Diamond Rough Shortfall Will Increase Prices.

Global demand for diamonds is outstripping the available supply over the next five years, and a worldwide shortfall in rough has been projected to reach $7 billion in value by 2012. According to U.K. analyst James Picton, that is roughly two thirds of last year’s global mine output. Over this interval, Picton also projected 30 percent price growth for rough to bring demand in line with supply.

Although new diamond mine exploration continues, when new productive mines will come online is a matter of conjecture. Right now prices for high quality rough are very high and pushing retail prices for polished diamonds consistently higher.

You Can Find A Diamond In The Park!

Rapaport Wire Service reports this morning that anyone willing to dig for diamonds can do so at Arkansas State Park!

Some 700 diamond finds have been in excess of 1 carat, but the largest diamond found so far weighs 40.23 carats (unearthed in 1924.) The largest diamond of late was 7.28 carats found by a vacationer in 1998.

According to park officials, the Crater of Diamonds is a result of one volcanic eruption about 100 million years ago that pushed diamonds up to the surface near a town known today as Murfreesboro, Arkansas. In 1949 an attempt was made to open the area up to the public after decades of private ownership. It opened as the Diamond Preserve of the United States in 1951. In 1969, General Earth Minerals of Dallas, Texas, bought the land as a private tourist attraction until 1972, when Arkansas bought the land for a state park for $750,000.

Thirty-seven acres of land are available for visitors to explore, and the park re-plows the land each month to help bring more diamonds to the surface. During summer months (late May through early September) park officials teach visitors diamond mining, and offer nature programs and a children’s mining camp. In spring and fall the park offers mining demonstrations.

Admission for adults is $6, and children ages 6-12 pay $3. Park hours are 8:00 a.m. through 8:00 p.m. from Memorial Day weekend into Labor Day weekend, and the park closes at 5:00 p.m. during the remainder of the year. Crater of Diamonds State Park is about 60 miles southwest of Little Rock, Arkansas, (off Interstate 30.)

Happy Hunting!

Appraisals Not Required for Insuring Jewelry Items Under $50,000.

I had the pleasure of meeting with a very professional representative from a large, well known insurance company last month called Chubb. Chubb insurance group has been underwriting since 1882 and is a multibillion dollar, global property and casualty insurance firm. I was meeting her to get on a list of independent qualified appraisers that they use for their in house agents to refer to. During our meeting I was surprised to find out that an appraisal and other important documents were not required for jewelry items under $50,000.00 to be insured with Chubb. Even to such a large company like Chubb, it seemed to me that $50,000.00 was a lot of money for underwriters to insure without some kind of proper documentation, picture, receipt, detailed description or appraisal. Now being an independent appraiser my first thought was how can Chubb insure their clients properly with this policy of not needing an appraisal or documentation? That quickly became an issue of less importance and the question that became apparent was how does Chubb replace items that have the unfortunate event of being lost, stolen, or damaged? This was something that left a lot of individual scenarios in question. How often do items valued around $50,000.00 fluctuate and how does that affect the insured? I took a look at an average diamond with a market value two years ago of $42,500.00 and looked at what that same diamonds market value would be today. I found a significant increase in price and from my calculations it would be impossible for the insured to replace the same diamond in today’s market. After finding the same situations with several different items I spoke with the representative to let her know what I had found. What was stressed to me was their efforts are to make it as easy and reliable for their clients as possible to get their items insured. The representative told me there is always the strong recommendation for an appraisal however, it is just not required. In the end I look at this policy as either the best customer service a company can provide or potentially a very dangerous situation if prices of items with no documentation get lost, stolen, or damaged.

DeBeers Goes Retail!

DeBeers, the Mining Giant and for years the engine that drove the wholesale and manufacturing sector of the Diamond Industry came full circle yesterday by opening their first Retail store in the heart of New York’s tony 5th Avenue, just a stone’s throw from such stalwarts as Tiffany, Cartier, Harry Winston, and van Cleef and Arpels.

