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As The Times Change

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Among the most pressing challenges to the diamond industry is the need to lift consumer demand. Historically consumer demand has been principally related to marriage. Consequently, diamonds have been marketed as symbols of eternal love and commitment. But millennials commitment to marriage is less than previous generations. They are marrying later, less often and it is seen more as a choice than a necessity.

The Diamond Producers Association led the way in altering the industry’s marketing campaign with its Real is Rare commercials (see my post on that below). Now comes Forevermark with a new campaign to support what they see as an emerging trend in the diamond market, the self purchasing female.

Forevermark’s research shows a big increase in self purchasing of diamond jewelry by women to about one-third of total sales. They think that reflects the shifting role of women in society and the changing attitudes that account for it. Their research shows a new model of femininity emerging with 82% of women globally preferring to be considered strong rather than sweet; with women no longer defining themselves as much by their relationship status; and with relationships or marriage, if it is chosen, more about personal growth and united goals. Women have become the largest emerging market with a global income of $5 trillion.

To tap into this emerging trend and the shifting diamond market that it portends, Forevermark is launching a new ad campaign to support and promote this new growth segment of the market. Diamonds can be about love but they can also be about “celebration, growing up, achievement and success.” They can represent a woman’s “inner character and qualities…her individuality and personal development.” Modern milestones have shifted, says Charles Stanley of Forevermark. Diamond jewelry is now purchased to mark coming of age, job promotions, graduations and financial success. Forevermark’s campaign is intended to encourage this trend. The ads will run from October to Christmas. Look for them.

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DeBeers’ Forevermark Unveils Black Label Collection

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442x480xforevermark_black_label_five_shapes_group_jpg,qitok=p0t6cyny_pagespeed_ic_rAQ34O-i_JA number of years ago, the DeBeers Corporation saw its influence over the supply of rough diamonds into the retail pipeline decrease as more players entered the field independent of their marketing network. They correctly saw this as a permanent change and responded by going downstream, opening their own retail outlets and “branding” their finished jewelry as Forevermark. This echoed their “Diamonds are Forever” advertising campaign of earlier decades.

Now, they have introduced a new Black Label Collection of diamonds that they say is the “best representation of the most beautiful of our diamonds. These diamonds, they say, are for light lovers only. Well, who isn’t a light lover when it comes to diamonds? That is what we find beautiful about diamonds, the optical effects: the brilliant return of light to the eye, the dancing of light that we call scintillation and the flashes of color that is caused by the separation of white light into the spectral colors.

The Black Label Collection, says DeBeers, does this to a degree not seen before, especially with fancy shaped diamonds. The Black label Collection, they say, are the world’s most beautiful and symmetrical diamonds. Great emphasis is put on the symmetry of the cut. In creating this collection, DeBeers along with HRA Group spent 10 years developing perfectly symmetrical fancy shaped diamonds. The perfect symmetry extends beyond the bellies and shoulders to the facets themselves and is said to account for the brighter, more sparking fancy shaped diamond that was their goal.

The Black Label Collection is intended to appeal to Millenials to give them something different. DeBeers named the arrow pattern seen under magnification in a perfectly symmetrical diamond the “Compass of Light” in an attempt to signify to Millennials that this is a diamond cut to a degree of perfection beyond ideal. The ideal cut is a range of parameters that makes for a beautiful stone, but the Black Label is an even narrower range of parameters. I would suggest that you should expect to pay more.

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Christie’s Celebrates 250 Years in Business

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The English auction house, Christie’s, is celebrating its 250th year in business. As the interesting article in Rapaport’s December issue reports, the auction house was started by a Scot, James Christie, born in Perth, Scotland in 1730. Christie went to London in 1750 and found work with a Covent Garden auctioneer, from whom he learned the trade. He held his first auction under the name of Christie’s on December 7, 1766, and included among the lots sold was a ruby and diamond buckle. So jewelry has been among the prominent items sold at Christie’s since the very beginning. Christie’s first ever all jewelry auction was held February 18, 1772.

James Christie died in 1803 and the firm was taken over by his son, also James, who was in turn succeeded by his son George Henry Christie in 1831. In 1889, the great grandson of the founder retired as the last member of the family to work at the auction house, although the name remains to this day.

