The ring was sent to an independent gemologist-appraiser, who inspected the ring; much as the first appraiser had done. He provided a comprehensive document, correctly describing the principal gemstone in the piece as "Zoisite; the variety [being] Tanzanite"; and disclosed the likelihood of heat treatment for color enhancement (such treatment is widely accepted as usual and customary, but should nonetheless be disclosed. M.Nature still heat treats some of her material without man's intervention). The side diamonds, which the seller described as (H) in color, were found by comparison with color-corrected master diamonds to be (K ) in color. The clarity was also found to be slightly lower than described by the seller. The findings were communicated to the client / buyer in a formal, written document; which she forwarded to the seller.
The seller rejected this appraisal as well; and in a rather ugly attempt to discredit the gemologist, parsed the document over descriptions and gemstone nomenclature. The jeweler then recommended the lady obtain a third appraisal at their expense, in hopes of resolving "vast quality discrepancies" and confusion.

I leave the story unfinished, but offer some observations:
• The seller rejected two legitimate appraisals, which described their merchandise to be something less than was represented. The third appraisal request is nothing more than another delay. Marketeers call this cooperative customer service; realists call it sales retention.
• The buyer is now both frustrated and exhausted, and she is really no closer to receiving what she was promised; or what she really wants: to return the ring, and get her money back. What is next is retaining an attorney.
• What is wholly missing here, is any concept of business acuity. In the event a really unhappy customer would be satisfied with a return and refund; any intuitive, ethical (smart) merchant would make it so. Facilitating such an action would convey a real interest in the customer; would most likely preserve the possibility of a future transaction, and create a positive resonance within the customer's sphere of influence. It would probably even negate the need for an attorney.
• These jewelry merchants (seemingly) have yet to learn that arrogance does not build lasting relationships with today's consumers; but barring my old-school rules, [they] may not even be concerned with return customers.

While the modus operandi of this retail genre' is not new, a "hybrid" jewelry market has definitely emerged in tandem with the growing accessibility to, and appeal of vacation / pleasure cruises. These operations seem to be driven by a "bid/ask price principle"; the consumer being "led" by price, and not realizing (until later) that they may not have purchased quality comparable to that available in their local markets for better value. But for now, the trend continues, so... cruisers, caveat emptor!

Lest I digress further, thanks for reading, QE

My apology for taking six months to produce Part Two. You should now have an understanding that diamonds are basically a "controlled substance".
So here, I feel a fast overview of the distribution architecture of the diamond industry, from the mine to the ultimate consumer is probably next in order.
Accounting just for DeBeers, rough diamonds are mined from its several sources in and about South Africa. The uncut diamonds are cleaned and separated, and sent off to the Diamond Trading Company (DTC), a wholly owned subsidiary of DeBeers located in London. There the diamonds are sorted for quality, size and color. DeBeers "allows" an exclusive, hand-picked list of buyers called sightholders; who are invited to London a few times per year, and given the opportunity to purchase "lots". or "boxes" of gem-grade rough diamonds. The prices are set by DeBeers, and a sightholder may either accept or reject the lot they are offered.

Through the years, the DeBeers cartel and its associates have had to respond to economic hiccups, market waves, wars and political fits. They have implemented dozens of strategic maneuvers to maintain supply and price controls. And as I write, DeBeers, DTC (Diamond Trading Co.), WFDB (World Federation of Diamond Bourses) and friends, are finishing up the current season of "Supplier of Choice": the latest "marketectural" structure built to maintain distribution and price control. The diamond industry has again, as usual, produced and starred in its own soap opera. The following is a short-list of recent tweaks and changes:
2003:
DTC continues to alter assortments of rough given to its sightholders, usually accompanied by a price increase In total, six price increases in 2002-2003; some as high as 10%. Sightholders absorbed most increases to preserve price levels downline. Late 2003: DeBeers introduces "Supplier of Choice" concept; many long-time sightholders are out

Early 2004:
Year starts with 3% increase in polished goods; rough prices up7%. June; 5% increase from DeB; downstream to sightholders. Manufacturers can no longer absorb and maintain market price levels. Price increases are passed on to downstream consumers.
[Having recently closed the DPS (the Diamond Promotion Service - the DeBeers-owned promotional / marketing organ); the costs of such elaborate, world-wide advertising having risen quite out of hand; DeB pressures its sightholders to take a larger share of rising marketing costs].
Nearly simultaneously, DeB begins a campaign of "branding" (diamonds are laser inscribed with DeB logo for differentiation in the market). Some ousted sightholders form alliances with the "new" Canadian producers. "Shortages" in larger diamonds emerge.
The venerable synthetic gemstone producer Chatham Co., ( now also well into synthetic diamond production), wants to engage the market. The Israeli diamond exchange moves to ban the sale of synthetics (a possible, emerging threat - to be addressed later).

