1. GOVERNMENT & PRIVATE DIAMOND MINES
Nearly all rough diamonds found in the world today are controlled by a relatively small number of governments and private mine owners and conglomerates. There are some smugglers who pilfer from the concessions of those who control the rough diamonds from both government and private mines. However, as a percentage of the total world production their numbers have little effect on the overall market.
2. ROUGH BUYERS & DIAMOND MANUFACTURERS
Traditionally, rough diamonds were bought only by diamond manufacturers for their own supply and for the supply of smaller cutting houses. Today, there are funds buying rough diamonds for investment. Most of these companies do not manufacture the polished diamonds. Rather, they put the goods in storage and most monetize the rough for liquidity.
3. EXPORT & IMPORT WHOLESALERS & BROKERS
Once the rough diamonds are polished, they are sorted and priced for sale to the export and import wholesalers and diamond brokers. India is the largest trading center by weight. However, it is difficult for Indian manufacturers to find the larger rough required to supply large diamonds to the world market, because DeBeers limits the large rough to India to protect the other cutting centers from India’s labor cost advantage.
Most larger, more expensive goods are manufactured in Israel, Antwerp and New York. There are goods cut in Russia and South Africa and several other countries. Israel, Antwerp and New York remain the most important centers in the world for larger diamonds. It is in these centers that the wholesalers and brokers find the polished diamonds for their customers in their home countries.
4. DISCOUNT RETAIL AND INTERNET DIAMOND STORES
Today, because of the change in the way consumers are prepared to compare and buy, the discount retailer and the internet stores have become a major user of diamonds. With few exceptions, they buy in the country of their business from wholesalers and brokers. Most of these companies lack the time, skills and assets to buy directly in the major bourses of the world.
5. FULL SERVICE DIAMOND RETAIL STORES
The consumer purchases the majority of diamonds imported from high end “carriage trade” stores (Tiffany, Cartier, etc.), large volume chain stores (Zales, Sterling, Fred Meyer etc.) or from independent jewelers. Like the discount and internet stores, with few exceptions, these retailers buy in the country of their business from wholesalers and brokers. Most of these companies lack the time, skills and assets to buy directly in the major bourses of the world.
I have provided the flow of diamonds from their rough state all the way to their arrival at retail stores. This illustrates how diamonds are priced at each level of the market and what the average profit is at the various levels.
Louis Pearl G.G.
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