Over the years, Christie’s has auctioned some of the world’s largest and most famous diamonds (and other gems as well); the jewelry collections of royalty, the famous and wealthy, and the world’s most famous designers. Among the famous diamonds sold at Christie’s auctions are the Wittlesbach, the Archduke Joseph, the Emporer Maximilan, the Oppenheimer Blue, the original diamond ring of Mary, Queen of Scots and the Elizabeth Taylor Diamond. Christie’s has sold the jewelry collections of Queen Charlotte, wife of King George III, Empress Eugenie, wife of Napolean III, the wives of Aga Khan, the Duchess of Windsor, Princess Margaret, Elizabeth Taylor as well as many wealthy socialites whose names are less familiar. They have sold the world’s most famous designers including Cartier, Van Cleef & Arpels, Tiffany, Schlumberger, Bulgari and more.

Christie’s first expanded overseas in 1958, opening an office in Rome. Today, they hold auctions in Geneva, Hong Kong, New York and Dubai as well as in London. Along with Sotheby’s, Christie’s is the preferred venue for the sale of great collections and estates as well as for the fabulous and colossal new diamonds just coming on the market. This is a great company with a long, rich tradition that is still going strong after 250 years and appears to have a great future ahead.

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MRIs COME TO GEMOLOGY

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This post is abstracted from an article in Rapaport Magazine by Shaun Sim about technological advances in the diamond cutting industry. Historically, diamond cutters inspected stones for flaws with nothing more than a 10X loupe and their eyes. In the 1980s, computer applications began to aid them in locating flaws in a rough diamond but a window still had to be polished to reveal the interior of the stone.

In 2009, Sarin Technologies, based in Israel, introduced the first product in its line of machines that do inclusion mapping in rough diamonds. It was capable of scanning and mapping the inclusions in a rough diamond without needing to polish a window. Sarin’s machines now take a video of the exterior of the stone while using a scanner that maps the interior of it. It is similar to the magnetic resonance imaging used in hospitals and is a breakthrough in materials engineering.

The data from the video and scanned imaging is fed directly into another Sarin machine that is designed to facilitate the planning and cutting of the rough diamond. This machine offers options for visualizing the number of diamonds that can be cut from the rough stone and how the stone must be divided to optimize the number and size of the finished diamonds produced.

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Real is Rare

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For many decades, the DeBeers Corporation funded an ad campaign that was intended to create demand for diamond jewelry, engagement rings in particular, as a symbol of eternal love and beauty. The “Diamonds are Forever” campaign went through many iterations in TV ads and is something baby boomers grew up with.

But, times change. DeBeers no longer controls the 80 to 90 percent of rough diamond supply that they did in the 1980s and before. In fact, the top three diamond producers, DeBeers, Alrosa and Rio Tinto, together control only about 60% of the supply of rough diamonds. DeBeers has opened its own retail operation and now manufactures their own brand diamond named Forevermark, echoing their ad campaigns of decades ago. They run ads for their own brand now, but not to create demand for diamonds generally for the benefit of everyone in the industry.

And now we have the Millenniels. Millenniels are less religious than previous generations and less devoted to the institution of marriage. And it has been marriage that has created demand for diamonds, not only for engagement rings but for births, anniversaries, graduations and maybe even penance.

But it turns out that Millenniels are still interested in buying diamonds. The desire is just more delinked from marriage than it has ever been. And they have a fascination with lab created synthetic diamonds (see my blog posts below) because they are high tech, sustainable, environmentally friendly and conflict free.

So into the void left by DeBeers steps the Diamond Producers Association with “Real is Rare” ads about to hit the air targeting Millenniels. The ads focus on the results of research that shows Millenniels have a desire for real and lasting connections with others but feel that they struggle to make them and feel insecure about the authenticity of those connections. The ads reposition the natural diamond not as a symbol of engagement or marriage but as representative of real and meaningful things, such as relationships that matter and last, whether in marriage or not. Look for the ads

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ASHES TO ASHES…

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Ashes to ashes, dust to dust as the good book says.  Or, maybe ashes to carbon, carbon to diamond.  Uncle Lester may have been a drunken lech in real life, but now he may be able to provide beauty and pleasure in the afterlife.  At least according to several companies like LifeGem and Cremation Solutions, which advertise that they will create a High Pressure, High Temperature (HPHT) diamond from your loved one’s ashes.

