What is the real worth of cut diamonds?

[strmrdr]

one answer is whatever someone will pay for it.
But lets seek a different answer.

We have cutters, people who deal in rough and cut experts here so lets try this.
1 ct h&a ideal cut diamond g vs2
cost of the rough?
hours needed to cut?
average hourly wage of the cutter?
cost of disposible materials used during cutting?
cost to have it graded gia , ags ?
other expences?

Dont count factory equipment at this time because it is spread out over multiple stones.

 

[Paul-Antwerp]

I do not know which knowledge you are trying to find, but here is an answer.

The dealers in rough diamonds know approximately which colour-clarity-size of cut diamond will come out of the rough that they are selling.

They also know the cost of cutting.

So, they price the rough in such a way, that the cutters have a margin of 5 to 10 % when they are selling wholesale.

The cutters that are selling more downstream can increase that margin but they will have more expenses and, very important, a longer time span in which they have to finance their inventory.

The cost of getting the rough is a different story. Some very efficient mines will give the miners rough at a very low cost, but other mines will yield only minimal profit.

Live long,

Paul

 

[valeria101]

----------------
On 11/30/2003 1:17:24 PM strmrdr wrote:

one answer is whatever someone will pay for it.
But lets seek a different answer.----------------

Price-costing, right? Diamonds will be set, sold, cut, mined for as much as the probable sale price would allow. As oposite to: mined...sold for as much as needed to cover costs and insure profit. These two methods only seldom attain the same rezult in practice. The largest expenditure in the industry is marketing, followed by distibution (at a decent distance). The costs you have lined up are not all that important, unfortunately. Is this a rip off? I don't know. If diamonds were cheap and E-rings still an extravagant habit of a few, would people still seek and buy diamonds? I doubt it, but welcome any comments, of course.

 

[strmrdr]

sheesh what a messed up industry model.
The raw material suppliers are setting the wholesale price and keeping a lions share of the wholesale profit.
I wonder why the cutters put up with it?
This also explains the crappy cuts on the market today with a fixed amount of possible income it does not pay to take the time to do it right.
Add on the 100% markup in some cases and the consumer is really getting taken.

 

[valeria101]

Diamond production is an order of magnitude greater than of competing gems: without this industry structure, there would probably be as any diamonds and diamond cutters as there are sapphires and rubies and such: meaning orders of magnitude fewer.

The actually finely crafted 'mess' started with a world-wide monopoly, which is now somewhat beign diluted. The story of DeBeers and the system for rough distribution and marketing of cut diamonds is quite well documented. Every school of economics and business has a story on it by now... Frankly, I wisk the diamonds' pricing system will last for ever: otherwise, those E-ring stones would get as pricey as quartz (ok, tourmaline?) some day.