Who controls market prices?

[OoohShiny]

Hey all

I fully appreciate this is a topic that has probably been done to death already! so I'm more than happy to be pointed towards existing information, I won't mind


I was just wondering who controls market prices?

I've been making some enquiries around potential earring options for the other half and had spotted a cracking pair of stones, but as I've been vacillating on the actual earring settings themselves I've taken a few days to make a decision (and still am not sure lol).

Unfortunately this delay has meant that the stones in question have risen in price. I understand this happens from time to time, but they've risen around 30% in price.

Is it DeBeers that control worldwide prices? I recall reading that they were effectively a monopoly until recent years but I had thought that had all finished now.


I'm aware this thread will probably identify me to the vendor in question but hopefully it won't put me in their bad books They have been very helpful in suggesting other options that are very close in size and spec, and which are at a similar price to the original stones, so I can't fault them on that, I guess I'm just venting some frustration at the situation


Any info greatly appreciated!

 

[Dancing Fire]

We the consumers do!, so we must stop paying these high prices for diamonds...

 

[GeorgeStevens]

The price of diamonds depends on the illusion in the minds of consumers that the diamond is a rare and valuable stone. Diamonds have little inherent value. The DeBeers cartel long ago went legit, so the only thing supporting the price of diamonds is the willingness to pay of the consumer. There is no set price of diamonds like there is for gold, a bushel of corn, or a share of stock. There are price sheets but these are not firm offers to buy or sell, so they're of limited value. For now the expectation is that prices will continue to rise as supply is expected to be less than demand.

 

[distracts]

Debeers' market share is just like 35% ish now, iirc. Now market prices are determined, well, by the market, rather than by a monopoly.

 

[Rockdiamond]

Actually George, diamonds have tremendous inherent value.
Without diamonds the industrial revolution would not have found fuel it needed ( Diamond drill bits)
Diamonds are used to polish the screens on smart phones.
It is after all the hardest substance.
Also one of the most capable of dissipating heat quickly.
Diamonds are used in ultra sensitive electronic components as heat sinks.
Of course we're not talking about the quality and type of diamonds people love to wear- but in some ways the two things seem related to me.

I have always loved the way the market has developed. I don't exactly agree with George- but I do find inequities in terms of utility, and sometimes beauty, an L is as nice as a D. Yet it cost's 75% less.

 

[WinkHPD]

The price of diamonds depends on the illusion in the minds of consumers that the diamond is a rare and valuable stone. Diamonds have little inherent value. The DeBeers cartel long ago went legit, so the only thing supporting the price of diamonds is the willingness to pay of the consumer. There is no set price of diamonds like there is for gold, a bushel of corn, or a share of stock. There are price sheets but these are not firm offers to buy or sell, so they're of limited value. For now the expectation is that prices will continue to rise as supply is expected to be less than demand.

LOL! George, having a supply that is less than demand is one of the key indicators that diamonds do have great intrinsic value, at least to those of us who love them and enjoy both giving and receiving them.

Due to the entry of both the Chinese and the Indians into the diamond engagement ring market, diamond prices continued to rise during our last few years of undeclared economic depression. Back in our last big economic downturn back in the 80's diamond prices went stagnant, because at that time the American market consumed well over 50% of the world wide production. I do not remember the exact number, but it was much higher than it is now.

I believe we now consume less than 40% of the world's production now, but perhaps John Pollard or Paul Slegers can jump in with the accurate numbers.

You are correct that there is no price sheet, nor will there ever be since diamonds are not fungible. Minor variation in way too many factors can have major consequences in the pricing of any diamond.

Wink

 

[kenny]

Diamonds are fungible.

I have lots of fung wearing mine.

 

[distracts]

Diamonds are fungible.

I have lots of fung wearing mine.

 

[Karl_K]

Diamonds are fungible.

I have lots of fung wearing mine.

just as long as it isn't fungus!

 

[OoohShiny]

Thanks for all the replies, all


I do appreciate the supply/demand / willingness of the consumer to pay thing, I was just confused because the comment made by the vendor I was talking to was "Don't blame us, blame DeBeers" which seemed to be invoking all the things I thought were no longer the case, i.e. they are monolopising the market and are restricting supply into the market to increase the gap between supply and demand and therefore raise prices.


So... where do I / A.N.Other customer go from here?

Do we just accept the price rises and either pay up or look for smaller stones within budget, or do we say "Actually, I think that's a bit steep. I will offer you X dollars for the stone(s) in question." and see if there's any price movement?

I was under the impression that the latter was poor form, but I don't see how we as consumers can have any influence on price levels unless we contest prices or literally just don't buy what we want to unless it comes down in price, but everything I've been reading expects prices to continue to rise whether we express dissatisfaction with pricing levels or not!

It does leave one, as a consumer, feeling very much like we are at the mercy of whatever the market decides to do, IMHO.


Anyway, like I say, I am a little frustrated at the moment so apologies for the rantings!

 

[denverappraiser]

They can blame it on DeBeers, the Internet, George Bush, or anyone else they want. It doesn’t make a lick of difference. Diamonds are peddled in a HIGHLY competitive marketplace and are increasingly seen as a commodity. That’s a perception thing in the eyes of both the buyers and sellers. Sellers can ASK whatever they want. Getting it is an entirely different issue. The same happens on the other side as well. You can offer whatever you want but whether or not they accept your deal is going to have to do with what their prospects are of selling it to someone else for more. No one is 'controlling' it.

Do diamonds have ‘inherent value’, like gold? Yes and no. It’s blasphemy to say it here but outside of a few industrial uses, diamonds are completely unnecessary things. They’re expensive because they’re cool and people like them. That’s not how people usually define inherent value but it’s as not bad as it sounds. The whole notion that diamonds should be a consumer product is about 100 years old and it’s going pretty well. That started with DeBeers but it long ago took on a life of it’s own. Will people continue to like the? That’s hard to guess, it’s fundamentally a fashion product and fashion can be fickle, but the prospects look pretty good. Meanwhile, gold is an example of the same thing although it’s been going on a bit longer, say 5000 years. That’s quite a while but this is not something that’s written in our DNA. There are a few applications like electronics where you could say gold is actually useful, but mostly it’s just because people like the stuff. Will it continue to be desirable next year? Probably, but it’s the same general concept. There’s no guarantee.

Are they rare? That’s a hugely loaded question. 80% of diamonds mined are purely industrial, and they aren’t terribly expensive. Of the others, the vast majority are quite small, under 0.10cts. Of the big ones (say over a carat), the majority are low color, low clarity, or both, and regardless of that, most are rather poorly cut. Big, clean, white, well cut stones really are quite rare, and the demand for them is both high and increasing. The usual use for these things is in engagement rings and the diamond bridal tradition is on the rise worldwide. Half of the people in the world are women. Half or so of those are single. That’s a LOT of potential brides and although they certainly don’t need a diamond, they increasingly seem to want one. That is to say, demand is high. Limited supply with high demand. Isn’t that the definition of rarity?