DeBeer’s foray into direct retail further blurs and erodes what had for many years been strict demarcated lines between wholesalers and retailers and furthers their concept of Branding and niche marketing.

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This move combined with the increasing market share of Internet diamond and jewelry websites increases the pressure upon retailers to define themselves to consumers and provide added value and quality to the products they sell. Middelmen are becoming an extinct species.

Who woulda thunk this would happen even a few short years ago? The industry is changing and evolving at warp speed.

For retailers, it is now “Adapt or Die”!

Darwin, where are you?

50k Diamond Razor For Fathers Day!!!

(Rapaport…June 17, 2005) Jacob & Co. created a 4.5 total carat weight Diamond encrusted M3Power razor for the Gillette Company to market as a Father’s Day gift for soccer-star David Beckham, Gillette says in a company statement.

The razor features two rows of white diamonds and one row of extremely rare green diamonds, and the edge of the razor has been finished in solid white gold. It is valued at $50,000.

Gillette says it is the most extravagant product the company has ever had commissioned.

“I am really delighted with this razor,” said Beckham. “To have an M3Power customized for me is amazing and for Gillette to give it to me for Father’s Day is a lovely gesture.”

Michele Szynal, director of brand communications says, “David Beckham is the ultimate style icon and a great dad. What better way to help him celebrate Father’s Day than to give him the closest shave with the coolest Gillette razor in the world.”

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The Razor

Gillette is headquartered in Boston, Massachusetts, and sells grooming and shaving preparation products as well as alkaline batteries and toothbrushes.

The Internet Evolution: Buying Diamonds and Jewelry Online

I just saw a fantastic article by Martin Rapaport concerning the tremendous evolution of the Internet today as a viable means of learning about and purchasing quality diamonds and jewelry at tremendous values. I will post the article here in its entirety:

“My father told me a story about his father — the original Martin Rapaport. He owned the grain mill in Satmar, Hungary. The mill made money by buying up large quantities of wheat, grinding it and selling the flour. Every year my grandfather would travel to a very wealthy landowner, a several days’ journey, and negotiate the purchase of the landowner’s entire grain production. One year, my grandfather arrived as usual and the landowner very apologetically explained that he had already sold his wheat to a company in London. He took my grandfather into a room and showed him a telephone, proudly explaining how that the deal was negotiated over the phone. Greatly disheartened my grandfather returned home and told my father “the telephone will kill the wheat business.”

Power
Obviously, the telephone did not kill the wheat business but it did kill my grandfather’s idea of what the wheat business was or should be. While the physical aspects of advancing technology are new, there is nothing new about the fact that technology changes our world in ways that empower and “depower” different segments of society. Sometimes technology does not merely advance us, it hyperspaces us to a new reality with unlimited opportunities and consequences. The printing press, electricity, telephones, air travel and computers did not just advance us, they put us in a different world. A world where the young challenge the old, where revolutionary thinkers displace the establishment and where it becomes increasingly difficult to balance the need to adopt new ideas with the need to maintain order and the success provided by well-established tested and tried ways of doing things.

New technology is G-d’s way of democratizing opportunity. Established firms with large investments in the old way of doing things are misplaced by new firms that are able to adopt change and innovate quickly. The older and more powerfully entrenched you are and the greater investment you have in the old, the harder it is to adopt new ways to do things. Technology shocks provide an elementary form of social justice as they limit the dominance of the powerful establishment and make room for new innovators. New technology is Darwinian as it provides for survival of the best adapters and elimination of those that resist change.

While many established firms took pleasure in the “boom-bust” collapse of the early internet and the justified fall of the arrogant gurus who predicted the imminent demise of traditional retailing and distribution, in fact the internet is continuing to develop and change the way we do business. A primary goal of this article is to try and understand how the internet will impact the diamond and jewelry business in the near to medium future so that we may develop strategies that optimize our strategic positioning.

Internet is an Evolutional Process
We must recognize that the internet is not a revolution but an evolutionary process. Like the telephone the internet does not change the world by itself, but by how it interacts with existing systems. The impact of the internet process will continue for a long time and fundamentally change how we evolve. The internet today is the telephone of yesterday and the electricity of yesteryear.

