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8/19/2019 Rapaport March 2016
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SO R.III I1., .
P M : t \ \ I I \ b ~ J •
8/19/2019 Rapaport March 2016
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~ ~ OUR W ~ S I H r OR
PRODUCT DU ILS
ND
PRICING
8/19/2019 Rapaport March 2016
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NEWS REVIEW
M I D Leads
Israel s Exports
nglo merican
Updates Strategy
De Beers
Revenue Falls
I
GD
Launches
1,111- arat
Diamond Named
JNS· Jewelry
News Se ce
From left: Michae l Steinmetz [eo Schachter Diamonds; Anna Marlin G/A; Dave Bonaparte }A;
David
Bouffard
Signet JeweJers; Erik jens ABN AMRO; John
Hall
SignetJewelers;
Cecilia
Gardner ve
SIGNET NNOUNCES NEW ST ND RDS
Signet Jewelers . the
largest
jewelry retailer in the
U. S., held a press conference
in February
2016
detailin
g
the launch o a new standard, the
Signet
Responsible
Sourcing Protocol
for
Diamonds D-SRSP). Signet's
new protocol
is
part of he company's efforts
to
promote
greater tramparency to better connect with taday's Millennial
comumen; concerned about ethical sourcing for diamonds.
Members
of
he diamond industry, civil society and
the government
who
contributed input included miners
De Beers and Rio Tinto, trade organizations Jewelers of
America OA),World Federation
of
Diamond Bourses (WFDB)
and United States Jewelry Council (VSJC), Signet's diamond
suppliers and more. Signet arrived at its current draft
of
he
protocol after a two to three year development period.
The
D-SRS
P was inspired by i
ts
previous success with inlplementing
a responsible sourcing protocol for gold and other
metak
•
The
D-SRSP covers
si
ngle stones and parcels from major
producers
De
Beers,ALROSA,
Rio
Tinto and
Dominio
n
Diamond
Corporation, mixed sources
as
well
as
diamonds
from
other
smaller miners .
• [n addition to being compliant with the Kimberley Process
(KP) and international sanctions,Signet requires suppliers
to
docu
ment
purchase records and provide evidence
of
a due diligence system, providing
as
much information
as
possible about their subcontractors.
• Suppliers are expected to provide a progress report on
compliance in 2016 and be subject to a third-party audit in
2017, whereupon they
will
be audited again every three years.
•
The D-SRS
P
is
also harmonized with other diamond
auditing standards such
as
the
De
Beers Best Practice
Pr
inciples
8
RapapOrT
March 2 16
and ALROSA's AL
Ll
AN CE Guidelines on Responsible
Business Practices,
to
avoid unnecessary audit duplication .
At the press conference, David
Bo
uffard, vice president
of
corporate
affa
i
rs
at Signet, said that Signet
is not
tryi
ng
to
segregate suppliers in the industry
of
good diamonds and bad
diamonds, as they were accused ofsimilarly for gold back in
201
O
Bouffard highlighted that Signet did
not
lose a single
supplier
when
they enacted their gold standards, and said that
the new diamond standard seeks to achieve the same results .
Participants posed questions about the
D-S
R SP's
feas
ibility
of
establishing a system of warranties internationally, especially
in major trading areas such
as
India and Antwerp. In response
Bouffard assured that Signet and its partners have identified
potential bottlenecks, and will be working closely with
suppliers in those
countr
i
es
to ensure compliance .
ErikJens, head
of
diamond and jewelry clients at bank
ABN
AMRO,also speaking at the conference, felt that
Signet's move would ultimately improve the bankability of he
di
amond
industry.
He
explained that
as
consumer confidence
in diamonds increase due
to
greater transparency, financiers
would see the risk in investing in the diamond industry
minimized, potentially inviting greater financing.
[n
other
Signet news, the jeweler announced its plans
to
delist from the L
ondon
Stock Exchange (LSE). Signet
said that
less than 1 percent of ts annual trading volume
occurs
on
the LSE,and the monetary expense, regulatory
burdens and time spent to maintain L
SE
trading supersedes
any benefits. Shares will continue to be traded on the LSE
until March 1
1,2016
and cancelation will take effect on
Ma
rch 14. Signet's shares will continue
to
be traded on the
New
York Stock Exchange (NYSE).
8/19/2019 Rapaport March 2016
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RAPAPORT
M RCH
2016
if you stop tllitlking o diamonds
as a commodity and start thinking
of
hem
as
uniqu
e
special
,
oHe-'-?J-a-killd illdillidllais,
then they are H
t
overpriced.
David Bennefl
Worldwide Chaimilltl
ifSolheby s
]l Wt lry
Division and Chairman
o
Swirzerland
Gmtva,
Swirzl'rLmd
24
1 Rapaport March 2016
COVER
36 THE MARKET
FOR SUPERGEMS
Martin R apaport goes
one-on-one
with Sotheby s David B
ennett to
discuss diamonds and the auction
mystique.
42
BEHIND THE SCENES
Each auction
is
a carefully crafted
sa
le. So what are the advantages
to
the
trade
when
selling at auction?
OP·E
34 RAPAPORT CALLS FOR
STANDARDIZATION OF
DIAMOND
GRADING
TERMINOLOGY
In an
open
letter
to
the
Federal Trade Commission
Mart
in
Rapaport comments
on
the
proposed
FTC
Jewelry Gu ides.
NEWS REVIEW
8 SIGNET ANNOUNCES
NEW
STANDARDS
28
M. .D. LEADS
ISRAEt :S EXPORTS
AWDC
Launches
New
Databa.se;
Zimbabwe
Seizes Di
amond
Mines;
Rapaport
Adds Grading Service.
30 ANGLO AMERICAN
UPDATES STRATEGY
De Beers R evenue Falls; BlueR
oc
k
to Bu
y
Diamond
Resources.
32 IGDA LAUNCHES
Di
amond
Slump
I-li
ts Botswana;
1
111-Carat Diamond Named;
SC
IO Gets
New CVD
Patent.
IN USTRY
18 ROUGH STRONG
POLISHED STILL
SHAKY
Rough demand
surged at
the
start
of2016 as polished inventories were
r
educed
in
the
second half
of
2015 .
However, polished
demand
remained sluggish.
8/19/2019 Rapaport March 2016
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RAPAPORT
M RCH
2 16
22
Rapaport
Oiaroond Report
0712-350; S5N:
0746-9829)
is published
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Inc.
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Diamond
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2 Rapaport March
2016
INTERNATIONAL COLORED GEMSTONE
48
U.S. RETAIL
12
GEMSTONE MECCA
Election year impact. Tucson
is
the
gathering place for
colored g e m ~ t o n e dealers and an
5
U.S
. WHOLESALE annual event that draws attendance
Market shim to more specialized g o o d ~ from all areas
of the
industry.
52 HONG KONG
Chinese NewYear period challenging.
54
ISRAEL
Economic,
po
litical i ~ m e s
impact market.
56 INOlA
Inventory streamlines.
58 RUSSIA
AL R
OSA 2015 production up,
sales down.
6 ANTWERP
Business mixed at Antwer p Fair.
RETAIL
1 6
FIRST LOVE
Emphasizing the personal touch
is
a priority
at
McCaski
ll
Company
in Destin, Florida.
1 8
RETAILRAP
This month Rapaport Magaz ine asks
retailers, What are you restocking
after the holidays?
11
RETAIL 8ULLETIN
112 RETAIL SCOPE
LEGACY
122 BETTER THAN EXPECTEO
Whi
le some dealers came
to
the
annual Miami antique show
with low expectations, they left
cautiously optimistic.
STYL
124 NOW TRENDING
The recent
NY
NOW gift show
revealed a shift in design trends.
