Exceptional Diamonds Keep Fetching High Prices at Auctions

A pair of pear-shaped D Flawless diamonds of 17.01 and 17.79 carats was sold on Thursday for $3,554,500 to a private buyer in New York. The duo, inscribed by Forevermark, are two out of about 50 high end polished diamonds that were sold in the past few weeks for good prices, despite the economic down turn.

The initial shock reaction that seemed to stunt purchases of high-end products - paintings, antiques, jewelry and diamonds - has largely dissipated, with top-end diamonds fetching at times even record breaking prices.

Just one day before above sale, the 35.56 carat grayish blue VS2 Wittelsbach Diamond sold at a Christie’s auction for $24.26 million breaking the record for an auctioned diamond. A few days before that, Christie’s magnificent jewels auction in Hong Kong sold only 63 percent of the lots, but total sales were 79 percent of the auction house’s estimates.

According to Rahul Kadakia, Christie’s Head of Jewelry, private buyers dominated the Thursday sale, acquiring all of the top ten lots.

How can these items, and a large number of other such diamonds, find buyers willing to pay $100,000 per carat and more at such times. Clearly, buyers with cash are seizing the unique opportunity to buy goods at a time when fewer bidders are around to push up prices. Dealers of large stones say the pair of D Flawless diamonds sold last week could have been sold for much more, at better times. Possibly twice as much.

Such diamond dealers are hard pressed for cash, and are willing to offer the goods for the chance to recover their costs.
Eighteen jewels sold for over $1 million at Christie’s New York in 2008, according to Kadakia.

Dear Mr. Rapaport

Mr Rapaport,

I am an Antwerp diamond trader and manufacturer since 1984.
I have witnessed your rise during these 24 years, becoming gradually the Oracle
of the diamond trade, the most powerful person, the reference for the whole
diamond world, and I can only admire that.
For many years, your Rapaport List, was supposed to be a reflection of the market,
never perfect, but nothing is perfect, an opinion, and that was ok.
Last June, you changed all that, by raising the list by 25%, saying : this is not a raise, the premiums have to go down, customers, please don’t pay more etc .. you tried to have an influence
on the market, stop the speculation.
While your intentions were good, the results were dramatic.
Since you changed from being an observer to being a manipulator of the market, since you decided that you
wanted to be ‘Alan Greenspan’, things went from bad to worse.
Your recent price decreases have succeeded to scare away the last few buyers that were intending
to purchase diamonds, postponing or even cancelling their purchases, thinking that the list going
down, tomorrow they’ll buy cheaper.
For this, I don’t thank you.
Mr. Rapaport, your every move has a tremendous influence for the industry, please, in the future act
with more responsibility.

Ziv Knoll
Sygma Diamonds

Random Acts of Management

I keep reading stories of CEOs of large companies who make hundreds of millions of dollars in stock options. There is some debate as to whether this is appropriate. One argument is that these CEOs are visionares, uniquely qualified to create spectacular stockholder value. Another possibility is that CEOs are just showing up and shuffling things around until something lucky happens. I'm leaning toward the "showing up and shuffling" theory.

I'm not saying CEOs are dumb. Put yourself in their shoes. When you're a CEO, the only information you have is what your subordinates give you. And they're all unscrupulous sycophants. The last thing you'd ever hear is the truth. So there you are, a powerful CEO astride some mammoth enterprise, armed with no useful information whatsoever. You know you have to do something but there's no way to know what. Your only rational strategy is to do random things until something lucky happens, then take credit.

The alternative - acting nonrandomly - is a sure loser. Let's say, for example, you're a CEO and you fire everyone whose last name starts with the letter M. That's a clear pattern, and not a good one. Everyone would think you were a nut. You see, when you don't have a good strategy, any activity that looks like a pattern just makes you look bad.

