Rising Inflation & Low Interest Rates~
Is cash worth keeping in the bank ?
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"... the supply of newly mined diamonds will not be able to keep up with this growing demand, which means the price of diamonds must rise, and, in particular, the prices of better quality diamonds" :
Shannon O’Donnell Mining Weekly
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Luxury Versus Investment - a fine line
In these recessionary times the luxury sales market has deeply affected diamond sales world wide.
The decline in the American market which represented close to 50% of the world retail diamond consumption has caused a chain reaction. Falling like a deck of cards the diamond pipeline has broken it's traditional chain for retailers, dealers and miners.
But is it really as negative as portrayed by fear mongering ill informed financial journalists who merely wish to sensationalise events?
The Hong Kong Chinese market has been the diamond trade's saviour.Rising Chinese inflation has created a new breed of diamond investor stabilising confidence where the American diamond market has failed with strong emphasis on collection colour VVS goods.
Likewise in Europe, auction houses have broken world records achieving high prices for rare diamonds until only recently not just in diamonds but also in art.The cashed up rich are taking advantage of the situation when it comes to buying art.
The highly geared and debt ridden have been the most to suffer. Those who chose to deal with unsecured high risk diamond vendors and stockists were the most exposed. It is nothing new.You do not need a recession to reveal the obvious because debt ridden clients are always a risk no matter how the financial atmosphere prevails as many unsecured creditors would know.
So a higher than average number of bankruptcies and liquidations caused a lack of confidence which in turn puts pressure on dealers who were also in debt and then the bankers become nervous until it all exploded in our faces just because the banks themselves lent money more freely in the good times. So we all paid the price directly and indirectly for thinking credit is a right and not a privilege.Lending up to 100% of a home loan by some institutions was irresponsible and the results have had serious repercussions causing a domino effect that rippled through world markets since the middle of November 2007 until the present.
The lack of confidence has caused diamonds to plummet as it is widely reported by alarmists.Fire sales and desperate dealers are scrounging the famine torn fields of depressed diamond exchanges everywhere so we are told while the lending banks are now on the warpath to retrieve monies that they should have never lent in the first place.
Calculated Purchases
But for every loser there is a winner.
Firstly let me remind you that diamond prices have fallen. It's true. But which diamonds ? Only the larger three carat and up have been drastically affected and those diamond dealers who specialised in these large sizes without counter balancing their stock levels with more smaller commercial sizes have either forgotten the plot and shown their experience.
Ask anyone with a real estate portfolio what is safer ? Owning one ten million dollar mansion in an up market neighbourhood ? Or twenty two-bedroom apartments which are easier to sell and buy than any mansion just because they are more affordable ? In other words smaller diamonds trade more often because they are always going to be more affordable than a single large diamond.It's not that complicated only you need to still have the knowledge required to avoid the many pitfalls that consumers encounter when buying from inexperienced and unscrupulous diamond rogue vendors.
We have observed at Diamond Imports that diamonds from 3 carat and up have fallen approximately from 15% to 25% however these sizes do not represent the bulk of the commercial market. Fewer people can afford these larger diamonds.The prices, even despite the decrease is still an expensive purchase assuming we are talking about collection colour goods ( D to G ) from IF to SI2 in Excellent to Very Good cut grades. On average I am talking about diamonds from AUD$30,000 plus.
Australian Diamond Buyer Demographics
The majority of diamonds purchased on the commercial engagement ring market cost from AUD$5,000 to AUD$16,000 which represents our target market in the age group from 27 to 38.This age group tend to be highly educated professionals who are disciplined at researching on the world wide web unlike their parents and in stark contrast to most uneducated jewellers and diamond vendors many of whom have not the same educational standard or are knowledgeable in internet sales strategies.
In other words diamond vendors must learn to stop bullshitting their way through life because their clients are not as easily sucked in anymore.
There is buyer resistance for any diamond exceeding AUD$17,000 and unless you have enough disposable income and you are not in fear of losing your job particularly those who live in corporate heaven, the idea of spending close to $30,000 or more is a more calculated purchase.