126 DESIGNER LINES
128 JEWELRY CONNOISSEUR
ECONOMICS
74
PARCEL PRICES
77 RAPNET PRICE SHEET
8
TRADE SHEETS
92 ECONOMIC BULLETIN
94 IMPORT EXPORT
DEPARTMENTS
15 LETTER FROM EDITOR
9 ADVERTISER DIRECTORY
96 CALENDAR
98
TAKE NOTE
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R P P RT
Volume 39 Number 3
iDITORI L
EDITOR IN CHIEF:
Amber Michel
le
EXECUTIVE EDITOR
: Phyllis Schiller
SENIOR
EDITOR: J
oyce
Kauf
SENIOR ANALYST: Krawitz
ASSOCIATE EDITOR:
Shuan
Sim
INTERNATIONAL
CORRESPONDENTS:
U 5 RETAIL
lara
Ewen
HONG KONG
: Mary
Kavanagh
INDIA:
Za
inab A
Mo
rbiwala
RUSSIA: Svet lana Shelest
BELGIUM:
Marc Goldstein
COLORED GEMSTONE: Sheryl Jones
SPECIAL
CORRESPONDENT: Ettagale Blauer
ISIGN
PHOTO EDITOR: luciena
Kardonsk.y
SENIOR DESIGNER:
Irena Sapi lak
ASSOCIATE
DESIGNER:
Ira
Cook
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MARKnlNG
VP
MARKETING: leen
Farrell
PHOTOGRAPHY
Don Kozusko
FOR ADVERTISING
INFORMATION
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Tel: 646.572_8560: eil
een@d
iamonds_net
TO CONTACT EDITORIAL
Amber Mi
chel
l
e,
Editor in hief
Tel: 212 535.2283;
amber@d
iamol ldsl let
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Copyright 2016
by Rapaport
USA. All
Rights Reserved.
Reproduction
is
strictly prohibired, Rapaport Diamond
Reporr-, Rapaport Magazine-, I n d ~ Index-The Internet
Diamond Exchange-, Jewelry Connoisseu ', RapNer-,
Rapaporr-, Diamonds.Ner-
and
JNS· are rrademarks
of
Martin Rapaport,
observ tions
he one thing that is certain in life is change. Sometimes
it happ
ens
gradually and other times it comes out ofnowhere.
H i
ght now the
U.S
.consumer
is
in a changing mind-set.Back
in
the 1980s, 19
90s
and at the turn
of
he Millennium,
it was
all about
conspicuous conswllption . .bigge r,betterand more diamonds.Bling was the
thing.Then the world changed seemingly overnight when the recession
of
2008 hit.Now the mind-set is about conscious consumption whi ch means
buying that which does no harm a product that is safe
for
the environment
and no one
was
exploited in th e pro
cess of
producing th e item.As a
res
ult
of
this conscious consumerism people are embracing experiences rather
than materialsm. Perhapsas a backlash to being glued to computers and cell
phon
es
emailing and texting
all
d
ay
consumers interests have turned
to
purchasing experiences vac
ati
ons dining out something that builds
re
lationshipsand creates conununity.These experiences are,ofcourse shared
on social media but it
is
the doing
of
an activity that
is
important. A
8/19/2019 Rapaport March 2016
8/67
18 Rapaport March 2 16
Rough demand surged at the start of 2016 as polished
inventories w ere reduced in the second half of
2 15
However polished demand remained sluggish
he di amond marke t ha s
been characterized
by
scrong
rough trading and sluggish
po l
ish ed d em an d sin ce
th
e start of
20
16 .
Th
at has crea ted
som e uncer tainty among dia m o
nd
dealers as to which direction the ma
rk
et
is
headin g.
Th e rough market
was
exuberant in
January due
to
res tocking and
fa
ctory
an d transaction
-d
ri ven bu yin g, but
we typically have
th i
s ebb
and
fl ow
momentum in t he rough market, said
Marcel Pruwer, managing director of
I
nt
ernational Economic Strategy (lES),
a c
on
sulta
nt to th
e diamond indus
tr
y,
among others.
Th
e question is
if
it is
sustainable and how polished demand
will
be in
th
ree mo
nth
s when
th
e new
po
lished suppl y
co
m es
to mar
ket.
An es
timat
ed
$1
billio n
worth
of
rough e
nt
ered
th
e m
ar
ket
in Janu
ary,
m a
rkin
g a sig
nifi
ca
nt in
crease from
th e sec
ond half
of2 0 15 w hen d em and
slu
mp ed
. M a
nuf
ac tu rers
ex pla
ined
th
ey n
eed
ro ugh
to
fill sh o
rt
ages
in
th
e polish
ed
m a
rk
et
as
a res
ult
of
th
e
y AVI KRAW ITZ
30
per
ce nt to
50 p
erce
nt decline in
m a
nufact
uring las t year.Th
ey
add ed
th at ro u gh d em and is also p
ar tl
y
driven by a
nee
d to kee p their factories
c
hurn
i ng, as th ey cann o t
afford
to
lose any m ore w
or k
ers
than th
ey did
in 20 15.
Manufa
c
tu rers
po
li
shed
in
ve
ntory
was depleted fo llow
in
g a signifi cant
decline
in
ro ugh s
upp
ly in
th
e latter
ha
lf
of
20
15.
There
fore,
whil
e it takes
a
bout three
m o
nt
hs for rough
to
be
ma
nu
factured i
nt
o polished and for n
ew
produ ction to enter the ma
rk
et,polished
pri
ces c
ontinu
ed
to
be s
upp
o
rt
ed by
sho
rt
ages
in
Fe
br u
a
ry.
Polished prices stabilized , ca
lm
ing
th
e
uptr
en d w
it n essed
in
th
e past
th ree
month
s.The R ap
Ne
t Diam
ond
Ind
ex
(RAP
I
TM
) fo r 1
-ca
rat diam o
nd
edged
up
.3 per
cent
du r
ing
th
e peri
od
Fe
bru
ary 1 to 22. RAPI fo r .
3- carat
di
am o
nd
s
in
creased by .3 p er
ce
nt
,
while
RAP
I
fo
r .5-carat diam
ond'i
grew
.4 p ercent. RA P I for
3-c
arat di am o
nd
s
declin ed by
1.6
p
ercent
du
rin
g
th
e
p
er
iod (see c
hart
on o
pp
osite page,
to
p).
8/19/2019 Rapaport March 2016
9/67
u.s.
SUPPORTING THE MARKET
Polished trading s
low
ed as bu yers in
Asia
Pa
cific took vacatio
ns
during the
Chinese NewYear f
es
tival. Dealers remain
cautious
abo
ut com-umerdemand
given
the
global
economic envirorunent,
particularly
with
re
ports ofdecliningjewelry
sales
over
th
e
Chinese New
Y
ear
season.
Chow T
ai
Fook,
the
larges t j
ew
elry
retailer in the region, noted that weak
consum er sentiment for luxury goods
du e to C hina's econ
omic
slowdown a
nd
recent stock market volatility weighed
negatively on
i
ts
sa
l
es durin
g the season
(see full report
on Chow
T
ai
F
oo
k s
resul ts on page 52).
Dealers therefore traveled to the
H ong Kong
In ternation
al J ewe ll
ery
Show, which began on March 1, wi
th
l
ow ex
pectations for the event. D ema
nd
inAsia P
aci
fic is slow asjewelry sales ha
ve
declined over the past year and retail
inventory leve
ls
remain high.
Rather, gl
obal
demand co n tinu es
to b e supp o rred by the U .S. eve n
as
trading
remains
below
levels recorded
in previous
ye
ar
s.
Polished
imports
to
rh e U.S . declined 10 percent year
on
year ro 5 .4 billion in th e fourrh quarter
of20
15
, w
hi l
e polish ed ex p o rr s fe ll
13 percent to
3.9
billion (see chart at
right , bottom).
Who
lesalers are selling
off
old
inventory and
tr
ading
is
driven
by
orde
rs for spec ifi c goods rarher
rhan in ve nt ory pur chases . Overall,
consum er spe
nding
is caut io us, wi rh
rerailers expressing
conce
rn about the
economy
in an
election
year an d
that
a possible negative wealth effect from
declinin g sto ck markets
will
impact
lu
xury
spe
ndin
g.
RapNet Diamond Index (RAPI'M)
2.5%
1.5%
0.5
-05%
-25%
1 2 3 4 5 6 7 8 9 10
11
12 13 14 15 16 17 18 19 20 21
FEBRUARY 2016
- .30el. .5 d . 3 d
The RapNet Diamond Index (RAPI ) is based on the average asking price in hundred /ct.
of
the 10 best·priced diamonds, for the top 25 quality round diamonds (D-H, IF-VS2, GIA-graded,
RapSpec-A3 and better), which are offered for sale on RapNet-Ra paport Diamond Trading Network.
u.s.
