Are diamonds over priced?

Supposedly rare and precious, but there seems to be a very healthy supply of them worldwide. Does the DeBeers cartel make that much of a difference in pricing?

The story is,
There are a lot! more diamonds in the world than DeBeers wants you to know about, the legend is that whenever a new discovery is made, the DeBeers family buys it up and locks it down to keep prices high, I do not deal with retail jewelry (I have friends in the wholesale end), but I can tell you that retail jewelry markup is INCREDIBLE!!! (300 - 500 %).

unclviny

yes, way over priced. debeers is to be feared. they have quite a strangle hold.

I believe that De Beers is banned from trading in the US because of its cartel operation, or at least certain parts of it’s operation are.

Certainly that gives the clue about the current price of sparklers.

Read this link, it explains things well.

http://www.worldlink.co.uk/stories/storyReader$245

And here I thought it might be brand names… or are we talking unset, raw diamonds? I’m not big on ‘real’ jewelry (the only thing like that I own is an amethyst :P) but we’ve got some sort of discount “factory direct” jewelers that has apparently ridiculously low prices… my dad was watching the commercial and he said so (I would assume he knows since he’s bought them before for my mom).

I mean this in the sense like… if the markup margin is 300-500% for the raw materiel, how much markup must the final store product be? O_o If it’s just brand name, this would be like the difference between buying an engagement ring at K-mart as opposed to buying one at Robbins’ Brothers or whoever they are.

Most jewelry sold has some HUGE quality problems but the general public does not have the knowledge or the tools to be able to tell, I have made runs to the local jeweler’s supply and picked up bags of low grade cut diamonds (for tennis bracelet repairs) and I remember being shocked at how cheap they were (around $5.00 each wholesale).

unclviny

Actually, I don’t think diamonds have a higher markup than, say, couches. Or ladies clothes. Or Coach purses.

You go to the furniture store, see a couch marked $2000., and notice that they’re giving 33% off today. So you sit on it, and the salesman tells you if you’re paying cash, he can give another 10%. You, being a shrewd negotiator tell him you really weren’t looking to pay over $1000 for your couch. So, he gives a little and you come up a little and you walk out with a $1100. couch, proud of yourself for getting it for almost half the “retail” price.

Of course, the couch cost the dealer about $450. But you got a “deal.”

Fashion has always had a big mark up. Diamonds are just another example.

Actually, I’m not a big diamond fan. I do think it’s fair to say that it’s overpriced. I once told someone selling jewelry pretty aggressively in the mall that I just couldn’t buy because diamonds are unstable at standard temperature and pressure and that I would basically be buying overly-priced graphite. Needless to say, I think I confused him.

I’ve gotta use this tactic more often!

Yeah, I think we’ll all agree that diamonds are insanely marked up. Moreso that other goods (furniture). I don’t see whats so great about them either. They’re just glorified coal.
[hijack]
Where does one get those low quality surplus diamonds?
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I don’t think your statement is true. Many things are marked up a higher percentage than diamonds.

Yeah. Heroin, for example. :slight_smile:

Well all I meant was that diamonds are marked up quite a bit. I’m sure there are a lot of things marked up more than diamonds, but diamonds are probably marked up quite a bit in comparison to other items.

Just popping in to say that was a fascinating link, casdave.

I can’t argue with that statement.:slight_smile:

But diamonds, as a fashion item which aren’t neccesities of life, are similar to, say, ladies dresses. The gorgeous dress down at the department store which just came in is marked $129. It’s a stunner. Just what you need to go to that fancy party over the holidays. But’s it’s gonna be on the closeout rack in late January. And marked down to $39. And, guess what? The store might just STILL make a buck or two on the dress. They didn’t pay HALF for it.

Gasoline has a low-percentage markup. I sell one-ounce gold coins in our coin store today for $346. Our replacement cost is $336. We make a low percentage. Other items in life come in between my examples.

“Quite a bit” is a relative term.

Definitely. You have an effective monopoly in this market.

There are lots of stories out there and the tacties DeBeers imposes to maintain its monopoly. Diamonds are not a rare commodity. There is nothing to support their ridiculously high prices beyond the supply and demand factors that DeBeers imposes.

I’m sorry I cannot provide a cite, but there have been numerous attempts by other companies to get into the “Diamond Market”. When this happens, DeBeers floods the market with Diamonds at rock bottom prices and these smaller startups have no chance to compete. When their competition is crushed, prices go back up.

I asked this a while back, so if you search the archives, there should be a really good thread on this. (Unless it got lost in the Great Purge).

The overwhelming consensus was that diamonds aren’t really that rare or that precious compared with many other gemstones, there are so many of them produced/mined/found now, and that they really are not worth very much at all.

And interesting thing that came up was the “Diamonds are forever” tagline. Apparently this whole engagement ring/diamond thing was started by De Beers as a marketing ploy, when other gemstones - even pearls - used to be far more traditional. The idea of making the diamond “forever” was to discourage people from reselling them, and therefore inhibiting a resale market, so De Beers could keep selling new new new.

You never get more than a third of the price of a diamond if you resell it. Go figure. Diamonds are NOT a good investment - they are a very bad investment (the whole “months salary-engagement ring” thing was another De Beers marketing ploy). Unless you really adore jewellry, or unless you really have money to burn, as a young engaged couple starting out in life, you would be a hell of a lot better advised to invest money in a house rather than a ring.

They’re worth what people are willing to pay. If you are willing to pay $5000 for that ring, it’s worth $5000 to you. That’s pretty much the definition of value. Someone else may say “That’s a Hawaii vacation in a nice hotel.” and get that instead. I wouldn’t spend a lot on a rock, but YMMV.

The link I posted was parsed oddly.

Instead try this, click on the link, put “de beers” inot the search box and this will give you a lnik to the item, turns out to be the first one.

http://www.worldlink.co.uk/stories/

Many years ago, the Japanese newspaper ASAHI SHUMBUN tried an experiment. They sent a reporter into a high-end Japanese dept. store, and had him buy a $10,000.00 diamond ring. Then they sent the guy to NYC, to try to sell the ring in the jewelry district. I was amazed! He got offers as low as $250.00!
So there are two things at work here:
-huge retail mark-up on diamonds
-the resale market is horrible!
Also, there are many aspects to grading diamonds-clarity is more important than size.
Anyway, once good quality synthetic diamonds become available (should be next year) the market for diamonds will collapse!
Take that, DeBeers!