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There may be hope for the future of the diamond industry

Garry H (Cut Nut)

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"The old way of buying quantity, processing it and then looking for a client forces you to sit on stock and forces you to freeze money,” he explains. “That forces you to reduce prices in order to get rid of items that you don’t know how to sell. That forces your competitors to sell their goods at a lower price.”
 

Karl_K

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and its called mmd because mining is on its last legs.
 

Garry H (Cut Nut)

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What do they mean by "diamond manufacturers" ?
Diamond manufacturers is what the trade call diamond cutters.
The idea of the old dude who takes a rough diamond and produces a polished diamond a week later is almost history.
A manufacturing facilitiy can have 20 to 50 people who perform individual expert tasks with a lot of technology for each rough on it journey to being polished.
That now happens almost entirely in Surat India in mainly factories employing +1,000 skilled people.
 

Garry H (Cut Nut)

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and its called mmd because mining is on its last legs.
I would put it another way Karl - when De Beers gear up and start supplying heaps of $800 a carat diamonds there will be a lot of bankrupt coal fired man made diamond factories.
 

Karl_K

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I would put it another way Karl - when De Beers gear up and start supplying heaps of $800 a carat diamonds there will be a lot of bankrupt coal fired man made diamond factories.
Its going to ge interesting that is for sure.
Even more interesting is trying to get environmental clearance for new mines. I dont see it happening in many parts of the world.
Maybe one or 2 here and there but not on the scale needed to replace existing mines.
The scanners may keep a few of the existing mines open for a while by catching more large stones before the crusher.
If that starts to produce many more large stones the large stone prices are going to tank.
There are not that many people interested in them and who have that kind of money.
 

Garry H (Cut Nut)

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Its going to ge interesting that is for sure.
Even more interesting is trying to get environmental clearance for new mines. I dont see it happening in many parts of the world.
Maybe one or 2 here and there but not on the scale needed to replace existing mines.
The scanners may keep a few of the existing mines open for a while by catching more large stones before the crusher.
If that starts to produce many more large stones the large stone prices are going to tank.
There are not that many people interested in them and who have that kind of money.
wrong in so many ways Karl :)
Diamond mining is one of the least environmentally damaging of all mining activities. There are no chemicals used in any part of the process.
What is in your phone - now that stuff is toxic!
Yes XRF is working a treat and so many mines were sold to junior miners who are now making good money finding +100ct rough.
And the gap between the rich and middle classes and poor is getting wider - not smaller. Ask Mr Pickety.
But rarely are those big diamonds cut into a single diamond - lots end up being cut into 10 or 20 stones. OctoNus basic business.
And in that story - what ever was left of WTOCD could be a brains trust.
 

RunningwithScissors

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How do you see this affecting prices and supply of finished diamonds for the type of consumers found here on PriceScope?

What is the carat weight that makes a diamond part of the "large diamond market"?

For example, I hope to someday purchase a 3 ct emerald cut diamond -- would that be considered part of the large diamond market? I always thought, in the scheme of things, 3 ct was "medium" sized (not that it is a size most people own, but because there are so many humungous diamonds out there on people's hands/ears/necks.)
 

Garry H (Cut Nut)

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How do you see this affecting prices and supply of finished diamonds for the type of consumers found here on PriceScope?

What is the carat weight that makes a diamond part of the "large diamond market"?

For example, I hope to someday purchase a 3 ct emerald cut diamond -- would that be considered part of the large diamond market? I always thought, in the scheme of things, 3 ct was "medium" sized (not that it is a size most people own, but because there are so many humungous diamonds out there on people's hands/ears/necks.)
3 times as many +200 carat diamonds are being found. Why?
The answer is XRays. Yet diamonds are invisible to XRays???
In 500 years up to 2004 there were around 163 plus 200ct diamonds found. About one a year for the past century. Since then 3 diamonds over 200ct have been found!
47 at an average of +400ct each or 19,000cts in total.
Before 2004 most large diamonds were alluvial found in river beds. All of the +200ct diamonds found since 2004 were from hard rock mines.
Modern miners XRay ore before crushing it. Diamonds are invisible to XRays and if there is a void inside the rock they carefully open the rock and find a big rough diamond!
 

Rockdiamond

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I focus more on the other end from mining. Who is going to sell the diamonds?
The way that the major players operate has basically eliminated a level of the sales pyramid. Clear upside for consumers in terms of price. But what are they giving up?
 