Polished
Diamond
Trade
7,000
8/19/2019 Rapaport March 2016
10/67
eBeers Half-Year Revenue, arnings
•
.2
"
if>
>
5,000
4,000
3,000
2,000
$1,000
$-
1 1,000)
-
-
t-
-
-
-
-
Ie: -
V
l- I
: b.
lH 2H lH 2H l H 2H l H 2H lH 2H lH 2H lH 2H
2009 2010 2011
20
12
20
13 2014 2015
_ Other Sales _ Rough Sales - Underlying Earnings
Based on data published
by
Oe Beers and Anglo American.
2 Rapaport March 2 16
BUILDING CONFIDENCE
Therefore,
businesses across
the
distribution
chain
are maintaining a
cautious
outlook
for 2016, despite
th
e
recent surge in rough demand .While
polished supply
is
expected
to
increase
significan tly in th e second quarter as
that new rough
is
prepared, De Beers
is
expected
to
limit its rough supply in an
effort to stabilize the market.
We're sellingwhat
our
customers want
and need rather than doing anything that
might
not
be in
ours
or
the
indu
stry's b
es
t
interests, Gareth Mostyn, De Beers head
of
strategy, told Bloomberg. The key for
us is to con
tinu
e to build on improving
confidence through 2016 .
Sightholders
noted there was good
de mand for
De Beers
supply ahead of
the February sight, which was
ongoing
at press time. They expla
in
ed that there
was
better
value in D e Beers
rough
than
other sources after th e company redu ced
pric
es
in
Janu ary.
ALROSA
r
eportedly
kept
pr ices un changed at its February
sa le,
wit
h its prices now unchanged
sin ce August. Prices were similarly firm
at tenders
and
on the secondary market.
While
rough
demand
remained robust
in Fe
brua
ry - and pr ices high - sales
are expected to fall below the
heights
reached in Januar
y, when
De Beers sold
$540 million worth
of
ough. Still, sales in
early 2016 marks a significant increase in
the
co mpany's performance in 2015,and
particularly during th
e
tough
second half.
RISING SUPPLY, STAGNANT DEMAND
De
B ee r s rou gh sa les slump ed
54
percent
year
on
year
to
1
.
36
billion
8/19/2019 Rapaport March 2016
11/67
in the second half0£2015, which resulted
in a loss
of 102
million compared to
pr
ofit
of 454
mi
llion a
year
earlier
(see
chart on
page 20) . Full-year rou
gh
sales fell 37 percent to 4.1 billion, while
underlyi
ng
earnings slumped
72 percent
to
258 million .
Similar declines were evident in the rough
trading
centers, with Belgium's
rough
inlpOrts
down
32 percent
to
4.77 billion
in the second half of last year and rough
exports declining by the same margin to
5.1 billion (see chart at right) .
T he latest data published
about
India's
diamond trade in
January
confirmed
the upward trend in rough
trading and
continued caution in the polished market.
India's rough
imports
rose
16
percent
year on year to 990 million during the
month, while polished exports slumped
42 percent
to
1.04 billion,
according
to provisional data
published
by the
Gem and Jewellery Export Promotion
Council (GJEPC).
De
Beers
management
explained that
rough demand in 2016 will depend
on
consumer demand
for diamond
jewelry
and the
resultant
levels of
restocking by retailers and, consequently,
the
midstream.
At least in the
first
quarter, manufacturers
required some restocking as evident in the
recent surge in the rough market. However,
while
t
he current
polished price levels
reflect shortages in the market rather than
a rise
in
demand, there is an overriding
concern among diamond
dealers
about
how
the market will evolve
as
polish
ed
supply increases in
the
coming
months
while overall demand remains weak •
Belgium s
Biannual Rough Diamond Trade
9.000
8.000
7.000
.2
6.000
5.000
.000
if> 3.000
::>
2.000
1.000
.
( 1.000)
( 2,000)
'
2H 1H 2H lH
H l H 2H l H 2H
lH
H
lH
H
2009 2010 2011 2012 2013 2014 2015
_ Rough Imports _ Rough Exports - Net Rough Imports
Based on monthly data published
by
the Antwerp World Diamond Centre (AWDC).
Rapaport March 2 16
2
8/19/2019 Rapaport March 2016
12/67
8/19/2019 Rapaport March 2016
13/67
AWDC
LAUNCHES NEW DATABASE
The Antwerp
World
Diamond Centre
(AWDC) has
teamed up with Bureau Van Dijk. a firm specializing in
company data
gathering. to
launch
a
free database
to
help
diamond
traders
comply with Belgian antimoney
laundering legislation. The law requires banks and diamond
tr
aders
to
identify
their
clients, veri
fy
their i
de
nti ty and
conduct a risk analysis before transactions.
The
collaboration
with
Bur
eau
Va
n
Di
jk
will
allow traders
to
investigate
who the
Margaux Dan
er
client
is,
risks associated with
the client's profile and the nature
of the business relationship,
said
AWDC
spokeswoman
M argaux D onckier. Besides
company informati
on
of
some
250
million businesses
wor
l
dw
id
e, the da
t
ab ase
also includes sanctions lists,
politically exposed persons
(PEP), media reports and a list
of
Financial Action Task Force
(FATF) h i g h ~ r i s k countries .
M I D
LEADS ISRAEl S EXPORTS
M.I.D.
House
ofDiatnonds
Ltd.
was Israel's
top
exporter
in 2015.
according to
a list released by
the
Ministry ofEconomy and Industry's diamond controller.
Th
e company exported 191 million of gems during the year,
l
UlSeating
Leo Schachter
Diam
onds Ltd. ,- the top exporter in
2014 - from the leading spot.The top ten companies exported
Sl .13 billion worth
of
diamonds combined:
• M.I.D. House ofDiamonds Ltd.,S1 91 million.
• A.A. R achminov
a m o n d ~
(2000) Ltd.,S163 million.
•
Niru Di
amonds Israel Ltd. , 155 million.
• Leo Schachter
Di
amonds (1987) Ltd.,S150 million.
•
D.N
.
Di
amonds 2007 Ltd., S128 milli
on
.
•
Ofer
Mizrahi Diamonds Ltd.,S102 million .
•
Yo
shfe
Diam
onds International Ltd., 74 million.
• R osy Blue S
ales
Ltd., 60 million.
• Andre M
essi
ka Ltd., S54 mill ion .
• Moshe
Nam
dar Masingita Ltd., 49 million.
28
Rapaport arch 20
6
RAPAPORT
ADDS
GRADING SERVICE
The Rapaport Group* launched a new
diamond
grading report
for
investment-grade diamonds
titled the Rapaport Investment Diamond Report
(IDR).
T he report grades diamonds based on the
Gemo
logical Instinlte ofAmerica
G
rA ) standards and
includes additional information ab
ou
t tint,location and color
of inclusions.
I t
l ~ o features high resolution images.
The
IDR
is double tested and includes an additional
independent
GIA diamond grading report.The service will only grade round
diamonds
sO
carats and larger, D
to
H color, IF toVS2 clarity,
of
exce
llent
c
ut
, polish and
symm
etry - diamonds mus t m
eet
Rapaport gemologist
s'
opinion of nves
tm ent
grade quality
m o n that do n
ot meet the
standards
might not
be
issued
the IDR.
ZIMBABWE SEIZES
DIAMOND
MINES
The Zimbabwe
goverrunent has ordered eight
mining
companies
who did
not
renew
their licenses
to
cease
operations
and
vacate
their premises, reported
Reuters.
At least six
co
mp
an
i
es
-
Diamond
Mining
Company
(DM
C),Anjin Investments,Jinan Mining,
Ku
sena
Diamonds,
Marange R esources and Mbada Diamonds - have refused
to
leave.
The se
ized mines will
be
taken over by
the
n
ew
stat
e-owned
Zimbabwe Consolidated Di
amond Compa
ny
(ZC
D
C) as
these firms had
not
invested e
nou
gh
to
continue
production beyond alluvial produ
ct
i
on,
Mines and
Mining
Development MinisterWalter Chidhakwa said .
According to R e
ut
ers,
DM
C said it intends to sue
the
government for breach ofcontract over
the
attempt to eject
the
com
panies.
Ra nlZ
i Malik, a general manager at
DMC
,
sai
d
that its joint venrure contract with the Zimbabwe Mining
Development
Corpora
tion (Z
MD
C), the state mining arm,
stipulates that
ZMDC
was responsible
fo
r renewing licenses
a
nd
that the investment agreements were valid and indefinite.