Many of the early internet advocates mistakenly believed that the advent of the internet signified a singular technological leap forward that would obliterate existing systems. They thought everything was going to change at once. They were wrong, not because the internet is a less powerful force than they estimated, but because it is more powerful than they estimated. The internet is slowly and consistently changing the very roots of our society and the way we will communicate and do business in the future. How fast things change is not as important as how fundamentally they change.

To a large degree, the internet is about how we develop and use information. Initially firms maintained information systems for purely internal purposes with many buying their first computer at the insistence of their accountant. Once the information was available for internal purposes, firms began to question how they could optimize its use not only to manage their company better, but also to increase sales. A number of business-to-business (B2B) trading systems such as RapNet® and Polygon developed to enable the efficient sharing of diamond availability and the evolution of inventory databases into trading networks began. The idea that sharing information was an important benefit to have took root.

Practical Considerations
The fact that diamonds come in thousands of size/quality combinations and that demand is very specific creates a situation where buyers are often looking for a needle in a haystack. The ability of the internet to aggregate information from thousands of sources and quickly find the exact diamond the customer needs is unparalleled. Furthermore, the internet is capable of ranking the diamonds by best prices, thereby creating a competitive marketplace.

The aggregation of real-time competitive internet availability and pricing information has created an unprecedented level of transparency in the diamond sector. Companies and consumers are able to shop the internet and easily obtain best prices for fine-quality laboratory-graded diamonds. Armed with internet prices and printouts of grading reports, consumers are demanding same pricing from traditional retailers. The consumers want the added-value services provided by retailers but they do not want to pay for them. Instead of supporting and promoting trade, the internet is coming between retailers and their customers.

It is obvious that retailers provide valuable and greatly desired value-added services to their customers. Most consumers do not want to buy diamonds sight unseen over the internet. It is also obvious that retailers cannot provide a retail shopping experience at prices that are competitive with internet prices, which are based on a 7 percent to 20 percent markup. Retailers are entitled to fair compensation for the added-value services they provide.

We know that a consumer prefers to see and compare diamonds before they buy. They also prefer the education and personal advice provided by a trained salesperson. But how much are consumers willing to pay for these and other added-value services provided by retailers? Can retailers live in a world where their customers know their cost prices? If consumers know the cost of the steak, how much will they be willing to pay for the sizzle?

When confronted by internet consumers, it is important that retailers not be shy about clearly communicating to the consumer what their added-value services are and what they will cost. Internet transparency is driving added-value services transparency. Retailers must be as transparent about the cost of their added-value services as the internet is with the cost of commoditized diamonds.

The internet will not replace traditional retailers for the same reason that McDonalds has not replaced fine dining and fine restaurants. And this is because many consumers want more than a commodity diamond. The challenge for retailers is to clearly define just what they are giving the consumers and to charge a fair price for it. Most consumers do not want the lowest commodity price when buying a diamond. They do, however, demand good value. Good value for the diamond and good value for the added-value services provided with the diamond.

It is up to the retailers to create real added value for the diamonds they sell. Retailers that flip diamonds the way McDonalds flips hamburgers better be offering a great price because there is no other reason for anyone to buy from them. In the words of Jack Trout, “If you don’t have a differentiating idea to drive your product or brand, then you better have a terrific price. There is nothing in the middle. It’s an idea or a price — take your pick.”

Diamond engagement ring

Here are some pics of a diamond engagement ring we just created for a customer of our who is flying in today from Florida to pick it up! The princess cut diamond ring features our Signature SuperbCert Princess Cut 1.40 carat, F color, VS2 clarity Diamond set in an elegant white gold engagement ring setting.

An important aspect to this unique engagement ring is the “chevron” or “V” tip prongs that encase the four points of the princess diamond so as to protect the structural integrity of the stone.

For more information on our Signature Princess Cut Diamonds which are crafted to achieve maximum brilliance and beauty, click on this link:

http://www.exceldiamonds.com/education/superbcert-princess-cut.php

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