Is it appropriate for the diamond industry to offer mass quantities of loose one-carat diamonds at these events? What is the message we are sending to the high-end consumers who frequent trade fairs, if they see high-end diamond jewelry pieces at one booth, and then loose diamonds in large quantities offered at wholesale prices at another booth? Does this help us promote diamonds as a rare creation of earth or harm those efforts? Isn’t it clear that we are hurting our own business with these actions?
Diamond industry analyst Ehud Laniado takes a helpful look at the, "trends, anomalies and problems in the wholesale sector of the diamond market" as we approach the holiday season. As anticipated, demand is rising, but changes in the nature of that demand are causing some concern; in particular, the steady shift to lower-priced goods, lower peaks in demand and an overall decline in polished prices.
Diamond expert, industrialist and industry analyst Ehud Arye Laniado takes an incisive look at the value proposition of synthetic diamonds, taking their producers and marketers to task on their main selling points. Reprinted in full with the permission of the author.
BBC News and Premier are reporting that an artisanal miner, who is apparently a Christian pastor, has discovered one of the world's largest rough diamonds in Sierra Leone's Kono district. If correct, and if it is gem-quality, the diamond, said to weigh 709 carats, would be one of the 20 largest gem-quality diamonds ever found - coming in at #13, right behind the famous 726-carat Jonker Diamond recovered at the Elandsfontein mine in South Africa on January 17, 1934, and just ahead of the 650.80-carat Jubilee Diamond, discovered in 1895 in South Africa.
The diamond industry is changing, and the global environment in which we operate is changing too. There is a constant and inseparable interaction between the two. We must continue to evolve ... The diamond industry should change its traditional approach towards consumers. My proposed new approach towards current and future consumers is one based on openness and transparency. For most consumers, the diamond mining and manufacturing process is opaque.
In his latest installment, diamond industry analyst Ehud Arye Laniado looks for a plausible answer to the following question: if consumer demand for polished diamonds is not rising, and inventory of said stones is not decreasing, what explains the currently strong - even "hot" - demand for rough diamonds? To give an example: "During De Beers’ Sight last week, the company raised prices by 2-4% on average, according to traders. Sightholders that chose to sell rough diamonds from the Sight reportedly sold them for higher premiums.
The term ‘mined diamonds’ is slowly entering mainstream language in the press and elsewhere, and I find it troubling. We need clear differentiation between natural diamonds and lab-grown goods, and it needs to be far more distinct than mined vs. lab-grown. Natural diamonds were always diamonds. They were formed billions of years ago and were mined after huge sums of money were put into exploration.
Comparing the current mentality of the diamond industry - in particular the midstream manufacturers - to that of mass production in the textile industry, Ehud Arye Laniado argues that the way to restore dwindling profitability is by restoring the luxury aspect of diamonds, and not by slashing labor costs, seeking favorable tax regimes and free trade zones. "How is it possible that an industry that manufactures luxury products is operating as though it provides low cost, price-point driven items?
Drawing a worrying analogy between the film The Big Short (2015) - which depicts how everyone took part in the ultimately disastrous play on U.S. subprime mortgages even though the fundamental truth was, or should have been, known to those familiar with the mortgage market - and the current trend in the diamond market, Ehud Arye Laniado issues a warning about ignoring the lessons learned as a result of the diamond downturn of 2015.
Following a week that saw the Oppenheimer Blue break all auction records for a polished diamond, and in which the sale of his own Unique Pink Diamond broke the record for a pink stone, industry analyst and veteran diamond trader Ehud Arye Laniado examines the 'how' and 'why' of the recent spate of diamonds achieving record prices.
The goal is to change the perception that a diamond is a financial expenditure and to facilitate the perception of a diamond as an asset ... With the increase in synthetic diamonds, which when placed in jewelry are no less beautiful than natural diamonds, we must highlight the financial value of natural diamonds. I believe that synthetic diamonds are here to stay but their existence and usage in the jewelry industry can only boost the notion of natural diamonds as an asset with potential wealth preservation value.
Diamond industry analyst Ehud Laniado takes an in-depth look at why diamonds are not fulfilling their economic 'promise' as a luxury investment that will appreciate in value. Comparing the performance of diamonds to other luxury items bought out of 'passion', he determines that the lack of marketing is hurting diamonds' potential to be perceived as an asset rather than just an expense. But he has a plan.
Diamond industry analyst Ehud Arye Laniado reflects on uncertainties and lingering questions about the direction the diamond trade is taking in the wake of BaselWorld, and wonders whether it is even appropriate to sell loose diamonds at such a high-luxury show? We have selected a few choice comments: "Business [in the diamond section] was not good. This luxury-oriented show is not a good fit for small goods or even 1-2 carat items.
Diamond industry analyst Ehud Arye Laniado analyzes the current state of the industry after hearing that ALROSA's third sales period of the year is currently estimated at $300 million-$350 million, about half of what De Beers supplied in February. The key question is whether the $3 billion in rough diamonds already sold by the major miners in the first quarter of 2016 genuinely indicates increased demand and that the market is getting back on its feet. Thus far he has concluded it does not.
What we are seeing is a group of manufacturers buying enormous amounts of rough at very high and unprofitable prices, which will yield less than needed polished, using credit they may have difficulty paying off because the prices they’ll be able to achieve for the polished can only be low… What better definition for the circumstances that lead to a market to peril. Do you feel this is sustainable? Isn’t it our experience that when rough is purchased in (overall) large quantities with high premiums, the miners raise prices?
Diamond industry analyst Ehud Arye Laniado took the occasion of the international jewelry show in Hong Kong to ascertain the mood of the diamond market, specifically its reaction to the high levels of rough supply in early 2016 in light of demand for polished goods, and more specifically to guage the resulting profitablility.
Diamond industry analyst Ehud Laniado performs a thorough analysis of current rough diamond supply and polished demand, noting a clear trend toward the same oversupply of rough and minimal profitability that undermined the industry in 2015.