Garry H (Cut Nut)

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I focus more on the other end from mining. Who is going to sell the diamonds?
The way that the major players operate has basically eliminated a level of the sales pyramid. Clear upside for consumers in terms of price. But what are they giving up?
No idea what you mean David - are you tipsy ;-)
 

Rockdiamond

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As a larger and larger percentage of stones are sold from a list of goods held by the cutters, it becomes less and less feasible for dealers to exist.
This has effects on pricing and availability. NYC is still relatively active at the dealer level. It’s crazy busy right now because there’s still non cutter dealers with goods in stock.
In terms of consumers..... if there’s far fewer sellers at the retail level, the main players can more easily manipulate the market. No?
 

Garry H (Cut Nut)

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As a larger and larger percentage of stones are sold from a list of goods held by the cutters, it becomes less and less feasible for dealers to exist.
This has effects on pricing and availability. NYC is still relatively active at the dealer level. It’s crazy busy right now because there’s still non cutter dealers with goods in stock.
In terms of consumers..... if there’s far fewer sellers at the retail level, the main players can more easily manipulate the market. No?
Hmmm,
Interesting concept.
When I started my store 44 years ago (last week) I was introduced by my gold supplier to a pearl importer who supplied many Australian Pearl wholesalers.
I was bumped up the buying hierarchy because I had developed a good reputation for prompt payment.
Today there is no such thing as an importer who sells to dealers who sell to retailers, except maybe in the international scene. But certainly not in diamonds.
Today I buy more gems and pearls from dealers in other countries and 90% of my diamonds direct from manufacturers (i.e. cutters).

So David, you NYC dudes may just be behind the times - now who ever thought of that!!!!

Remeber too that when diamonds move from India to US dealers, even under the same company name - the price jumps up a bit. So maybe this would lead to lower retail prices?
 

Karl_K

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The way that the major players operate has basically eliminated a level of the sales pyramid. Clear upside for consumers in terms of price. But what are they giving up?
Nothing, as long as there is real competition and the corruption stays down.
The real risk is going back to De Beers or a group of the big players getting together and gaining near 100% control again.
If they play it wrong the mmd producers will just own the market quicker. So that helps consumers.

No industry can survive with long pipelines anymore the diamond industry has been needing to do this for decades they just managed to hold out longer than most.
 

Rockdiamond

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Nothing, as long as there is real competition and the corruption stays down.
I see it a bit differently Karl. Just as an example- in diamonds there are two “main players” and everyone else is a fraction the size. With only one competitior a major player can offer less useful info. We see this happening now.
In terms of prices, if there’s only two major players, What’s to stop them from raising prices.
My point is that with only two main players, that’s not really a competitive marketplace.
Then, consider what it takes to enter into that market. The two top guys are spending hundreds of thousands per month on google placements. How would any sort of start up compete?
 

Garry H (Cut Nut)

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I see it a bit differently Karl. Just as an example- in diamonds there are two “main players” and everyone else is a fraction the size. With only one competitior a major player can offer less useful info. We see this happening now.
In terms of prices, if there’s only two major players, What’s to stop them from raising prices.
My point is that with only two main players, that’s not really a competitive marketplace.
Then, consider what it takes to enter into that market. The two top guys are spending hundreds of thousands per month on google placements. How would any sort of start up compete?
Ever heard of Google Facebook or Amazon?
 

Rockdiamond

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From what I’ve seen, Amazon is not interested in loose diamond sales, thank the gods.
I don’t believe Facebook is all that viable to sell. And google.....the cost of getting a search term noticed is based on its popularity. If you’re selling ........alligator enclosures, sure, easy to get noticed. But “diamond ring”......costs tons to get noticed.

And yes, NYC is thankfully behind the curve on this. There’s still diamonds being cut here and still many diamonds residing here. Specialty stuff for sure- and larger stones.

The NY price for “commodity” stones is generally only a few points higher than India. This difference isn’t so great. It’s possible to offset a few points on price with the ability to have stones on hand.
So near term at least, the NY market seems in good shape.
 

Texas Leaguer

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Interesting article and interesting convo here y'all. I agree to an extent with the various points being made.