However in the more accessible commercial sizes from 0.50 carat to 1.49 carat, prices have only dropped a couple of hundred dollars per carat. It's barely noticeable plus compounded by the weakness of the Australian dollar against the US dollar which has only made a 5% recovery of late ( from AUD$0.65 to AUD$0.70 = USD$1 ) since the heady times of almost reaching equal parity late last year.
For example a round brilliant 1.00 carat D IF Ex Ex Ex has dropped from USD$24,800 per carat according to international wholesale price lists to currently US$23,100 per carat. This only translates into approximately AUD$2500 decrease in total price. This is a minimal decrease and not even worth considering if you are only buying one diamond ring. Naturally if you bought in bulk this would be different but such diamonds are never bought and sold this way.Diamonds below the D IF barometer have been less effected from 1.49 carats down to 0.30 carats.
Mind you, those few dealers such as ourselves who are investing in higher graded D to E - IF to VVS diamonds have not felt the need to change prices.These diamonds are still rare and if sold, still require to be replaced. A recent purchase of a round brilliant 1.30ct D IF Ex Ex Ex by us took well over year to replace the same in a 1.36 carat. Clients who purchase such diamonds appreciate this value is based on the rarity and availability not like some phantom diamond listed on a bogus website listing used to bait and scam innocent easily impressed would be diamond buyers.
Those who have followed prices remember that in June 2008 the price was $18,100 per carat for a round brilliant 1.00 carat D IF.It remained stagnant for months until the price increased in line with the larger diamonds because they just looked too cheap in comparison.
Therefore those ill informed financial journalists who continue to mimic rubbish because the three carat plus diamonds have fallen have no idea about the diamond market. They are not traders yet they report facts that many dealers are not noticing.
In fact this shows how high grade commercial sizes ( 0.50 carat to 1.49 carat) have held their ground. The large diamonds were over inflated and the decrease is a reflection of the prices that real diamond merchants feel is now a more appropriate price until the situation recovers once availability becomes scarce again
Overheads and Employment
The other factor that effected price in a more indirect way was OVERHEADS.
Overheads cause debt which eat into profits.
The diamond business is ,despite what most larger diamond dealers would like us to believe, is a small cottage industry. Small operators wheeling and dealing are the staple diet of our business.
Sure there are big diamond dealers out there too but in the scheme of things relatively speaking they too are still small time.
The larger dealers employ too much dead wood. Unproductive cowboys who seem to think because they were fortunate enough to land a job with a diamond company that they are hot shots who can do no wrong.These cowboys cost money. Many have no idea what they are even talking about past the basic 4C's and it shows when you attend their offices and trade events.They are disposable.Keep staff to a minimum if required.
A perfect example is the number of sacked GIA staff members just before last Christmas. Although not diamond dealers, GIA was a by-product of why so many unproductive gemologists were not needed.It is no different in some of the larger diamond companies. Over two hundred thousand Indian diamond cutters have returned to their original agricultural life styles.
The trick is to stay small and controlled in the diamond business but this is difficult to do when your business seems to be growing faster than your cash flow. Do not grow big. The risks are too high for small profit.
The only way to cure this is give no credit. Give no consignments or approvals. ( or memos as the Americans call them ).
Only deal with those who can put the money on the table otherwise it is a waste of time.
Tyre Kickers
This also goes for diamond buyers who tend to be tyre kickers. Diamond buyers require to do their own research if they are to receive any benefit when buying a chosen diamond.It is not necessarily the responsibility of the inexperienced diamond vendor because many are just spokespeople doing a job. These tyre kickers expect retail service at lower prices. Unfortunately the less experienced diamond vendor seems they need to do bend over backwards in a cowering performance of submission hoping they may close a sale.Nothing is further from the truth unless of course you do not have any diamond education when selling.
At Diamond Imports we insist clients should do their own research prior to an appointment. We are not school teachers and have not the resources or the time to deal with novices who think they should appear on our door step expecting us to be delighted to see them. Others dealers will gladly meet you with open arms. Go there and expect to buy the diamond with the advice and service you pay for but do not expect 100% professional service.Used car dealers are more reputable and have more laws governing their actions these days than diamond dealers and that is a clear fact !
