Charles Wyndham: Industry Needs to Move Away From Sights to Ongoing Sales

Finance and Trade
09/02/2016 07:07

The unexpectedly sharp rise in rough prices and demand for goods in January, with De Beers and ALROSA together selling around $1 billion of goods and seeing demand for much more, got Charles Wyndham around to thinking about the sight system and how the industry's sales methods could be changed. "What struck me also is that this sight system of sales, supposedly such a part of any diamonds DNA, every five weeks or so might be contributing to what might prove to be a slightly exaggerated burst of hopefulness, as frankly there does not appear to be any news of any end user demand having or about to suddenly transform our lives.

"From a producers point of view it might, at first sight (no pun, of course, meant) be convenient to hold sales at set times for the full range, but is this merely force of habit and avoiding the thought processes to achieve the same flexibility as the cutting industry. Therefore, why not end the fixed cycle for selling. Why shouldn’t producers sell on a continuous basis as and when various goods are available rather than having to wait for everything to be available. Why not sell the goods by individual mine rather than going for mixes? As diamonds fight against losing even more ground to other luxuries let alone other commodities, could not the whole issue of provenance be used as a powerful marketing inducement?"

Wyndham also believes that selling by mine would also stop "cross-subsidization" from mine to mine. "This in turn might make producers look harder at the numbers of individual mines and prevent the hiding some of their more costly mistakes, i.e., Snap Lake which everyone knew was a dog when it opened, indeed everyone knew it should not have been opened but too much ego had been invested in it. An added rationale for this would be to put a premium on higher quality mines, which often have lower grades. I think the days of churning out millions and millions of carats that get gobbled up by this mammoth production machine - however unattractive the outcome as junk diamonds are turned into ‘polished’ - may be numbered." He says the industry should move away from creating diamond jewelry from "the junk end of goods (boart) that were previously crushed for industrial use.

"Moving to continuous sales, away from the set sight system, might be a small step in the right direction. Mining companies would not be competing to sell in front of each other. Companies could, if they wanted, give a general guidance, as they do now about the expected volume of carats to be mined in a year, and then let the market get on with it and avoid some of the more crass shenanigans we are all subjected to at the moment. This feverish focus on each sight figures would disappear and the market could get on with thinking about growing rather than its fetish for navel gazing."