Thursday, March 29, 2012

De Beers Reports Global Diamond Sales +10%

Global diamond jewelry sales increased by 10 percent in 2011 spurred by continued growth in China, according to De Beers research obtained by Rapaport News. The rate of growth was on par with the increase in 2010. De Beers also concluded that sales were boosted by increased diamond prices, which apparently led consumers to seek lower-quality or smaller diamonds.

“Polished price growth was a strong feature of the market in 2011,” De Beers stated in its report. “Pass-through to consumers occurred at different speeds in each market. Overall, the net result was positive.”

Accordingly, Rapaport’s RapNet Diamond Index (RAPI) for 1 carat certified polished diamonds rose 19 percent in 2011.

De Beers survey showed that China posted the strongest sales growth, rising by 22 percent during the year, and overtook India and Japan to become the second largest diamond market behind the U.S. De Beers estimated that China has 11 percent of the global market share now, whereas the U.S. market accounts for about 38 percent. The company did not estimate the size of the market in dollar terms.

De Beers observed that the biggest contributors to sales value varied greatly by market with U.S. consumers focused on buying 0.50-carat to 0.99-carat, H color or better and SI clarity stones. In China and Japan, the popular items were in the range of 0.18-carat to 0.49-carat, H color or better, with VS clarity in China and SI clarity in Japan. The strongest items in India were 0.02-carat to 0.07-carat, H color or better, VS-SI clarity goods.

“While the best-selling diamond jewelry products in 2011 varied by market, one common theme was the strength of non-bridal multi-diamond rings,” the company explained. Still, bridal dominated the market, particularly in the U.S. where bridal and engagement rings had a “clear lead” over diamond jewelry.

The research indicated that earrings were important in India and necklaces were big sellers in Japan, while both bridal and non-bridal solitaire products dominated sales in China.

De Beers reported that retail inventory levels were slightly higher in all key markets even though the trend was towards faster stock turnover. The company predicted continued growth in 2012 but it did not provide a forecast for the year. De Beers presented these findings to sightholders at this week’s Diamond Trading Company (DTC) sight.

Source :

Wednesday, March 28, 2012

Crown Jewels go on display to mark Diamond Jubilee

Crown Jewels have gone on display in a dazzling new setting.

The priceless objects, whose symbolic importance outweighs their monetary value, are at the heart of a Tower of London exhibition updated to mark the Queen's Diamond Jubilee.

The historic collection features some of the world's most famous diamonds and artefacts used at the coronation of a monarch, but all have had their brilliance enhanced by using a trick from the jewellery trade - blue velvet.

They include the Imperial State Crown set with 2,969 diamonds, 273 pearls, 17 sapphires and 11 emeralds.

The exhibition also features newly commissioned music, film footage of the Queen's 1953 coronation in colour, and three dimensional models visitors can touch.

Sally Dixon-Smith, curator of the collection, said: "The interior of the cases have been lined with blue velvet which really makes the gold sing. Jewellers work in a blue room for that reason.

"We have given them a blue background and placed them on blue stems and they are brightly lit - it almost looks like the orb and crowns are floating. We wanted the facets to be seen much more on the jewels."

Objects associated with the coronation are known as regalia - sceptres, orbs, rings, swords, spurs, bracelets and robes - which have a specific part to play in the ritual.

The monarch is crowned by the Archbishop of Canterbury with the St Edward's Crown - made of gold and decorated with precious and semi-precious stones. However the best-known item is the Imperial State Crown, re-made for the coronation of the Queen's father, George VI, in 1937. It is worn at the end of the coronation service and at the State Opening of Parliament.

Among the famous gems on display at the Tower is the First Star of Africa - mounted at the top of the Sovereign's Sceptre and the largest flawless cut diamond in the world, weighing 530 carats. This stone and the Second Star of Africa, weighing 317 carats and set in the Imperial State Crown, were cut from the Cullinan diamond, the largest ever found.

Tuesday, March 27, 2012

Big miners backing away from Canadian diamonds


Rio Tinto PLC (RIO-T4.660.102.19%) today followed its rival BHP Billiton Ltd. (BHP-N71.48-1.13-1.56%) in saying it is reviewing its diamond operations, which include a 60-per-cent stake in Canada's Diavik mine, as well as projects in Australia and Zimbabwe, exploring options for "potential divestment."

