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Regal Imports News for SEPTEMBER 2017

De Beers and Alrosa are keeping rough prices steady however original rough parcels purchased directly from these two miners are selling into the secondary markets at cost. When terms and expenses are taken into account, original rough traders are selling at a loss. Rough and Polished news reports that U.S. polished diamond imports fell for the last eight consecutive months and are down eight percent year-on-year. Israel's net diamond account slumped 29 percent in the first half. In August, the Polishedprices diamond price index fell to its lowest level since December 2009.

Edahn Golan summarizes the situation. "The bottom line is that diamond manufacturers bought more rough diamonds, paid more for the rough diamonds they purchased, and sold fewer polished diamonds at lower prices. As an economic concept, this is not a long term business plan with any chance of success." The truth of these words is evident given the announcement that two large and reputable Indian diamond manufacturers owe 140 million dollars that they are unable to pay.

Yoram Finkelstein believes that miners and manufacturers are out of touch with retail. He relates an experience at a Rapaport lecture when Martin asked a room full of Israeli Diamond Exchange members how many had visited a jewellery store in the past year. There were about 300 people present and only a few hands went up. He concludes that "there is a huge information gap, vacuum some might call it, between the upstream and downstream players."

Upstream miners and manufacturers read their market analysis and put together their action plans without downstream consultation. Retailers are the frontline experts. It is impertinent to exclude them from strategic planning. Miners and manufactures would do well to recognize this point.

Retail exclusion results in personal experience giving way to empirical data. I don't know if Jean-Mark Leiberherr, CEO of the Diamond Producers Association, fully appreciates all that his statement implies when he said "The industry has become so impersonal in many ways. We've lost the emotion... (currently diamonds are) slightly more romantic than a low-risk mutual."

Industry has made a full commitment to social responsibility. Industry executives are publically promoting a multitude of appropriate socially conscious initiatives. They are so completely committed to social responsibility that they have neglected the appeal of the core product. Consumers pull back from products that spend more time on ethical concerns than on the product itself!

Initiative after initiative has been instituted to impress upon the public the many ways the diamond industry is ethical without an equal effort on maintaining desirability. The result is that the diamond industry stands before the public naked, stagnant and boring!

Industry is obsessed with the definition of conflict diamonds, human rights issues, diamond reports and tracking origin while diamonds are struggling with a lack of self esteem. Positive ethical action without product support is a classic example of the expression "The operation was a success but the patient died".

The GIA and De Beers are quietly feuding. The GIA has put their reputation behind a mine to market program to verify diamond origin. De Beers supplies approximately 35% of the world's diamonds. They have decided not to play ball with the GIA. De Beers will not allow the GIA to track their rough diamonds. They say the GIA program will cause confusion with the De Beers retail brands.

Alrosa supplies more diamonds to the market than De Beers and is well positioned to initiate origin verification without the help of the GIA. After all, why should a miner pay the GIA to verify origin when they mine the goods? The new GIA origin program, two years in the making, could go up in a puff of smoke!

There are more problems for the GIA. Sarine Technologies is venturing into diamond grading reports. Sarine says that they have developed "the world's first automated measurement and grading of all the 4Cs"and can deliver "an unmatched level of accurate, repeatable and automated diamond grading with less subjectivity and far fewer human errors." This new technology can also detect synthetic diamonds and treatments. If the GIA doesn't update their grading systems and categories then a GIA document might well become irrelevant. The world and especially millennials want more technologically advanced information. The GIA in its' present incarnation is archaic.

Here are 3 sporty shorts:

Express.live reports that "Currently, lab diamonds only represent about $150 million in annual sales - a fragment of the $80 billion diamond industry. But that's expected to grow to $1.05 billion by 2020."

Signet Jewelers is buying R2Net which controls both JamesAllen.com and Segoma Imaging Technologies. Virginia Drosos, the new CEO of Signet, said that this takeover will "redefine the jewellery shopping experience."

Finally, Bill Boyajian in his blog Top of the Mind speaks of the importance of the 4Cs of life: creating, changing, contributing and caring.

Mel Moss