Well….., buyer beware.  The International School of Gemology looked into these claims and issued a report in 2007 which cast lots of doubt on them.  To begin with, both companies used a picture of a row of BARS diamond presses on their websites and promotional material claiming explicitly in one case and suggesting in the other that these presses were owned by their companies.  In fact, neither company owns these presses.  The picture was taken off the internet and the presses belong to New Diamond Technology, a Russian company.  When LifeGem receives ashes from someone wanting a diamond created of their loved one, they claim to send the ashes to Russia where the diamond is created by NDT.

According to them, you can tell them how many diamonds you want from Uncle Lester, how big, the shape of them and their color.  But the major diamond synthesis labs consulted by the International School of Gemology said it was not technologically possible to do this to the extent claimed by the cremation diamond sellers.  Moreover, it seems that the cremation process itself burns virtually all of the carbon.

According to the ISG, there is no proof that the ashes you provide are ever sent to Russia or that, if they are, they are used in creating the diamond you buy.  In the best case, ISG says there is only a miniscule amount of carbon from your loved one in the diamond you get, and in the worst case, there is none at all.  You might just get conned and sold a lab created diamond with none of Uncle Lester’s carbon in it and for a price that can be about double the normal price of a lab created diamond.

So, was the diamond you see below once Uncle Lester or did you just get suckered?Cremation Diamond

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MORE ON D FLAWLESS DIAMONDS

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To follow up on my March 30th post on D color, Flawless diamonds, the number of these stones sold, most of them at auction, is tiny compared to the volume of diamonds sold worldwide each year or even just at auction. But their impact is huge. The sale of these diamonds makes news in part because they are almost always for millions of dollars and the demand for these diamonds from wealthy private clients exceeds the supply of them.

To illustrate, the 76.02 carat, Archduke Joseph diamond is a D, Internally Flawless stone which originates from the Golconda region of India where several other of the world’s oldest and most famous diamonds come from. It sold at Christie’s November 2012 Geneva auction for $21.5 million. Six months later in May 2013, a 101.73 carat pear shaped, D, Flawless diamond sold again at Christie’s Geneva auction for $26.7 million. That set a record as the largest D, Flawless ever sold at auction. The record lasted until October of the same year (2013) when a 118.28 carat D, Flawless was sold at Sotheby’s Hong Kong auction for $30.6 million.

Historically, alluvial diggings in the Golconda region has been the source of the world’s finest diamonds going back to the 15th century. In the 20th and early 21st century, the Cullinan Mine (renamed from Premier) in South Africa has been the source of many D, Flawless stones as well as the Letseng mine of Lesotho. The Karowe mine in Botswana is the most recent addition producing many large diamonds, including a 1,111 carat diamond which looks to D potential.

D, Flawless diamonds are naturally scarce, especially when combined with large size. But the number of clients wanting them is constantly on the increase creating a situation in which increased competition will bid prices to fabulous levels and create great excitement in the auctions of Chrities and Sothebys. Seventy percent of the word’s wealthiest 1 percent made their money in the last 10 years and are looking to invest at least part of it in art, real estate and diamonds. That has made D, Flawless diamonds the glittering stars of the auction world.Archduke Joseph

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MORE ON SYNTHETIC DIAMONDS

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I did a blog post in January on synthetic diamonds moving into the jewelry pipeline. Both Gems and Gemology (the publication of the Gemological Institute of America) and Rapaport are full of articles lately on synthetic diamonds.

It seems that synthetic diamonds are very appealing to Millenials for several seemingly good reasons. “Lab created diamonds resonate particularly well with a Millennial audience…because they are beautiful, responsible and affordable,” say Lara Ewen in Rapaport magazine. She is correct, they are cheaper than natural, mined diamonds. The discount at the present time is 20 – 25% and that could mean paying $15,000 for a 2 carat diamond rather than $20,000. Also, there is no mining involved and so there is no environmental damage involved in producing the product.