"The diamonds market outlook is very positive, with demand growing strongly and lack of new discoveries limiting supply," Harry Kenyon-Slaney, who heads the company's diamonds and minerals group, said in a statement.

"We have a valuable, high quality diamonds business, but given its scale we are reviewing whether we can create more value through a different ownership structure."

BHP, which owns 80 per cent of the Ekati project, Canada's first diamond mine, said it could abandon the business in Canada. BHP's sales from Ekati represent some 10 per cent of global supply, but it's a small part of the country's overall operations.

In a world that spurns "blood diamonds," Canada's are certified as conflict free, and the country has gained a name in the global business.

Monday, March 26, 2012

Appraisal Inflation — It Keeps On Keeping On

An insurer receives an application on a black diamond engagement ring. The appraisal values the ring at $9,250. The sales receipt says the buyer paid $2,999. Suspicious? Yes.

Here are some questions the insurer asked, and where the answers led.

Who wrote the appraisal?

The submitted appraisal came from ABCG, American Board of Certified Gemologists.

The name sound official but . . . it’s just a name. The gemologists are not certified by anyone.

Who’s the seller?

In this case, it’s an online retailer, Liori Diamonds. It has its own website as well as a strong eBay presence. In both places, similar rings were selling for under $3000.

So where did the $9,250 valuation come from?

Good question. It came from the seller’s desire to show the customer a document that “proves” the jewelry is a bargain, and the appraiser’s willingness to provide an inflated appraisal. A valuation more than 3 times the regular selling price is grossly inflated.

What about gem enhancements, or treatments?

The appraisal does not mention treatments — it does not specify whether the stone is treated or untreated. But on Yelp, the retailer has a promotion for the clarity enhanced diamonds it sells: “When you purchase a clarity enhanced stone [you are] purchasing the look of a VS stone for an SI price.” That is, the stone looks better than it is.

The page on the Liori site carries the statement that the diamonds are natural and have not been treated or enhanced. We would like to see this statement on the appraisal. In fact, we’d like to see it on an independent appraisal not supplied by the seller.

Website text can be changed at any time. To the buyer, and to the insurer, it is the documents in hand that matter.

An enhanced stone is worth significantly less than an untreated stone of similar appearance (to the aided eye). So the insurer wondered whether the diamond on the jewelry in question was a treated, with a valuation of an untreated stone.

What’s the ring really worth?

When there is a huge difference between the appraised valuation and the purchase price, the selling price is a better indicator of true retail value. Valuation should be based on what the jewelry would sell for, and the purchase price is exactly that.

What are the appraiser’s credentials?

The ABCG website says all its appraisers are GIA Graduate Gemologists, and the document carries an illegible signature with GG behind it. We have no way of checking whether they’re GGs, but we have our doubts because . . .

What about the quality of the gems?

GIA has developed language for describing diamonds, terminology that is widely used and understood around the world. Although the ABCG graders are said to be GIA Graduate Gemologists, the grading on this document does not follow GIA standards.

On this certificate, “Round Brilliant” is used to describe cut and shape. But Round Brilliant is a term that designates only for the shape of the diamond. A diamond’s cut (one of the 4Cs, along with color, clarity and carat weight) is a set of proportions. Putting cut and shape together is just a way to obscure the fact that cut proportions are not being given at all.

Clarity is graded as “AAA (Ideal),” but this is a phony, feel-good phrase. GIA has no such grade. Its scale of grades goes from IF (internally flawless) to I3 (included 3). And “Ideal” describes the proportioning of a stone, not its clarity.

The color of the stone is said to be “Fancy Black,” but GIA has no such designation for color grade.

Such bogus grades tell us nothing. Unless the appraisal uses standardized grading terminology, the descriptions are useless in determining value.

The document is called a “Certificate & Appraisal.” What’s the significance of that double name?

This lab is taking advantage of the prestige associated with the term “diamond certificate.” The document looks official, and its layout mimics the look of a diamond certificate from a respected diamond grading lab.