The role of the 'middleman' has been under pressure in the diamond industry for quite some time, and many dealers have been squeezed out over years and decades. There is still a role for many of them to play, which I think was one of @Rockdiamond 's points. But in order to survive they must add value. The days of the 'flipper' are pretty much over.

There is significant risk for the consumer in too much consolidation, also a point @Rockdiamond makes. However, a bigger theme I see coming out of this current crisis, and exemplified in the article about HB Diamonds, is that there is a paradigm shift happening. While the cost of entry into the field is high, there are opportunities for more than just a couple of companies to fill the void left by failing outfits doing business in old fashioned ways that are not strong enough to withstand the disruption of covid and other shifts in society and technology.

I see the article as a preview of the kind of progress the industry will be making over the next decade. And ultimately, I think the consumer will continue to be benefited, just as they have been by the emergence of information technology and the greater transparency and reach it has provided.
 

Rockdiamond

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While the cost of entry into the field is high, there are opportunities for more than just a couple of companies to fill the void left by failing outfits doing business in old fashioned ways that are not strong enough to withstand the disruption of covid and other shifts in society and technology.
This is part of my fear Bryan- I agree that it's possible for some well-capitolized companies to emerge ( Bain Capitol owns Blue Nile, right?)....I'm a dad- and wonder what kind of opportunities "normal people" will have in our field in the coming years.
I very much admire your company Bryan- even though we tussle often, I find both of us to be among a very few internet independents that, through luck, perseverance and timing that can somehow still find oxygen in this environment.
But if all the newcomers are big bucks corporate concerns, does that really help the consumer?

I've also seen the likes of eBay, Etsy turn into faceless entities. Got a complaint- send a letter to city hall. You'll get more responses.
The added value we're losing, when independents are driven from the business is, to me, what's so special about diamonds and jewelry in the first place.
 

Rockdiamond

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An analogy: Music stores.....who needs'em!!! Sweetwater has everything you could ever want to buy. Of course, you'll never run into any other musicians on a website to trade ideas....nor can you actually touch the guitars.....but selling online is so much more efficient.....
I hate to be a "snowflake"...but I shed a tear every time I walk down 48th Street- former home to Manny's Sam Ash, Stuyvesant Music and 10 others.....instead of those, we're going to get a few more $1000 a night hotels!!! Yipeee!!
 

Texas Leaguer

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@Rockdiamond ,
I hear your concerns and they are real. But they are really not new, though covid has accelerated the pace of change in many ways.

Ever since the industrial revolution, new technologies, information and understandings have consistently disrupted businesses of all kinds. The diamond industry has likewise been impacted and will continue to be affected going forward. Perhaps what makes it feel particularly jolting in our industry is the fact that we have had a relatively long period of status quo. As a result there has been too much complacency in our business. Just look at the level of experience and knowledge in the average brick and mortar jewelry store today.

Whereas many other industries have long realized that continuing education is critical, and that a business must continue to proactively evolve in order to stay competitive, the jewelry industry seemed for such a long time to be comfortable doing what they have always done.

For many, that mentality will doom them. Because, like so many industries the jobs lost today will not come back. Great new opportunities will definitely emerge but they will require different skill sets. And there are no re-training programs that will be imposed on our industry. That will have to come from individuals who are motivated to continue learning and developing new skills.

While it is natural to lament developments such as the takeover of retail by big box stores and the impact they have on the Mom and Pops, they ARE providing added value in terms of price, selection and availability. And the additional information about the products that the small retailers could provide, is available to shoppers through through the internet including technical info provided by the manufacturer, in depth peer reviews from other consumers, youtube demo videos, and forums such as this one!

The pressure is on every participant in the diamond and jewelry supply chain to step up their game and insure that they are providing sufficient added value to compete and succeed. The more who accept that challenge and lean into it, the better our industry will do. For, we are not just competing with one another, we are competing against all other industries who are vying for the consumers' disposable income.
 

Texas Leaguer

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An analogy: Music stores.....who needs'em!!! Sweetwater has everything you could ever want to buy. Of course, you'll never run into any other musicians on a website to trade ideas....nor can you actually touch the guitars.....but selling online is so much more efficient.....
I hate to be a "snowflake"...but I shed a tear every time I walk down 48th Street- former home to Manny's Sam Ash, Stuyvesant Music and 10 others.....instead of those, we're going to get a few more $1000 a night hotels!!! Yipeee!!
One of the things I miss most about being in an isolation mode due to covid is going out to small venues to hear live music. And I hope, selfishly and for the sake of the musicians and club owners, that they all find a way to survive until we can get the pandemic behind us.