Late 2004:
Economy in US worries DTC; most producers raise prices 25%; the traders resist. DeB settles the long-running anti-trust suit with US government (ah, the politicians' lust for money), so as to gain access to direct marketing in US.

2005:
Diamond prices become erratic. Larger diamonds are largely unavailable; sellers market ensues. One carat diamond prices flatten. Profit margins across the markets become very thin; market begins to shrink. By mid-year: Sightholder list juggled once again. Brick-and-mortar retailers finally admit that internet diamond sales are real and permanent. Several highly leveraged supplier/wholesalers must "declare a chapter". DeB announces plans to have 150 retail stores in US by 2015.

As well, the litany of participants and avid watchers (suppliers, traders, bankers, retailers and appraisers) appended to the diamond business, will once more (as before) speculate, calculate, analyze, and adjust measures of balance and profitability. Industry pundits are creating scenarios on the future impact the rapidly-advancing technologies of synthetic diamond production will have on the market.

This is turning into a book anyway! Part 3 will appear when I get to it. I have some other projects to conquer first. Comments and questions are welcomed by email. Go to "contact us" on this website. Thanks for reading.

There is no shortage of information on the subject, and modern diamond industry is more public and vital than ever. DeBeers has had its portion of public exposure: scathing media reports of "the South African monopoly", rumors of involvement in sectarian violence in several African countries, strong accusations over "blood" or "conflict" diamonds, ad-nauseum. Yet, the questions I am most frequently asked are "What is the real value of diamonds?; if they aren't rare, why are they so expensive?; what is the truth about the cartel?, why do they cost so much, but are worth nothing when I want to sell them?".

Meanwhile, the distribution and retail segments of the diamond business are so engaged in a contest (or maybe more like a rabid dog fight) to be more recognizable than the other, the average consumer is now awash in a virtual ocean of sales hype, name branding, technology and confusion. Yikes!

My goal is to present the diamond industry from a different perspective (my perspective); the perspective of a professional appraiser, market observer; not a professional seller. I plan to cover all pertinent topics from the beginning, to present day; in a series of installments, and do it in some loose dispensational order. QE

To better understand current events in the diamond business, a quick "throw-down" history seems in order. In recent years, an array of articles and made-for-TV documentaries, have provided the American public with at least, a basic knowledge of the "invention" and growth of the diamond dynasty. Without doubt, DeBeers is by far, the most efficient and durable cartel ever to exist on Planet Earth (more on cartels below). From its beginning, the diamond industry has been driven by two primary engines.

1. Natural diamonds of significant size and quality to be cut and polished as gemstones, represent a comparatively small percentage to what is mined (most diamond material is suitable only for industrial applications). And though diamonds are found in fairly few locations on the planet; among those locations, they have shown to exist in sufficient profusion to continually exceed planetary demand. So in the construct of supply, there are plenty of diamonds.

2. The diamond industry operates inversely to most classic commodity-market fundamentals. Basically, diamonds were a "product" that, beyond a long trail of myth and lore, had no real, or conceived value to a mass market. The common perception in 19th - early 20th Century cultures was that diamonds were reserved as toys for aristocracy, not "ordinary" people. Indeed, DeBeers owed much of its early progression to favorable associations with the powerful British-Dutch stewards of South Africa.

The Diamond Invention: coup de maître of the DeBeers / Ayer partnership

Thus, already holding a virtual monopoly on rough diamonds (supply), DeBeers realized that value and desirability (demand) would have to be invented. And to ensure the growth and profitability of the consortium, both supply and demand would be well-controlled. This sounds like "Marketing - 101" now; but in the 1930's, what DeBeers, and its advertising firm, N.W.Ayer, did for diamonds, not only set, but also permanently shifted the paradigm of modern mass marketing.

The original market targets for this endeavor were of course, British subjects, as well as their next-door European neighbors. However, in the late 1920's, because of a fairly wide economic depression in free Europe, concerns over the looming spectre of war and the general disinterest among European society, the concept of public ownership of diamonds never really caught on.