Buying a lab created diamond also gives one certainty that the diamond is not a “conflict” diamond, meaning that it was not mined in an area controlled by African rebels and the profits from the sale not used to kill women and children in a civil war.

And then there is the technological wizardry. Millennials seem to like the idea that a diamond can be made specifically for them in an 8000 degree reactor; that they can dictate the shape and form it will take and watch the process from inception to final product. It is high tech, sustainable and environmentally friendly.

AH, and therein lies the rub. Synthetic gem quality diamonds are a very new TECHNOLOGICAL product. And like all new technological products, the price is certain to fall. So, if you pay $15,000 for a synthetic 2 carat diamond instead of $20,000 for a natural one, and 5 years from now the same synthetic diamond is selling for $5000, how will you feel? Martin Rapaport thinks that synthetic diamond prices will fall by 50% in 2 years and that there is no reason why ultimately the price won’t decline to the levels of cubic zirconia or moissanite.

The reason for this is that there is a potentially unlimited supply of synthetic diamonds with new players rushing to get into the business and rapid technological improvement decreasing the cost of making the product. On the other hand, natural diamonds will retain their value and continue to be a store of value not only because they are beautiful but because they have natural scarcity. The rarity of beautiful, natural diamonds relative to demand will cause prices for these stones to remain high.

For more on the future of natural diamond prices, see my blog post below on the subject.

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A PERFECT DIAMOND?

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It is not uncommon to hear people say that there is no such thing as a perfect diamond. But there is such a thing as a “D” color, Flawless diamond. A “D” color is the highest color grade in the color grading scale of the Gemological Institute of America (GIA), by far the most widely used diamond grading scale in the world. A “D” color diamond is, by definition, a Type IIa diamond, having no nitrogen or boron impurities because such impurities would impart some color to the stone. And only 2% of all natural diamonds found in nature are Type IIa, giving you some idea of the rarity of such a stone.

“Flawless” is the highest clarity grade in the GIA’s clarity grading scale. A Flawless diamond has no visible imperfections at 10X magnification. In reality, it has no visible imperfections at much greater magnifications since the labs power way up to see what they can find and then power down to see if it is still visible once they know where it is.

The GIA annually takes in for grading half a million diamonds over 1 carat and says that less than one half of 1 percent are either D, Flawless or D, Internally Flawless. The American Gem Society says that less than one quarter of 1 percent in their laboratory get graded either D, Flawless or D, Internally Flawless.

These stones are as perfect as the existing grading system can accommodate and obviously exceedingly rare. Christie’s and Sotheby’s each list only about 25 to 30 stones, 2 carats or above, sold in all their venues worldwide for each of the past four years. They are in huge demand from people who want to buy the very best and sell for tens of millions of dollars. More on that in my next post…

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2ND LARGEST DIAMOND EVER DISCOVERED

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Several months ago, I wrote a blog on the large diamonds being discovered by the Lucara Diamond Corporation at their Karowe mine in Botswana.  It is now being reported by several media outlets that they have discovered the 2nd largest gem quality rough diamond ever found.  Pictured in my facebook post on this, it is 1,111 carats and is 2nd in size only to the Cullinan I which was 3,106 carats.  This new gem is the largest rough diamond found in 115 years.   It is roughly the size of a tennis ball, measuring 65 x 56 x 40 mm.  It was too big to fit in Lucara’s in house scanner and will require a larger 3rd party scanner to render into 3D.

Plus, it is reported to be a Type IIa diamond.  Only 2% of all natural diamonds are Type II.  So here is the difference: Type I diamonds contain impurities of either nitrogen or boron which give the diamond different amounts of color depending on the number of these trace elements replacing carbon in the crystal lattice. Type IIa diamonds contain none of these trace elements and so, unless there is distortion of the crystal lattice structure, the diamond should be colorless.  It certainly looks so in the picture.  The possibility exists here to manufacture one or more diamonds of fabulous size and quality that will sell for tens of millions of dollars.

Lucara’s stock price increased 32% on the news of the discovery, adding $150 million to its market value.  Plus, that wasn’t the only good news for Lucara.  During the same week this diamond was discovered, they also unearthed rough diamonds of 813 carats and 374 carats.  The 813 carat diamond is the 6th largest gem quality diamond ever discovered.