I remind the reader, do you buy a house, a computer or a car this blindly ?
You should NOT buy a house or a car this way. Why buy a diamond in such a manner which is clouded more in mystery than other luxury products despite the standardisation of nomenclature ?
Diamond Jewellery Retailers
Diamond jewellery retailers are at a disadvantage these days. They have to compete against the bullshit artist internet diamond retailers many of whom do not carry any diamonds in stock and know even less then them.
Some have finally realised they are fighting a losing battle not just on price but also on their own lack of product knowledge.Very few have remedied the situation and not a day goes by that they wonder where this upheaval in their safe little shopping centre world has come from.
This is what happens when , like so many internet diamond dealers, retailers do not have the confidence to carry actual diamond stock for sale.
The potential client sees right through it and leaves until they find some one who actually owns their own diamonds for sale.
If the diamond vendor is not confident in stocking and waiting to sell a diamond how then can the diamond consumer expect to have the same confidence.
Diamond jewellery retailers are still stuck in a rut. They often charge too high a price which can be easily checked and compared. Sometimes this is not their own fault. High rent and hidden costs of running a business warrant the higher margin requested. Does this help them ? No
Based on price alone, retailers fail to realise by being competitive on a diamond they can achieve the sale and then through added value services such as manufacturing a piece of jewellery they are able to recoup the lost profit for their services but they are greedy and want it all or nothing. And nothing is what they sell !
But buying diamonds based purely on price and not taking into consideration other pricing factors is the one sure way of buying a lousy diamond.These are the sort of customers retailers and drop shipping diamond websites prey upon.
See :
Buying Diamonds Online - Savings or Scam?
Undercutting Diamond Prices & Diamond Scams
Bluff Diamonds
EGL VERSUS GIA
JAA Trade Alert- Inaccurate GIA & EGL Diamond Reports
Australian Diamond Jewellers Require Accreditation
Diamonds Hold Value Only For Some
Diamonds despite what some journalists write have held their value better than most people realise and are still higher in price than they were five years ago. The price may have plateaued out for the short term but this is a healthy correction.
With many diamond mines closing down temporarily this will cause new shortages and keep prices stable once overstocked diamond dealers' diamonds are depleted.
In addition while banks are offering ridiculously low interest rates on savings, the low risk of diamond values just like gold, are looking very attractive to those diamond merchants who are flush with funds and are patiently waiting for the inevitable next price rises which I expect will occur within the coming year due to expected shortages due to mine closures.
It's never been a better time to commence restocking for those who have the knowledge and confidence in commercially viable diamonds.
If you are an experienced diamond dealer you have understood all the above.
Warning to Internet Diamond Retailers Pretending to be Wholesale Importers
As for the rest of you wanna be insolvent diamond dealers and fake diamond experts with your dodgy diamond websites thinking you are on the way to making an easy buck, think again.
Many of the fringe dwellers have disappeared. They do not belong in the diamond business.
But more and more keep popping up weekly as if they have just discovered the world wide web and their websites are an embarrassment to themselves.
The worst ones are those who feel the urge to put a picture up of themselves...cringe factor ten out of ten... as if this is enough to say " Look at me ! Now buy the diamond ~! ".
Frustrated " celebrity diamond salesmen " have no place in your diamond purchase unless of course the diamond appears superior to them. I hope this makes sense. At least parasitic lice can be eliminated but there are no cures for dishonest diamond dealers who have the chutzpah to call themselves as such. And in Australia there are more and more sprouting out of the darkness like black fungus hanging from website diamond lists world wide...it's your lucky day so you may think.
It's time these fake diamond salesmen find a new career path and let the ethical diamond vendors do the job the pretenders were never destined to do.
Do not for a moment think assorted " diamond vendors " are immune.Unhappy clients tell their friends where not to go.Happy clients do the opposite.
What are the credentials of the diamond vendor ?
When a serious diamond buyer enters a store and is confronted by an attractive young smiling bimbo or an even younger bimbette this is the one sure way of knowing you are not in the right place unless the salesperson can impress you immediately with an honest reply showing sincere product knowledge.It rarely happens. Likewise if the store employs some old condescending fart with a use by date that goes back to medieval times expounding their wealth of misrepresented knowledge this too is an issue.