But there are amazing things happening such as live streaming events that will change the way we interact with musicians. I joined one yesterday (Joe Robinson - you would appreciate him!) and was really impressed. There were thousands of people on the stream, from all over the world, posting comments, requests, you name it. It was in some ways even more intimate and interactive than hearing a live performance. And EVERYONE had a front row seat. And there was a link to a "tip jar" that you could make a voluntary contribution to that accepted pretty much any form of payment. It was very cool experience.
 

denverappraiser

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An analogy: Music stores.....who needs'em!!! Sweetwater has everything you could ever want to buy. Of course, you'll never run into any other musicians on a website to trade ideas....nor can you actually touch the guitars.....but selling online is so much more efficient.....
I hate to be a "snowflake"...but I shed a tear every time I walk down 48th Street- former home to Manny's Sam Ash, Stuyvesant Music and 10 others.....instead of those, we're going to get a few more $1000 a night hotels!!! Yipeee!!
The success of $1000/night hotels just amazes me. Colorado is filling up with them. I know a decent number of wealthy people, and a few who even stay at these places, but none who frequent them. I go up to Vail or Steamboat and I see 1000 room hotels at $1000/night and up with no vacancy. This is going to end and merchants who know their products and who support their customers will rise again.
 

Rockdiamond

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You're rasing excellent point Bryan.
For sure, there's a different value that can be added.....playing to an Ipad is far better than not playing at all. Hearing and seeing through an iPad is far better than not seeing a live concert, and you're in the first row!....yet there's really no comparison when taken as a whole ( of course, this is opinion based- we can easily see it differently)
I was thrilled to be involved in a few Covid style projects...and grateful for the opportunity.....
But it's nothing like humping the gear and setting up on stage- playing in a group, and feeling the vibrations working together.... bouncing riffs off your friends on stage with you.
Bottom line is that musicians are suffering terribly in this pandemic- and no end seems to be in sight....
 

Rockdiamond

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This is going to end and merchants who know their products and who support their customers will rise again.
Nice, positive message!! So they're going to tear down the Hyatt ( or whatever it's going to be) and re-erect Manny's? Yes, things may evolve to a better place...and maybe I'm overly pessimistic- but I don't see ( for example) more than 1/4 of the places that used to host live music in NYC to be coming back....and it's also true this was going on way before COVID.
To bring the discussion back to diamonds.....will local stores ever become viable again, on a mass scale, as they used to be?

In the case of NYC...I adore living in the past. Deals made on a handshake. Looking at the goods, in person. Weird personalities. One of a kind stones impossible to categorize for the "big boys". May it be this way forever ( I know it won't)- and personally, I don't mind paying 2-3% more for this privilege. Luckily we've found many thousands of people who feel the same way....
 

Texas Leaguer

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Nice, positive message!! So they're going to tear down the Hyatt ( or whatever it's going to be) and re-erect Manny's? Yes, things may evolve to a better place...and maybe I'm overly pessimistic- but I don't see ( for example) more than 1/4 of the places that used to host live music in NYC to be coming back....and it's also true this was going on way before COVID.
To bring the discussion back to diamonds.....will local stores ever become viable again, on a mass scale, as they used to be?

In the case of NYC...I adore living in the past. Deals made on a handshake. Looking at the goods, in person. Weird personalities. One of a kind stones impossible to categorize for the "big boys". May it be this way forever ( I know it won't)- and personally, I don't mind paying 2-3% more for this privilege. Luckily we've found many thousands of people who feel the same way....
I personally think there will ALWAYS be a place for merchants with integrity who have a passion for diamonds, are curious enough to continually seek out knowledge about them, and who can inspire the love of diamonds in their customers.

For reasons very similar to those you stated about the value of seeing live music in person, having a trusted diamond vendor who you can work with in person will always be worth a premium.
 

denverappraiser

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I’m not sure stores that you can walk into at any time they’re open and spend as much time as you want getting advice for free is the future of retail, but yes, I think merchants who actually add value are going to have a place at the table. Possibly even a big place. “Buy for a dollar, sell for two” is gone for good.
 
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