Th
e ZMDC
is
in
joint ventu
re with eight firms to
mine
in
Marange. f f i c i a l ~ from Mbada Diamonds and Chinese-run
Anjin Inves
ml
ents said
th
ey were trying to persuade the
government to reconsider, reported R euters.
dd itional repor
tillg
pr
ovided
by uireM
ed ia
R
apaport Maga
z
ine
is
published
by
the
Rapaport
Gro
up
8/19/2019 Rapaport March 2016
14/67
NGLO
MERIC N
UPDATES STRATEGY
Anglo American PLC
announced
plans
to streamline
its assets and improve cash
flow
to strengthen its
balan
ce sheets.
The
mining company n t e n d ~ to focus
on
De Beers - in which it holds an 85 percent interest
platinum group metals and copper. Ma rk Cutifani, CEO of
Anglo American, added
that
its workforce
will
eventually
be
ark
Culirani
reduced to fewer than 5,000 roles,
dow
n from 11,500 rol
es
in 2016,
wit
h cost savings estimated at
250 million.The
2016
targets in
the
new
strategy include:
• Positive free cash £low at
current
pnces
.
• 1.9 billion earnings before interest
and tax (EBIT) .
•
i s p o s a l ~
totaling 3 billion
to
4 billion.
• Net debt levels below S10 billion .
The
new strategy would effectively
streamline i
ts
core portfolio ofassets down
to
16 from 45.
Anglo American would seek to ensure there
is
no overreliance
from anyone product group or geography even as the
portfo
li
o becom
es
smaller. De Beers will continue its
mining operations across o t ~ w a n a Canada, Namibia and
South Africa. D e Beers is also expected to complete the
development
of
its 51 percent-owned
Gahcho
Kue venture in
Canada, with production
to
begin in
the
second
half
of2016 .
DE EERS REVENUE
F l lS
De Beers total revenue for 2015 fell
34
percent to
S4.7 billion. It is attributed to lower rough diamond sales
which
plummeted
36 percent to
54.1
billion, according
to a prelitninary earnings report. Earnings before interes t
and tax (EBI
T)
slu
mped
58 percen t to 571 million.De Beers
has reduced production by 12 percent to 29 .7 million
due
to
weaker rough
diamond
demand,
as
well as tr imm ed costs and
capital expendiru
re.The mining
company, which
emp
loys
2,236 people.has decided
to
reduce
i
ts workforce by 189 positiom,
of whi ch 68 need not be retrenched but redeployed
e L ~ e w h e r e
instead
or
by
natural attrition from retirements.
3
Rapaport arch
20 16
- Global consumer demand fell marginally in U.S. do
ll
ar
ter m
s,
accor
ding to
the report.
-While the US ., the largest market for polished diamonds
accounting for 45 percent of global market value. saw
growth in 2015, it was at a l
ower
rate.The growth was offiet
by soft economic sl
owdown
in C hina and a strong U S. dollar.
While
demand for
diamond jewelry
in
China
remained
stable. demand in India fell in local currency terms.
- The Forevermark diamond brand from D e Beers expanded
its reach by 14 percent and is now available in 1,760 outlets
across 35 markets. De Beers also rep
orted
that Forevermark
achieved
doub
le-digit sal
es
growth in 2015.
-
The
mining company expects the US . market to drive
growth
of
consumer demand in 2016 . Factors atTecting the
growth would include the strength
of
the currency and
the
economic p
erformance
in C hina .
- D e B eers
is
h
oping
that the continued r ise
of
he middle
class in the world's
emerging
r k e t ~ including India and
China, would positively impact the industry in the
long term
.
De Beers expects
to
produce 26 million
to
28 million carats
of
diamonds in 2016.
In
other
De Beers news, the miner's research company
Internation al Institute
of
Diamond Grading R esearch
(IID
GR)
will otTer to grade non-Forevermark diamonds
from its UK. lab for the first time starting March 1
,2016.
IIDGR has also launched a diamond grading service in
the Far East, Middle East, India and Europe.
The
service will
only grade natural, untreated diamonds, from
laboratories
in Belgium, India and the UK.
BlUEROCK TO BUY
DI MOND RESOURCES
U.K.-listed
BlueRock
Diamonds has approved
the
purchase ofDiamond Resources Pty Limited
from
Tawana
Resources.
Blu
eRock
will
ai
8/19/2019 Rapaport March 2016
15/67
IGD LAUNCHES
Laboratory-grown diamond producers,
distributors
and
retailers around
the
world have
partnered to form
the International
Grown Diamond
Association (IGDA). Claiming to
be
the first ever association
representing the grown diamond industry, IGDA aims to promote
l a b o r a t o r y ~ c r e a t e d diamonds
as
an alternati
ve
and educate
about qualities and applications oflabot'arory-grown diamonds.
The
founding members include: Microwave n t e r p r i ~ e s (
MW E
),
IiaTechnologies,Washington
a m o n d ~
Corporation,
New
Diam
ond
Technology, Scio Diam
ond
Technology
Corporation, Go1condia Cultured
Di
amonds,
Pure Grown
Diam
ond
s.
Po
li
shed Diam
ond
Co mp
any,
Diamond Foundry, MiaDonna Company and
Chatham Created Gems Diamonds.Richard Garard,
CEO ofMWE, was
elected the secretary general of
the
new organization.
SCiO GETS NEW CVD PATENT
Laboratory-grown
diamond producer
Scio
Diamond Technology
Corporation announced
in
February that it
received
its 28th patent for its CVD
manufacturing
process.
Titled
Gemstone
Production from
ChemicalVapor D eposition (C
VD
) Diamond Plate:' the
patent
is
a continuation
of
a previous applicati
on
under the
same name.Th e patent l a i m ~ to maximize diamond yields
by geo metrica11y optinlizing
pref
orms, such as growing
cylindrical CVD d i a m o n d ~ from a round wafer
to
maxinlize
diamond yields for
round-cut o
Scio
Diamond
also claims to be the first firm to deliver C VD single-crystal
diamond plates, CVD diamond gems and one-inch square
single-crystal diamond wafers .
3 Rapaport arch 20
16
1.111-CARAT DI MOND N MED
Lucara
Diamond Corp. announced in February
that the l , l t l-carat diamond recovered from
the Karowe mine in Botswana has been named
Lesedi La
Rona.
The
name, which means Our Light
in the local Setswana language, was picked as the winning
en try in a nanling c
omp
etition held
in
January open only to
Bo
tswana citizem, includi
ng
the nliner's employees.
- Thembani M oiclhobogi from Mmadikola won the contest,
netting himselfa 2,243
pr
ize.
Hi
s entry
was one
ofmore
than
11 ,000 s
ubmitt
ed .
- Auditing firm Ernst &Young oversaw the nanling
competition to ensure fairness .
- The diamond was extracted
in
November 2015, and is the
second largest diamond ever recovered . is also th e largest
diamond nlined in
Bo
tswana.
DI MOND SLUMP HITS BOTSW N
Botswana s diamond e x p o r t ~ fell
to
i
ts
lowest in six year
s,
dropping 38 percent to 2.4 billion in 2015, according to data
published by the Bank
of
Botswana.
The
se
fi
gures do not include
d i a m o n d brought into the country by D e Beers for aggregation
and re-exports. Kenneth Matambo, minister
offinance
and
development planning,
sa
id in his 2016 budget speech that the
continued slowdown of growth in the global
economy
had
adversely impacted Botswana's
domes
ti
c econom
y,
reported
Mmegi Ol/lil/e He added that the Bank ofBotswana revised
its econonl ic forecast down
to
1 percent from 2.6 percent
because of the weakness
in
the diamond industry.The majority
ofBotswana s diamond exports come from D ebswana, ajoint
venture between the gove
rnm
ent and D e Beers. Debswana c
ut
i
ts
production 16 percent to 20.4 million car
ats
in
20
15.
