Unlike gold, diamonds are not a commodity. There is no diamond exchange on Wall Street whereby investors can buy and sell diamond futures. The quantity of diamonds on the world market, and by extension the price, has been regulated and controlled primarily by the DeBeers Corporation for well over a century. In recent years a few independent diamond mining companies have given some competition but DeBeers has maintained a near stranglehold on the industry through their network of Diamond Trading Companies, the ONLY outlets for the majority of diamonds sold by diamond mines around the world.
There are a number of Diamond Trading Companies located in various cities around the world. Approximately every five weeks each DCT will hold what they call a "sight" where a relatively small group of pre-selected and pre-qualified representatives of major diamond cutters come to buy a quantity of uncut stones. Each buyer is there by invitation and is assigned a specific seat at a long table. In front of each seat is placed a small box of diamonds with a stated price. The buyer is encouraged to inspect the stones in his box but exchanges are not allowed. Neither is haggling on the price. Refusal of the box is allowed, but this very rarely happens because the buyer refusing will be stricken from the invitation list.
Diamond sights are extremely well regulated and honest affairs. Usually there are no contracts or paperwork. A deal is closed with a handshake and sometimes the Yiddish words "mazel und broche", luck and prosperity. There is never a thought of dishonesty, and many times a buyer will leave his box of diamonds sitting on the table for hours while he is away socializing or doing other business, knowing full well it will be there untouched when he returns. Eventually the buyer will pick up his box and happily, or unhappily, go home to await the next sight. Thus ends the first tier of a diamond's eventual price, and the only one that can in any way be called "wholesale".
Diamonds are not particularly rare, especially in sizes of less than one carat. Many beautiful gemstones, Painite for example, are much rarer, but when there are only a dozen or so known specimens it doesn't offer much of a market. DeBeers is well aware of the world demand for diamonds in all sizes and grades, and through the Diamond Trading Companies they release just enough to supply that demand without impacting the price to any great degree. If all the diamonds available to DeBeers were released at one time the price would plummet, so these stones have an artificial rarity factor.
Most of the buyers at the sights represent major diamond cutters where the stones are faceted and polished into the glittering gems we all recognize. They are then sold to distributors, who in turn sell them to jewelry manufacturers and finally to retailers. This is where the "keystone" pricing comes into play. I explained keystone pricing in another recent article. By the time you see the diamond in a jeweler's case the price has already been doubled, and maybe tripled, several times. Regardless of some advertising online, there are no wholesale diamonds.
There are no great bargains in diamonds, as their prices do not conform to normal supply and demand. Nearly all the supply and some of the demand are purely artificial. About the best you can do is find a distributor who will sell to the public at the same price he sells to retailers, or an individual wanting to sell a piece of diamond jewelry. In both cases you MUST know what to look for as far as clarity, cut and weight, for that low price may reflect even lower quality. If you do your homework you might get an exceptional deal from an individual seller or even from some pawn shops, but in general with diamonds you get what you pay for. Lew Marcrum
