So, it’s a movie cliche that diamonds are a great way to pay someone with an illegal deal, and that they are worth committing elaborate heists to obtain, and that you can fit millions into a small bag.
Also, I’ve seen in at least one TV show the clever tactic of hiding the stolen diamonds in that ice tray in the freezer with the freezerburned ice cubes that nobody ever wants to use, by putting the diamonds in the tray and pouring water on top.
Well, I’ve also read articles that diamonds have very poor resale value. That their value is due to the De Beers monopoly and this is a house of cards. So if you wanted to pay someone for an illegal deal, you’d be trading perfectly good cash for something that isn’t worth nearly as much. As a result, nobody is going to have black baggies full of loose diamonds in a safe to be stolen, either.
What’s the straight dope on this? Should criminals use diamonds, or is the $100 bill still the best they can do?
Diamonds can still have an agreed-upon, if not exact, value. Whatever retail diamond merchants or DeBeers say, a diamond can still be bought and sold privately, and people who are fairly decent at grading a diamond can reach a price. If a transaction requires payment of, say, a million dollars, and the payer and theh payee agree that a certain cache of diamonds is worth a million, what’s the problem?
Whether it actually occurs or not, I have no idea, but there is nothing intrinsically unique about diamonds that would make them unsuitable for any such transaction. The drugs being moved in exchange for diamonds doesn’t have an exact value, either, it is whatever the traffic will bear.
I may be wrong, but I think where diamonds really become useful is getting money between countries.
So you are a Central African warlord. You’ve made some money moving guns or drugs or whatever, but it;'s all in Central African Francs, which is pretty useless to anyone. Luckily, you can go to a local diamond trader, who will be able to use the CFA to pay the local illegal mining operations that supply him.
Now, you’ve got some diamonds that can be easily be moved on your person without detection to a number of no-tell countries in the Middle East and Asia that house diamond brokers. They have connections to actual currency, and may even be able to help you get it to the country of your choice.
That is true. While it may cost you $100k for a diamond the size of a dime, that same dime-sized diamond will probably only sell for $40k-50k. What really helps reduce that devaluation is if you do not pay for the diamond in the first place.
Correct, whoever is getting them in exchange for whatever isn’t taking the huge kids if they would have purchased them. Of course you can roughly figure you’ll need a lot more diamonds if your calculating your payment on the retail price of the stones.
If you’ve ever tried to sell a used diamond you can bet on getting between 30% on the high end to about 20% or lower on the bottom end. Dismiss are a absolutely horrible investment. I once had a saleswoman try to get me to buy a diamond by using the argument that they’re valuable because they’re so rare. I asked her if they are do rare, why is there 5 jewelry stores in every mall in America And every single one of those has hundreds of not thousands of diamonds? She just stared at me like I kicked her puppy.
We’re mixing a couple ideas here. Diamonds have a wholesale and a retail market. Just like every other commodity. There is no such thing as “the price of diamonds.” There is such a thing as “today’s retail price of diamonds” and “today’s wholesale prince of diamonds”
If you buy pea gravel at retail at Home Depot it costs 2x to 10x as much as buying it wholesale at a quarry. Diamonds are no different.
The folks doing illicit transactions using diamonds as currency did not pay mall store prices for them.
One of the first computer bank heists in the 1980’s, a guy who worked on inter-bank transfers used the codes to fabricate bank transfers, then flew to Switzerland, where he used the proceeds to buy diamonds from the USSR. he was caught fairly soon, and apparently when the diamonds were sold the bank made a profit on them.
My understanding is that buying a cut diamond from a retail store is radically different from what we’re talking about.
But criminals are not trading “used” diamonds or retail jewelry. They are trading loose, uncut diamonds among themselves that enter the system through smuggling, theft, and Third World conflict. They are shipped in bulk by weight as polished stones… Not cut, finished pieces of jewelry. They retain their value because the jeweler hasn’t yet applied their hideous markup. The retailer doesn’t apply the markup until after the jewels have been smuggled into the wholesale system, at which point they are no longer used for criminal trade.
When you sell something illegally, you want to trade it for something that’s valuable almost everywhere and easily portable. Gold would easily satisfy the first requirement but not the second. Almost any gemstones would do; Diamonds are just the easiest to value, authenticate and obtain.
By my calculations, “one meelion dollars” of gold at current $1320/troy oz. is about 52 pounds (regular pounds). But Starbucks’ profit is in one day is almost four times that.