8/19/2019 Rapaport March 2016
16/67
OP ED
R P PORT
C LLS FOR
STANDARDIZATION
OF
DI MOND
GR DING
TERMINOLOGY
Rapaport Comment on the Proposed FTC Jewelry
Guides
Jewelry Guides 16 CFR Part
23
Project No. G711 001
To The Federal Trade Commission
Re Stalldardizatioll
of
Dimno d
Grading Terminology
The
Gemological Institute of America
GIA),
established in 1931 , created terminology to describe
the color and clarity of
diamonds. So as to differentiate
their language from a broad range of confusing terms
that were commonly used
in the trade, the GIA begins
their color grading scale using the letter 0 instead
of A, AA, AAA, etc. The GIA defines their diamond
grading terminology standards
by
grading millions
of
diamonds each
year
and applying the GIA terminology
to their diamond grading reports. The GIA Gem Trade
Laboratory (GTL) maintains and uses master samples
to define various gemological characteristics such as
color, clarity, fluorescence, etc. The use
of
GIAdiamond
grading terminology has become the de facto language
used to describe diamond qualities and gemological
characteristics.
Over the years numerous additional and competitive
diamond grading laboratories have emerged.
Almost
all use GIA terminology while applying GIA grading
standards. Unfortunately,
in
recent years, a number
of diamond grading laboratories have been issuing
diamond grading reports using GIAgrading terminology
to
significantly overstate
the color and
clarity
of
diamonds. Evidence of such deceptive practices has
been
presented
in a
court case
where two
3-carat
diamonds color graded as G by EGL International were
later graded by the
GIAas Nand
M
colors-a
disparity
of
six to seven colors representing a $113,000 value
difference according to the lawsuit. Please note, that
while we will be using diamond
color
differentials to
highlightovergrading, such overgrading also takes place
regarding diamond quality, cut and other gemological
characteristics.
The
attached article, Honest Grading,
4
Rapaport March 2 6
published in the
Rapaport Magazine
November 2014,
provides important additional information and is included
in this submission.
Unfortunately
,
the
gross misrepresentation of
diamond quality by unscrupulous diamond laboratories,
dealers and retailers has become rampant. Hundreds
of
thousands
of
consumers have been sold overgraded
diamonds, whose qualities have been misrepresented
through the fraudulent use of GIA grading terminology.
Such abuse
is
destroying
a level
playing
field and
constitutes unfair competition.
An honest eweler selling a legitimate honestly graded
G
color diamond must
charge a significantly higher
price than a dishonest jeweler offering the consumer
an
overgraded
G color. What is
the jeweler
to do?
Some are being forced to compete by overstating the
quality of he diamonds they sell and/or using fraudulent
grading reports that overstate quality. Furthermore, the
ability of consumers to competitively shop and compare
prices is
being
undermined. What
are
consumers
to
do when
faced with alternative grading reports or
representations, both of which claim a diamond is a G
color?
They
might naturally
go
for the less expensive
item ,
mistakenly
thinking that a fair comparison has
been made. Finally, the value
of
an overgraded diamond
will be significantly less upon resale. Consumers are
being led to believe that the quality
of
what they have
purchased is significantly greater than what it actually
is. Upon resale , consumers will find out the true grade
of
heir diamonds and the resultant significant difference
in value. This will not only hurt the consumers but
also significantly reduce co
nsumer confidence in all
diamonds, including honestly graded and fairly priced
8/19/2019 Rapaport March 2016
17/67
diamonds from legitimate retailers. It should be clear that all of
the above point to unfair competition and consumer fraud.
Some
of
the entities overgrading diamonds try to justify their
actions by falsely claiming that since diamond grading requires
the subjective skill
of
a trained diamond grader there are no
diamond grading standards and they can therefore use GIA
terminology to misrepresent diamond qualities. While diamond
grading may in fact be subjective, such subjectivity is relevant
only within a reasonable tolerance range. Legitimate graders
might disagree
about
a one color or clarity difference but a
difference of five or six colors is outright misrepresentation and
fraud. No legitimate diamond grader would be off by more than
one color
or
clarity. Furthermore, retail jewelers are deemed to
be experts in their dealings with consumers; they should not be
allowed to misrepresent the quality of the diamonds they sell by
abusing GIA diamond grading terminology.
For all of the above reasons, this writer appeals to the Federal
Trade Commission (FTC) to make the following changes andl
or additions to the FTC Jewelry Guides.
l t s an unfair business practice to communicate the grade
of a diamond using
GIA
terminology while applying non-GIA
standards thatsystematically overgrade the quality of a diamond.
a Definition: An overgraded diamond is a diamond whose
quality is communicated by the seller using GIA terminology and
when graded by the GIA is found to be more than one color or
clarity below the grade represented by the seller.
2 Diamond sellers are responsible for the
quality
of the
diamonds they sell.
In
the event that a seller describes a diamond
using GIA terminology and the diamond is graded by the GIA
and found to be more than one color or clarity below the grade
communicated by the seller, the buyer may return the diamond
to the seller within a period of one year and obtain a full refund.
In the event that the Commission is concemed about the level
of
diamond grading subjectivity, it may wish to modify the above
rules by allowing for a two color or clarity differential.
Please note, in the event that the Commission is unable to
include the above rules, I request the following addition to the
rules.
u
The standard for diamond grading when using GIA
terminology shall be the results generated by the GIA Gem
Trade L a b o r a t o r y ~
In the event that the Commission holds any hearings regarding
changes to the rules , please notify me, as I would like to attend.
hank yoltfor your time and consideration.
Martin Rapaport
C
harimall
Rapa
port roup
RAPAPORT
CALL
TO
ACTION
Members ofthe diamond trade
are encouraged to communicate
directly
with
the
Federal Trade
Commission FTC)
regarding
misrepresentation of
diamond
quality. Please send an email or
letter supporting
our submission
to
the
FTC
and/or
request
that
the
FTC add these two rules
to their
guidelines.
1. Those using GIA
terminology
must use GIA grading standards.
2. Those selling diamonds using
GIA
terminology
must
provide
a refund
if within one
year the
diamond is graded by the GIA and
found to be more than one
color,
clarity or cut grade below the grade
the seller communicated.
• Write Jewelry Guides, 16 CFR
Part 23, Project No. G711001 on
your comment.
• File
comment online
at:
https://ftcpublic.commentworks.com/
ftdjewelryguidesreview
Or mail
your comment to:
Federal Trade Commission
Office of the Secretary
600 Pennsylvania Avenue
NW
Suite CC-5610 Annex 0)
Washington,
DC 20580
Rapaport March 2 16 5
8/19/2019 Rapaport March 2016
18/67
OVER
Sotheby s
y M RTIN
R P
PORT WI
TH
M ER M ICH Ll
avid Bennett, worldwide chai rman of
Sotheby's
jewe
lry division and cha
irman
of
Switzerland,
made
jewelry
hi
story once
again when he sold th e
Blu
e Moon of Jo sephin e
diamond for $48.5 million in November
2015 - the
most
expe
n sive diamond or gemstone ever so ld at
auction.
Known
as the tOO-carat Man, Bennett has
sold seven tOO-carat diamonds during the span of his
6 Rapaport March 2 16
four-decade
ca
reer at Sotheby's .H e has handled som e of
the world s most
important
historical jewels, including
the
collections of
he
Duchess of Windsor, Ava Gardner
and the
Beau
Saney
diamond,
which once
belonged
to H enry IV of France. Mter th e fall auct
ion
season
closed this pas t December, Bennett sat down wi th
Martin
Rapaport
at Sotheby's N
ew
York for this exclusive
in t
erview
about
diam ond and
the
auction market.
8/19/2019 Rapaport March 2016
19/67
Martin Rapaport: How
s
the
jewelry
auction
business?
David Bennett: It
s
been
an
extraordinary year.The May
auction in Geneva was a record
sa
le of$160,914,902.
We had the Blue Moon
of
Jo sephine beating the Graff
Pink, very exciting, and we had the
tOO
-carat D
IF
in
New York.
The
jewelry market is extremely good at
auction. Toward the end of the year, there was a slight,
slight, softening in large white diamonds.
MR: s
it because
all
of
asllddwjantastic
stones
have
appeared?
DB: Most of he private se llers are
one-off
sellers.They
come, they sell what they have and that's it.
You
never
really see them
aga
in.The opportunity effect is very hard
to
predict. If we visit Munich for example, it might be
just at the right moment when a particular individual is
thinking
of
sellingjewelry she inherited from her mother.
We don't really know when and where sellers offantastic
items will appear.
MR: Are t tere a lot
i uppliers
in the
trade
who
are
produdllg
magnificent diamolldsforyou? Do tltey know ill
advance,
wltell
they buy
tlte rough,
that
auction is tlte way
they re
going to
sell
the diamond?