Experience shows and inexperience helps your competitors close a sale.
Always insist to deal with the owner of the business not an employee.
Always ensure the diamond is owned by the diamond vendor and not on consignment as is the custom by so many incompetent internet dealers and retail stores.
These sort of people have no duty of care to you the client. They will sell you any diamond that is available pending your enquiry in advance because they have had enough time to source a diamond in the meantime. They will sell any diamond that they have been lucky to be given by a patronizing wholesaler.
How does the diamond vendor appear ?
Presentation is the key to all successful closed sales and when you do not even hit first base it's uphill the rest of the way. The stories that clients tell me are unable to be published here for legal reasons but the point is that the buying diamond consumer is no longer the gullible idiot most internet diamond dealers think they are.
Some of the diamond websites that are sprouting up now like noxious weeds in a strawberry patch are so badly thrown together that you wonder how stupid these people really are.The experienced IT analyst can perceive information about who the diamond vendors really are simply because certain clues are left in the coding and page formats that reveal more about the seller than the diamond product they are selling.
Diamond websites owners copy and plagiarise key words and formats not realising the damage they are doing to themselves.Often some are just clones of each other.After a while it becomes boring and frustrating for the diamond buyers when they realise they are looking at similar versions of the same thing but yet diamond vendors persist with the same unoriginal formats.
If you are not honest in your presentations online then how can you be trusted to sell a diamond ethically ?
Jewellery is meant to be individual and unique but most diamond website vendors fail miserably.It is indicative of their websites...the new jewellery shop windows.But are you surprised? How often do you see the same ring in two different competing jewellery shops?
Some of these dodgy diamond websites, most of which advertise diamonds they have never seen, let alone own, are laughable. We hear clients tearing strips of our competitors. In a desperate attempt to compete most are liars and they look cheap and nasty; an obvious reflection of the type of diamond vendor you have chosen if they are unable to disclose the truth and present the diamond accurately compared against several other CERTIFED diamonds in order to make an intelligent properly informed decision.
One self opiniated West Australian Perth pissant idiot can barely rub two twenty cent pieces together, who was expelled from the Jewellers Association of Australia, goes under four separate identities online rubbishing others.This sort of dishonesty reveals a lot about the character you are dealing with and everybody knows it but does not have the balls to tell him to his face; cringe factor 10/10 ! but I admit he is good for business. Even our other lack-lustre competitors who patronize him just to be nice are bemused.They all deserve each other and anyone purchasing a fantasy virtual diamond from these clowns has to be equally as stupid because they are both the two sides of the same coin.Their diamonds are as inferior as their advice they freely give assuming they actually have any real diamonds in stock that day attempting to impress you with their expertise.
If you recognise the contempt I have for these want-to-be rogue diamond vendors then you are not mistaken.They are nothing short of con men and no jewellery trade organisation in Australia can enforce them to behave ethically otherwise.
So when a diamond salesperson may inform you that they only sell Russian cut diamonds or ideal cut diamonds or diamonds that show fire or any other crap that comes out of their stupid mouths, then simply ask diamond vendors to explain what they really mean. At least you might find it entertaining watching them make fools out of themselves blundering through incomprehensible reasons why some diamond vendors say the unqualified statements they make parrot fashion to you and those before you and after you.
Hiding Behind Local Gemologists
In addition be careful of local gemologists who sometimes know even less. A gemological diploma does not automatically guarantee experience or diamond product knowledge despite some online diamond vendors' websites emphasising their staff are fully trained qualified gemologists.
This is just an illusion to provide you the buyer with the facade you are dealing with an experienced diamond dealer. It is the usual lame limp line of defence that those faceless diamond vendors who are not gemologists make a point of telling you in order to justify their own lack of credentials.
You the diamond buyer need to understand the diamond. If you do not understand, then the diamond vendor has failed you.
Warren E Buffet, one of the world's richest men summed it up succinctly , " If you don't know jewelry, know the jeweler."