Conversely, if you act randomly, reorganizing for no particular reason, promoting idiots, merging unrelated businesses, spinning off a few divisions - that looks like leadership. It's leadership for the simple reason that your employees never would have made those changes on their own. Later when something lucky happens, you can take credit. If nothing lucky happens, call it a transition period.

I wonder what CEOs say to their spouses in private. Do the CEOs begin to believe that their management decisions are connected to the results? I bet they do. It probably sounds like this:

CEO: "Honey, I fired my VP of marketing because I didn't like his shirt, and our stock went up a point!"

Spouse: "Didn't the Fed lower interest rates today?"

CEO: "Try to stay on the topic."

posted by Dilbert

DTC July Price Increase

De Beers Trading Company (DTC) increased prices for rough goods by an average of a little more than 5 percent at its July 7-11 sight, the sixth of the year. Prices for better goods that produce polished weighing more than 1 carat went up as much as 15 percent.

HRD Antwerp Provides First Advanced Polished Diamond Grading Course in Surat

HRD Antwerp organized a special workshop on Advanced Polished Diamond Grading for the executive staff of India's Blue Star Company from April 21 to 29 in Surat, India's major diamond processing centre. The aim of the training was to compare the HRD Antwerp grading system with Blue Star's working methods. In this way, employees are better able to understand the details of HRD Antwerp certificates.

The course handled the four C's: cut, clarity, carat, and colour in detail, and orientated to the practice of everyday work. The participants in this course were highly skilled employees with a high degree of professionalism and many years of experience. These included directors, managers, diamond planners, quality checkers, and graders from the different departments.
Altogether there were four groups of 18 employees. The course participants commented that the intensive training provided by the course had been of great practical use to them, and that they would be able to apply it to their work.

De Beers Announces Price Increases

De Beers in a letter to clients last week said it had increased prices by an average 8.5% since the start of the year, including this week's Sight or sale.
"Overall, the cumulative effect of the Sight by Sight changes to our list prices over the first 4 Sights of 2008 (including the April/May Sight) will have been an average of +8.5%", the letter said.
Rio Tinto and BHP Billiton are also said to have raised price this month, highlighting the continued strength of the rough market.

March Diamond Prices Continue to Rice Sharply

Global diamond prices continued to march upward at an increasing rate in March. On a year-over-year basis, polished diamond prices surged by 8.6 percent, according to IDEX. On a month-over-month basis; March 2008 vs. February 2008; polished diamond prices increased sharply by 2.0 percent. Both of these price increases are the largest since 2004, and they are greater than the record price gains last month.

The sharp price increases in polished diamonds were driven by three-carat diamonds and larger.
While prices for on-half to two-carat stones increased more modestly than the larger stones, it is important to note that all key diamond sizes posted a price increase, year-over-year, in March.

There appear to be five key factors that are driving diamond prices sharply higher:

1. solid demand from most markets, except the U.S. and Japan.
2. rising costs throughout the diamond pipeline.
3. a weakening U.S. dollar, the international currency for the diamond market.
4. a global rise in the price of virtually all commodities which has spilled over into the diamond market.
5. stock market volatility, the last of which has caused some traders to move their wealth into diamonds, precious metals, and other assets that may hold their value, until the financial markets recover.

The big question is this: will these diamond price increases hold at retail, or will merchants negotiate them down?

Even though the U.S. is in a recession, demand from other regions of the world is expected to push diamond prices higher during 2008. As long as the demand for diamonds and diamond jewelry remains strong, especially in emerging markets, prices are expected to rise. Further, since rough diamond prices have been rising faster than polished diamond prices, there is ongoing pressure to pass along those price increases.

De Beers Loses $521 Million!

De Beers net earnings fell into the red from a profit of $730 million in 2006 to a LOSS of $521 million in 2007. Diamond sales fell 3 percent to $6.4 billion.
In the year 2007, where prices and sales of diamonds were very strong, for every well managed company in the world, we can ask ourselves, how come De Beers in its dominant position, is unable to generate profit? Accounting schwindle? Bad strategy or incompetent management?