DB: We've had considerable success in selling dream
ticket co lored and white diamonds. We have built
relationships with some
of
the cutters.
When
we see a
big rough diamond coming onto the market, we follow
it. The Blue Moon seemed , right from the moment it
was
discovered, to be a stone that would attract a huge
amount ofattention. It is also, I think, the most beautifitl
blue diamond I've ever seen,We want to remind people
of
th
e magi
c,
history,
glamour
and
luxury
of these
wonderful treasures.
Th
e campaign we designed around
th
e Blue Moon
was
precisely that. We made two films
to
illustrate
th
wonder
of
his extraordinary stone that had been sleeping
miles beneath the earth 's surface for billions of years.
Suddenly, at this one mo m
ent, in a fraction
of
a second
in time, the diamond is brought up to the surface by pure
chance, with a volcano. I
t's
that mystery that we as an
industry need
to
remember, because that's what mak
es
people dream about owning diamonds. Somehow, we've
become very blase .The industry, particularly the client
facing part
of
he industry,
has
to remember these things
are objects ofdesire and ha
ve
to remain objects ofdesire.
Otherwise people, clearly,
w ll
stop desiring them.
MR
So Sotheby s adds vallie
to
diamonds by romal/cillg
tlte stolle?
DB: That's what I try to do. It's been important to me
to place every stone that I've offered over the years in a
context
of
rarity, beauty and historical importance and
to somehow bring the magic out
of
he stone.
MR
So who are the buyers of these very
rare
and special
diamonds?
DB: The
one
thing they have in conUllon is, of course,
that
th ey
have the funds
to
buy
these
items. Sometimes
people d
on't
know what
they
want
until they see it.
When I sold a 25-carat ruby in
20t5
for a huge price
- three times more than any
othe
r ruby
has
ever sold
or the biggest challenge was exciting people about it,
because nobody had ever seen a 25-carat pigeon blood
Burma ntby before.So they didn't know that they wanted
it . I talked to one particular individual and he was say ing
to me,
A
ruby, huh? He hadn't thought about buying
a ruby. I showed
the ruby to him and he said, Wow,
that is really fabulous, I've never seen anything like it.
I
sai
d, You've got a point, because in 40 years in this
business I've also never seen anything like it. He asked,
How much should I pay for it? I said, There isn't a
price for this stone. All I can do is try and tell you how
wonderful
it
is.
Th e best way to define something as being beautiful is
to
show it - by explaining to
him
how rare it
was
and
showing him it beauty and by detailing the history of
the stone.
Once
he understood all these things, he ended
up bidding.He didn't buy it,but he
was
a very important
part of the underbidding process.
There
isn't
anyone
particular buyer because in the end, ir's somebody who
e
nt
ers into
th
e magic
of
this world
of
extremely rare
natural treasures
who
buys the stone.
MR: How important are olltside
experts
wlto
call understand tlte
Imiqllelless, spedalness and
rarity of
agemstolle? Is
there
eliot/gil
gemological knowledge Ollt there to sllccesifillly dtfferwtiate and
value these
multimillion-dollar
pieces?
DB: If you're thinking of buying a gemston
e,
you need
an advisor who's seen a lot of stones. He can relate it
to specific points
of
reference that he
has
seen with his
own eyes. I think that's hugely important. The ruby is a
ve
ry good example.A pigeon blood ruby is not an exact
definition
of
color. I
t's
sort
of
an agreed upon
term
that
Rapaport March 2 16 7
8/19/2019 Rapaport March 2016
20/67
eauSaney
38
Rapaport arch
20 16
the trade uses to describe a particular, very small spectrwn
of
he red end
of he
co lor scale So you really need to determine i his is a
good
pigeon blood.The
only way you can determine
if
something
is good
or exceptional
is
by mentally
comparing it w ith many other top-quality stones you've seen. A lab
orato
ry
certificate is
not
going to do that.
The same
is true
for colored diamonds . In my experience,
no
blue
diamond
is like another one.A blu e diamond can
only
refer to other blue diamonds. It's
not
like any
other
gemstone. Don't
think
a blue diamond is going to
look
like
a sapphire. It's an entirely different and special
co
lor and
ge m
.We have to stop
thinking
of
particular types
of
co lored diamonds, particularly blue, pink,
as
a
category of gemstones - they're individuals .
MR: Are
the
buyers i
lte
stones mostly trade?
DB:A stone that needs repairing or to be recut to improve its quality; very
often will go
to somebody
in
the
industry.
Certain
types
of
o ld colored
diamonds
are susceptible
to
being recut
to improve
the
colo
r or
appearance. But when a stone is finished like the Blue Moon,
it absolutely goes to a private.
MR: COl/ld YO l explain why
these historical prices
are
being
made at
a time when
the global
economy has beell
very weak?
DB:
E ven though there may be a general
econo
mi c
malaise, a
lot of people
are
making
a lot
of
money
and are very cash-ri
ch.
Fine gemstones have always
been something that people consider having in their
portfolio
of
investments
. If
they
are
going to
buy
something,
they
want
to
buy the rarest, the best.
In
my experience, in this market now,it's ten times easier,
no
matter
what
the price, to sell the rarest and
the
best
than it is to sell the second best or the third best, where
price sudd
enly
becomes an issue.
MR: Do
YOIl
think tltat the
economic
l/ncertaillty
is
flleling
demand? Political lltlrest in
the
Middle East, Hncertainty
about
the Chinese ecot/omy at/d the Chinese government cracking
down
on
comlpt
ion: s
that drivi g
demand?
DB: The i st 100-carat D IF diamond that I to ok for sale arr ived at what was
conce
ivably
the
worst
moment.
Saddam Hussein had
just
invaded Kuwait.
The underb
idd
er
of
hat
stone
was a
person
who was attracted to the diamond
because, as he said to
me, How
else can I
put
$12 million in my pocket? That's
portability. Great diamonds
and co lored
stones have been admired, valued,
esteemed and
collected by the
ri
chest
and
most powerful for
as
long as history
has been recorded .There's a
pr
etty
good
likelih
ood
that th is will continue .
MR: Do you feel that the kind i magnificent jewelry that
YO l
sell partiwlarly to very
wealthy people is a reaUsac and a reasonable form i iversificaaon o assets?
DB:
That's
not
for
me
to judge.
There
are people
who think
like that. People
th at I speak
to
say real estate,
jewels
and
gold
in some cases are all possible
interesting areas
of
investment.Whether jewelry is a
lon
g-term
investment,
8/19/2019 Rapaport March 2016
21/67
I
don t
know, but it hasn't performed badly in the past
2,000 to 3,000 years
MR:
vVlIat
adds value, the history, owner or
maker
ofa piece?
VVlJat percentage
of
the vallie is attributable to these kinds
i hings?
DB: A good example would be the Duchess of Windsor
sale.
It s the
fi
st sale that
was
very heavily mediatized and
followed. Lot 15
was
a pair of the Duke's cufflinks tha
we estimatedjust on its intrinsic value. It
was
a Cartier set
estimated at $15,000 to $20,000 and it sold for 50 times
the estimate because it had been the King's cufflink set.
If you went out today to buy some cuffiinks fo merly
owned by the King ofEngland, you would have a great
deal
of
rouble finding them. Sometimes provenance, the
history
of
he item
or
the previous ownership, can make
a piece very desirable and valuable.
There was
the Beau Sancy. The diamond had been
cut in the late-sixteenth century and had been bought
in 1604 by
Henry
IV of France and given to his wife
Marie de Medicis to wear in her crown for the coronation
in Saint Denis cathedral in Paris.That stone was magical.
A lady rang me up before the sale and asked
to
see the
Beau Sancy. I opened the box, she took a look, gasped
and burst into tears. It
was
such an extraordinary emotion.
It's a
kind
of
visceral emotional response that I
think
separates a stone like that from all the rest. It
was
a stone
that had been owned by four royal houses, including
the British. It was an off-col
or
SI2 stone.The stone was
cut in this extraordinary way It
was
easy to imagine the
cutter, in Amsterdam, cutting it by hand.When Henry IV
bought it,it was the most valuable stone in the worldYou
can have diamonds where the value
is unrelated
to
the
history of he object.And you can have diamonds where
the value is all about the history.
MR: VVhat about regular jewelry? Mrs.jones passes away
and
her daughters
want
to sell it Vf; hat about
that
market?