However, a certificate from a respected lab, such as GIA, only describes (or “grades”) the stone. It is not involved in sales, and does not assign value to the stone or to the jewelry as a whole. Its grading certificates can be trusted because the lab has a reputation for accuracy and impartiality.

It’s true that anything can be called a certificate, but in this case the issuing lab is riding on the popularity of jewelry “certificates” of all kinds being perceived as authoritative testimonies of value. ABCG has no status as a diamond grading authority.

This document is just an appraisal. A poor one, at that, with an inflated valuation.

What does “the fine print” say?

Here’s how ABCG stands behind its appraisals:

The American Board of Certified Gemologists is not to be held liable for any discrepancy on the grade or appraisal results of any diamond or gemstone. Should you seek a different opinion, it is your responsibility to accept any quality or monetary differences between the reports. Should you find that the diamond or gemstone you received is not in accordance with the issued report; ABCG is not to be held liable.

(from the ABCG website)

Who’s being scammed?

Even though the appraisal may be misleading, if the consumer is happy with the purchase, and if he got what he paid for, what’s the problem? Here are a few of the problems:

  • If the ring is insured at the inflated appraised value of $9,250, the policyholder will pay more in premiums than he should.
  • If a loss occurs and a claim is made, the insurance company will be able to price a replacement at far less than $9,250. If we take the purchase price as retail, and the insurer can get the ring for about 20% below retail, the cash payout to the policyholder would be about $2,399.

    A payout of that amount would leave the insured feeling cheated — not by the retailer that sold him the ring, but by the agent and the insurer. The insured might decide to move all his other business from the agent and the insurance company.
  • If a settlement is based on the inflated valuation rather than the retail price, the insurance company would be grossly overpaying.
  • Buyers of $3,000 engagement rings are not high-rollers. They are most likely young people, just starting out, who don’t have much money and are looking for a bargain. They are just being fooled.

How prevalent are grossly inflated appraisals?

VERY! This is not at all an unusual case. Especially for jewelry purchased on the internet, documents distributed by jewelry sellers are often canned appraisals and certificates from bogus labs, and they are not to be trusted.

ABCG’s site says: “Our Expert diamond gem analysis is recognized by all major insurance companies.” What this means is that insurance companies accept these inflated appraisals, as they do most appraisals, at face value. Insurers are not experts; they are fooled, just as consumers are.

Why hasn’t the prevalence of inflated jewelry appraisals been reported in the jewelry industry press??? Why haven’t we seen exposés on national television?

Perhaps because the problem is so commonplace.

So what did the insurer do, when presented with this inflated appraisal?

The company insured the ring at the purchase price. The insurer did not want to rain on the buyer’s parade by telling him he didn’t get a bargain. But sooner or later someone will tell him the true value of the piece.

Note: This article was prompted by a real-world insurance application, but it would be unethical to reveal private information received from a policyholder. As it happens, jewelry appraisal inflation is so common that we were able to find many, many examples on the Internet. This is only one.


More investment inroads from China into Zimbabwe

China is making no secret of its desire to engage even further with resource-rich Zimbabwe, as they seek new ways to fuel their booming economy.

With ties to Zimbabwe that already go back to the days of the liberation war, the Asian giant has been ratcheting up its investment push into the country in recent months as they look to forge new trade routes and expand on existing alliances.

A Chinese Communist Party delegation, led by politburo member Lui Qi, was in Zimbabwe last week and visited various places, including the prime tourist destination, the Victoria Falls. It’s believed the Chinese intend to invest heavily in tourism and plan to build 5-star hotels in Harare, Masvingo and Victoria Falls. The delegation also met President Robert Mugabe for talks.

Very recently the ZANU PF leader also met the Head of the Chinese Navy, Admiral Tong Shiping, who was on a visit to Zimbabwe.

There are concerns the Chinese Peoples’ Liberation Army is supervising the diamond mining in Marange, with reports suggesting Chinese military planes are transporting the diamonds exploited from Marange, to China.

The Marange diamond fields are believed to be one of the largest alluvial diamond fields in the world and in return for the diamonds the Chinese military are allegedly supplying weapons and other essential materials to help keep Mugabe in power. - SW Radio Africa News

Sunday, March 25, 2012