Feeling frustrated yet when buying a diamond ? I don't blame you.
Good Hunting & Buyer Beware
Hooorrooo from De Guru...
Additional Reading :
Diamonds & Bank Crisis
ABN AMRO Comes To Botswana
DTC & The Bankers
Banker's Doublespeak
China: Creditor to the Rich
Inflation & Weakened US Dollar Affects Diamond Prices Chinese Inflation Affects Diamond Prices
Confident Rich Continue to Invest in Diamonds & Art
The World's Leading Art & Antique's Fair 2009 Maastricht 09
TEFAF: Europe’s Grandest Fair Projects Confidence
Optimism and Jitters at Art Fair in Europe
Brisk Sales as Thousands Attend TEFAF Maastricht this Weekend
Investing in Diamonds: The Terms of Engagement
Diamond Investors Despite Financial Gloom
Diamond Circle Capital : " the market is thirsty for liquidity "
Diamond Circle Capital : Can commoditisation be good for diamond prices?
Diamonds For Art Lovers : Diamonds, like art, are a commodity that is gaining attention as an alternative investment.
Diamond industry likely to get smaller
De Beers on Struggle Street
DTC Sightholders ~Undermined by Over Mining ?
Rough Diamond Future Planning
Diamonds Demand Driven
" Rapaportization " of Diamonds
Diamond Descent for the Purpose of a Diamond Ascent
Antwerp Symposium: Industry Considering its Fate " Diamond reserves are at an all time low and demand is expected to surpass supply by late 2011 or early 2012."
Retail Jewellers- The USA Solutions & Advice
Diamonds & Gold Indian Style - Happy Diwali
Inflation Affects Diamond Prices
Diamond Website Vendor Grilled
Integrity of Diamonds Impacted by Trade Transparency in Africa, Penny Says
The Morality of Diamonds
" The positioning of diamonds in the market is no longer just about the quality of the product.
Consumers will increasingly measure the product against where it comes from, who manufactured it, and how. What does the product do for the economies where it is mined? This goes far beyond ethical practices – we are getting into areas of business morality, or, more precisely, the morality of our business." : Chaim Even-Zohar
Luxury Versus Commodity " the investment in marketing must be more sophisticated than that of other luxury items." : Motti Ganz, Chairman of the Israel Diamond Institute, speaking at the 3rd International Rough Diamond Conference earlier this year." 2008
Risky Business
Historical Feature: The Diamond Boom of the 70's
Inflation & Weakened US Dollar Affects Diamond Prices
DIAMONDS: DIMINISHING SUPPLY
Buying Diamonds
Diamond World Supply To End In 20 Years ?
Diamonds - Buying Diamonds - The Diamond Imports Difference
Long-term outlook for diamond jewellery positive – analyst
Australian Diamond Jewellers Require Accreditation
What Diamond Vendors Do Not Want You To Know
Drop Shipping & Diamonds
How diamonds are sold - Your options for purchasing
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Diamond Imports
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Kiss Her With A Diamond
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Highest Quality Certified Diamonds
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Today in History
1521: Luther defiant at the Diet of Worms
Martin Luther
, the chief catalyst of Protestantism, defies the Holy Roman Emperor Charles V by refusing to recant his writings. He had been called to Worms in Germany to appear before the Diet (assembly) of the Holy Roman Empire and answer to charges of heresy. Martin Luther was a professor of biblical interpretation at the University of Wittenberg in Germany.In 1517, he drew up his 95 theses condemning the Catholic Church for its corrupt practice of selling indulgences, the forgiveness of sins. Luther followed up his revolutionary work with equally controversial and groundbreaking theological works, and his fiery words set off religious reformers across Europe. In 1521, the pope excommunicated him and he was called to appear before the emperor at the Diet of Worms to defend his beliefs. Refusing to recant or rescind his positions, Luther was declared an outlaw and a heretic. Powerful German princes protected him, however, and by his death in 1546, his ideas had significantly altered the course of western thought.
Kahn Canary 
Barack Obama denies claim he is to buy rare £20,000 rhodium ring 
Barack Obama kisses Michelle on election night