DB : Well, that's very much a major part ofour market. I
mean, this year we've had a very good sell-through rate.
Eit
her we're doing something very, very well, which is
getting the price right,
or
the market is very healthy and
there's a lot
of
demand. Perhaps both.
MR : Are
there
jewelry collectors? How do
brands
play into
this? If a
piece
is
Van leif
Arpels
or
Tiffany Co.
or
Harry
WinstOIl,
how
much value
will that
add?
DB : Co llecting
is
about desire. There are people
who
collect, for exampl
e,
pieces by Belperron.
MR :
Brands also
play an important role. For example, if
YOIl
had an unbranded gmeric diamond ring alld a CrqIJ ring at
auctioll, most people would
go
for the Crqff
ring,
because it s a
standard
of
excellence .The
quesaon
is
how
much
more would
they pay?
DB : That's really a question
of
the competition . I think
the brands attract and focus much more attention on
the
item.The important thing at an auction is to get people s
interest started. Once you've got people started, there are
all sorts ofpsychological imperatives that may keep them
going. Having a signed ring is more likely
to
have more
people after
it.
MR:You
)ve made historical
prices for fmley
colors.
Even in
this
economic
environment)
everyone s
exdted aboHtfatuy
colors
but
the
same
level of exdtement is tlot
there
for
whites.
Why
do
YO thinkfalley colors have taken cijJwhile white
diamollds
are
languishing?
DB : It goes back to the fact that we need to give more
attention to marketing white diamonds. All the record
prices, almost without exception, have been for colored
diamonds.The ruby came close. It was $30 million, not
far away. Colored diamonds are very beautiful. A pink
diamond
is
an absolutely charming, entrancing stone.A
blue diamond is mysterious and wonderful.Whereas with
a white diamond, until you
put
it in front
of
somebody,
put it in somebody's hand, it
is
difficult to ima ine, as
most people are never going to have an opportunity to
hold a 30-carat-plus D fl wiess gem. I sold a couple
of
very large stones in 2015 for very high prices to a private
collector and it was simply a question of alking about it,
explaining it and putting it on their finge , and then it's
"wow." I think it's the wow that
is ultinutely the thing
that sells the diamond. T he wow is an experience.You
have to understand how big a 30-carat diamond
is,
or a
50-carat
or
a 100-carat.
MR:Are imey c r
diamonds
overpriced?
s there
a bubble
today?
DB : I don't think so. If you stop thinking of diamonds
as a
conunod
ity and start thinking
of
them as unique,
special, one-of-a-kind individuals, then
of
course they
are not overpriced.
MR: Is there an issue i Ollspiwous
cOllsumption,
so that the
more
expetlsive the
dial/Wilds are,
the more people want to buy
them?
DB : For certain groups
of
people, headline auctions and
publicity are very important. It nukes the diamond more
desirabl
e.
I think that's
all
part
of
t .
Rapaport March 2016 9
8/19/2019 Rapaport March 2016
22/67
e
w nt
to
remind people
of the mag ie
history
gl mour nd
luxury of these
wonderful
treasures.
- David Bennett
4 Rapaport March 2 16
MR: Do the auction O/ses appra ise jewelry? Hill
en
you appraise
i
t is
th
ere any
conflict i f nterest?
DB:
Because
I
ve
worked
so l
ong
in
th
e
auction
business, I have a very high
opinion of th e process. Selling at auction is a wonderful process. It beats
mos t
ot
h
er
ways of selling things, because fi st ofall it takes
the worry
out
of
t, you re
pr
esenting it
to
an
in t
ernational audience on a very sophisticated
and
open
platform.The other thing I like about the auction
bu
sin ess is that
the
se
ller and the auctioneer are on the
sa
me
si
d
e. Th
e simple dynamic is
the more we
se
ll it for, the
mor
e conuni
ss
ion we make. It s not like we re
trying to beat people down. In my
ex
perience, the least successful auction
examples are when people have insisted on very high reserves that we ve
counseled against. If I were se lling at auction, I d put a ve ry low reserve and
let
the
auction take effect .
MR:
What-s
tlte mostJantastic
piece
ifjetIJeiry you ve ever
seen?
DB: Th e Beau Sancy. It left me speechless.What history.You re th e Kin g
of
France and you se
nd
someo ne to negotiate the
pur
chase
of
the most
valuable diamond in the world.
Ca
n you imagine that?
Th
ere it was and
it
weighed 30-something carab. 100 percent Golconda. It
s
the only diam ond
so
ld
in recen t years that is 100 percent Golconda. It could
not
have com e
from
anywhere
else.
MR: f.Vh
at-s
going
to
happCII next year? Do yo u expect this tren d
toward
very
expensive diamollds sold at historical prices to continu
e?
DB: I think if the
market
or mines co
ntinu
e
to
prod
uce
very rare col
ored
diamonds, there s goi
ng
to be a continuing market for them. I really don t
see any lack ofdemand, bur ie s only for these very, very rare gems Very high
levels
of
excellence that we can attach to something is ext remely important
a
nd
I
think
th e market for excellence is goi
ng
to
continu
e. For the rest of
th
e
mark
et , it s really
mor
e a question of
what
happens
economi
cally in th e
wo rld. It s a question of
how
mu ch free m oney is available.You and I may
be sitting here in a year s time
with
an
economy th
at s go ne
into
a maj
or
recession, who knows? I think the American market is going to be very
important
next year. But th ere will be new emerging markets,
I m
certain
of
t. I think India has massive potenti
al.
If India can stop its punitive import
taxes, it could be th e biggest mark
et
in th e world . If the Indian economy is
l
oosene
d
up
and allowed
to
perfo
rm
, it
would be
fantastic.
Yo
u d
on t
have
to explain anything to Indians about co lored stones and diamonds; it s in
th eir blood.
MR: Do YO II think white
diamo
nds will come back?
DB:
I d
on
t
think
th ey ve go ne. I
think
maybe at
the moment, co
lo red
diamonds are th e fashion. All th e papers are always talking
abo
ut colored
diamonds wi th arti cles about h
ow
colored diamonds have
gone up
in price.
There has b
ee
n less publicity about white diamonds . I think the diamon d
industry must get behind promoting white diamonds.When it com es to th e
top e
nd
of
he
market,we
mu
st stop treating th ese diamonds as conunodities
and
instead treat each
inlportant diamond
as
th e individual it is •
8/19/2019 Rapaport March 2016
23/67
THE EYOUNG
OLLE TION
~ a / o e
0 lt l ha jaa
SINCE 5
608 Fifth Avenue · New
York
NY
10020 · 212-54 -7202 • 800-525-3250
www thedeyoungcollection com
8/19/2019 Rapaport March 2016
24/67
Ea
ch
auction is a carefully
cr
afted sale . So what are
the advantages to the
trade
when selling at auction?
ve ry jewelry auc
ti
on is a we
ll
-choreograph ed
per for ma nce, a perfec t balance o f se ll ers
and buyers with the au ctionee r being th e
conductor of the myriad players contr i
butin
g to
th e overall eve
nt
.
But
,like any pe
rf
o
rm
ance,
mu
ch of the
hard work tak
es
place behind the cur tains, out of sight
of the aud ience.T hat
is
where decisions are m ade about
which goods to take in for sale where to
pl
ace them in
the s
al
e and h
ow
to
se
t the es timat
es
all with an eye to
reaching a hoped- for do llar am ount.
At
th
e
sa
m e
tim
e, aucti ons have b
eco
m e
publi
c
spectacl
es
drawing the curi
ou
s and th e we
ll
-heeled, the
pri
va
te clients and the dealers, the celebrities and
th
e
socialites.This has helped auctioneers find fres h goods
fro m priva te consigno rs . In addition, the rrade often
bu
yers
at au c
ti
on provides a st
ea
dy supply of goods.
According
to
Gary
Sc
hul er
dir
ec tor of
th
e j ewe lry
departme
nt
at So th eby's, Most dealers will tell you
we are th e b
es
t retail ers in the world. We are turning
inve
ntor
y four times a
yea
r in New Y
or
k. R etail sto
res
rarely reach that l
evel
, which
is
crucial to presenting
fre
sh
goods to potential bu
ye
rs.
To accomplish this Sc hul er says Wh at we like to
see coming in are ve ry special goo
ds.