So, DeBeers and Ayer re-tuned its efforts to the only remaining market, The United States. The American consumer was regarded by most Europeans as having more money than sense; so it seemed the perfect alternative. In 1938, Harry Oppenheimer, son of the founder of DeBeers, set forth to New York, and a meeting with N.W. Ayer, an aggressive, forward thinking advertising agency in the US.

Ayer proposed applying to the diamond market, a recent groundbreaking theory that the American consumer was motivated to purchase not by utility but by "conspicuous consumption", an idea postulated by economist Thor. Veblen in 1899. By combining the persuasive power of Hollywood icons, motion pictures and American socialites, with compelling advertising and Verblin's theories; Ayer subtly and completely succeeded in altering the American psyche. By 1940, Ayer had achieved an unprecedented goal. Diamond sales in the US were up over 50%. By the early 1950's, the idea of the necessity of the diamond engagement ring had been permanently inured to the American consumer. Fully 75% of all DeBeers diamonds sold, were sold in the US market.

Thenceforth, diamonds have been marketed ingeniously and aggressively to the consuming public of every free society; an effort so effective, that today the giving, receiving and ownership of diamonds is endemic to the expression of betrothal and of enduring love; as well as the most universally recognized symbol of wealth and power in modern western culture.

As For The Cartel

A cartel is generally held to be a coalition of independent producers, whose goal it is to control a product or commodity,
fix or set prices and restrict competition (unlike a monopoly, which is held by a single entity). There are some basic principles that apply to all cartels; and given subtle variations, that also describe the DeBeers organization precisely.
1. The amount of product or commodity is usually ample and available through more than one source
2. The producers, distributors and investors realize that by merging their interests, they become far more powerful
3. Demand is created, maintained and controlled through effective marketing
4. Product price is controlled by limiting supply and distribution (created shortage or availability to demand)

Most countries wield antitrust laws prohibiting cartels; yet they continue to exist. Price-fixing is widely prohibited, but practiced internationally. In a few cases, price control agreements are sanctioned by a government, or protected by a multilateral treaty. DeBeers has successfully controlled supply and prices since its inception in 1888; and for the greater portion of the 20th Century, either owned, or controlled all of the diamond production in southern Africa. Today, DeBeers exists in many forms, and in many countries; and significant diamond producers (not in the DeBeers fold) now exist on two other continents. Yet, beyond what it still directly owns, DeBeers continues to influence (to great degree) both supply and price of "the diamond".

Notes
*Diamond: ORIGIN Middle English : from Old French diamant, from medieval Latin diamas, diamant
*Well worth a read: Thorstein Veblen's work "Theory of the Leisure Class", 1899

Thanks for reading. More to come...

When the Civil War officially “broke out” in April, 1861, coinage (aka, fractional money) began to disappear rapidly. Since most currencies were still issued by local banks, and the escalating war presented serious solvency problems, virtually anything containing precious metals (including coinage) was hoarded by citizens on both sides of the line. Tokens such as this were created of a collective, private effort to alleviate the coin shortage caused by the war. The tokens were eagerly accepted in the nation’s major cities, as they often facilitated the continuance of every-day commerce. They were issued in two general varieties: “patriotics” and “storecards”.

Patriotics, like the one pictured here, were issued mainly by private citizens and organizations, and typically bore a national emblem on one side, and a slogan on the other. Storecards were issued by merchants, and typically bore an eagle or Indian on the front and the issuer’s name on the back.

Storecards were found to be a very effective form of advertising for the issuing merchants! Both varieties were circulated as cents. Enterprising private mints offered hundreds of possible design combinations (fronts and backs), and would custom make storecards.

The typical token contained very little copper, and it is not known what the manufacturers charged to produce them. However, judging from the tremendous number of issuers, the price must have been irresistable! Token making quickly became a considerable source of revenue for several private mints, most notably in Cincinnati; widely regarded as the “birthplace” of the Civil War token. Collectors’ guilds have catalogued approximately 1500 varieties of patriotics, and 8500 varieties of storecards.

Storecards were issued in approximately 400 cities in 23 Northern states. Alas, along with broad cross-acceptance of the tokens by merchants, railroads, etc., there also arose significant legal problems when they were presented to their issuers for redemption. Production of the pieces halted April 22, 1864, when Congress outlawed them.

Their Value today? Most of these tokens trade between $20 and $60, depending on rarity and condition. Those of very limited issue, or never before catalogued may trade as high as $300.