, are high in the hiyarchy.

I would imagine they use computer models to examine rough. Maybe their options are presented faster; but, the decision is man made.

 

[Greg]

The national average wage for a gem cutter/polisher is $14.70 an hour. I guess that cinches the argument that they are true artists (we never get paid well....unless we’re good and get a little bit lucky). I admire them too.

 

[fire&ice]

----------------
On 7/3/2004 6:09:44 PM Greg wrote:

The national average wage for a gem cutter/polisher is $14.70 an hour. I guess that cinches the argument that they are true artists (we never get paid well....unless we’re good and get a little bit lucky). I admire them too.----------------

Yes, but like any artist, they get bonuses & perks when there stuff makes a splash.

And, diamond cutters from the ground are a different story - I'm not sure you can research it -especially with the bloomsing Asian cutters for smaller diamonds.

Disclaimer - a healthy discussion.

 

[WinkHPD]

----------------
On 7/3/2004 5:17:02 PM fire&ice wrote:


I would imagine they use computer models to examine rough. Maybe their options are presented faster; but, the decision is man made. ----------------

Yes, it is very interesting to look at a piece of rough and have someone scroll through the options for making two or more stones from it on the computer screen. Quite amazing what a computer can do, and what it can't.

Wink