Th ose goods will
reach the grea test audience, on a global sc
al
e no matter
where the sale is held. Selected highlights of upcoming
auctio ns travel to key venu es, in clud ing Ge neva,
N ew
Yo
rk and Hong Kong, and catalogs are available
online reaching many
mor
e potential buye rs. Diamond
cut ter Isa
ac
Wolf says the global reach of th e auction
houses is an unsurpassed marketing t
oo
l for dealers who
pla
ce their
ra
re and special goo ds in the sales .
Auction hou
ses
are for select dealer goods.
Sc
hul
er
says We do h
ave
a good se nse of what we
ca
n se
ll
4 Rapaport March 2 16
OVER
y
ETT G
LE BL UER
we know our audience and
wh
at th
ey
h
ave
an appetite
fo r. H e elaborat
es O
ur sal
es
are curated .
Th
ere is no
need to fill up a sal e with und
es
irable items. It affects
the look of the
ca tal
og and the mood of the sale. We are
merchandisers as much
as
specialists.We are not the ve nue
for everything.
Still, it is a very rare sale that is 100 percent so ld.That
honor goes to the unique
esta
tes: the Duchess of Windsor,
Elizabe
th
Tay lor or a socie ty
fi
gure
with
a ve ry high
recognition fac tor among the publi
c.
Mos t jewelry s
al es
are 75 perce
nt
to
80 perce
nt
sold by lot, sti
ll
a g
ood
ba tting ave
ra
ge for a one-day event.
GETTING TO AUCTION
While the trade is a consistent se
ll
er at auc
ti
on, gi
vi
ng
th
em their daily bread and
butt
er, it is th e es tat
es
and
pri
va
te goods from collectors that offer the most d
es
irable
goods that give th e auction s their fl air.
Goods come in from mom-and- pop stor
es
in sma
ll
town America,
as
we
ll as
the natio
nall
y known reno
wn
ed
nam
es.
R etailers' customers turn to them to se ll goods,
of t
en inher
ited
jewe
lr
y
th
ey do n 't wa
nt
. In some
instances, the reta
il
ers offer those goods to the auction
hou
ses. AI
Molin
a
chairman and chief executive officer
(CEO) of both Molina FineJewelers in Phoenix,Arizo na,
and Black,Starr Frost, with stor
es
in Newport Beach ,
California and Ph oenix,says that when his c
li
e
nt
s come
to him with goods to se
ll
,he
has
two options. l
fth
e c
li
e
nt
needs cash, I will buy it outright .But we may be allowed
to represent them in an auction. M olina th en acts as
the middleman, nego
ti
ating with the auction house and
then allowing the c
li
e
nt
to decide whether the estimate
suggested by the auction hou
se
is acce
pt
a
bl e.
Auction houses h
ave re
gular
re
lationships \
vi
th
re
ta
il
ers
8/19/2019 Rapaport March 2016
25/67
w
ho
often bring th
em
fresh
goo
d
s,
sometimes items
that ha
ve
been in private hands for generations.Th is is a
win win
siruation for ll concerned . All three parties have
something to
gain
the auction house has a desirable
offering, the retailer creates a cash flow for his client and
the c
li
ent
e n e 6 t ~
from the expertise
of
both
entiti
es
.T
o
be successfitl
in
using the auctions
as
an outlet, Molina
says,
You have to be a stud ent of the auctions. From a
family
of
ewelers, he
was
8 years o
ld
when he attended
his first auction.
THE TRADE
The trade is a regular source
of
goods for auc tion
houses, with some dealers signed up with annual contracts
that state th
ey will
pro
vi
de a
minimum
dollar amo
unt
of
goods, according to Rahul Kadakia, international head
of
ewelry for C
hri
stie s. Conunission arrangements are
widely negotiated
do
wn from the standard 6 percent of
the hanuner pri ce and depend on the val ue of he goods
as
well
as
the volume and frequency
of
he consigrun ents.
Whether the consignment comes from a private client
or the trade, there are additional fees to cover r isk ofloss
a
nd ph
otography for the catalog.
Diamond cut ter
s,
too, sometimes turn to the auction
houses when they have extraordinary goods to sell. We
seek a balance ofgoods,
says
Kadakia. This
is
a very fluid
process .We
won't
take another lO-carat D flawl
ess if
we
have one
in
the sale, he says, We are looking for balance
among all the categories. According to Kadakia, it is
important to limit the appearance of hese stones on the
market so as not to decrease the sense ofabsolute rarity.
Kadakia continues,
Di
amo
nd
cutters
as
k
us which
shape and size they sho uld cut ,
which
product would
be a
sa
lable
diamond
and would make
more
mon
ey.
8/19/2019 Rapaport March 2016
26/67
Rapaport March 2 16
They ask if they should make two stones, for
example, to make a pair.We try to think where
we should place each ge certain stones are
better in ce rtain parts of he wo rld.This helps
th
e buyer and seller.
Sometimes, if
th
e au ction houses see an
o
pp
o
rtunity
th
ey
reach
out
to
the
trade
.
Saul Go ld
berg
of William Goldberg, th e
NewYork Ciry-b ased diamond cutter and dealer
known for itsAshoka c
ut
,would never c
ut
a stone
to put it
into
th e auction but
th
e auction houses do
come to them for special goods.
T
hey are very clear
about what th ey like. 'Do you have a 5-carat pink?' they
w ll
as k. Their catalogs are
not put
together by accident,
says Goldberg.
The history of ecent sales also guid es the process ofdeciding what
goods to take in. Kadakia says,
We
know how many people were bidding
a
nd how much
cash was available from
under-bidders. This
suggests
that
th
e market is still hungry for certain rypes of goods, as seen n th e constantly
escalating prices of pink and blue diamonds.
When
C hristie's began 250 years ago, Kadakia points out, the sellers were
estates or royal families. D ealers didn't have access
to th e royal houses.
Th
at
has c hanged
over
th
e past 40 to 50 years as dealers began selling to o
th
er
dealers through the auction houses. In the heyday of Middle East buying in
th
e late 1980s/early 1990s, he says, A lot of he goods that Ahmed Fitaihi a
nd
Rob
ert M ou
a\-va
d - two
prominent
Middle East dealers
ca
ter ing to the royal
families of their own region - were buying goods from
other
dealers .
Whether
goods com e from dealers or pri vates, for a business known for its
secrecy, auction houses offer a
tr
emendo
us advantage over dealer
-to-
dealer
sales:
Th
e transactions are totally transparent.
Th
e hanuner pri ce plus
bu
yer's
commission is known to the penny and the se ttl
eme
nt date - 35 days from
date of sale - is also known.Th ere
is no
holding back payment,
no
chasing
after money owed, no r
et
urns. In an unsettled econo my such as exists today,
th is is very reassuring for a seller of high-
pri
ced good . For most consignors
th is advantage far ou tweighs
th
e
time
lag betwee n consi
gnme
nt and sale,
which can be anywhere from two to four months. Holding
goo
ds costs
mon
ey
including finance charges
on bank
loans and insurance fees, but putting goods
into
auctions means at least a 75 perce
nt
cha nce the item will sell.There is no
other venue that offers that assura
nc
e along with th e global marketing reach
and stellar customer service an auction house provides . •
8/19/2019 Rapaport March 2016
27/67
8/19/2019 Rapaport March 2016
28/67
lection
Year
mpact
BY
ARA EWEN
I
t's all
election year, and
some
scores
were
already feeling
the
ensuing
customer
caution,
with
slow s
al s
and light
traffic.Although custom pieces, especially
custom
r c m o u n t ~ were
doing
well,
new
purchases were
sluggish.
Additionally,
more
customers
were
paying in cash.
This
slight
pullback led some retailers to
question
whether
rhey were doing
all
they
could to
capture
new Millennial
customers. Stores
that
have
expa
n
ded
their
technological footprim have found
it easier
[
attract and interact with
younge r
customers.
However,
most
owners
indicated that after
the
election is
decided in November, one way or another,
they expected to sec sales stabilize.
DEBT AND SPENDING
Although some
stores felt rhe impact
of
elections even in
2015,
the
rca
bmnt
of the cycle
began
in
early
20 16 . An
election year
is
always
one of
concern
because o f
the uncertainty
of a leader,"
said Tonia Leitzel
Ulsh,
chief operating
officer
(COO) of Mountz
Jewelers, with
three stores in Pennsylvania. " T his affects