Buying and selling diamonds are two different things!

[alexd]

Yesterday I was helping a friend get the most money for her old gold jewelry. She is moving out of country and gave me small collection of assorted gold rings and chains that she wasn't wearing any more and figured she could use the money toward her trip.

I used the connections I have made over the years from selling my metal detecting finds to gold refiners and jewelers to get her the best price for her gold.

One of the rings had 4 pretty large diamonds in it - not huge or anything, but big enough, and they were of very good color, cut, and ok clarity. I had my jeweler pry them out of the ring and spent the day shopping them around to various jewelers and gem dealers in the gem district at Victoria & Dundas St. to see if I could sell them to maximize the money my friend could get.

I sort of knew that diamonds lost most of their value once you bought them at a store, except of course for any diamonds over a carat in size. My friend's diamonds ranged from 1/4 carat to 1/2 carat and would be more than enough for a sparkly engagement ring for someone I thought.

Unlike gold, it turns out that diamonds have no measurable value when it comes to re-selling them. But when it comes to buying them, there is a price guide called the Rap report that jewelers and manufacturers use as a guide when purchasing diamonds from wholesalers or to roughly establish value of a diamond.

This, however is just a guide that a jeweler would use to price out a ring if you wanted to get a ring made.

If you went to a jeweler to get a ring made for your fiance; say with a 1/2 carat diamond in it, he would look at this chart, call his diamond dealer, see what the dealer has on hand, and with some haggling buy the stone using the prices in the Rap sheet as a benchmark. He would get the best quality stone within the quality range you were looking for and your budget.

Then he would build your ring and set the diamond in it, probably marking up the diamond 100% in the process, adding the cost of the gold or platinum used, marking that up, and then adding his labor cost to the total.

Jewelry making is an art. It involves precision work and fine manual dexterity but also machinery and working with blowtorches, furnaces, kilns, and with toxic industrial chemicals and acids. This where a lot of the cost gets added to the final cost of the engagement ring, and rightly so, and how a ring made with hundreds of dollars worth of materials ends up costing thousands of dollars.

That much is easy to understand.

But say the engagement is called off. The dude can try and sell the ring privately, but few people want to buy a used engagement ring (they reckon it's cursed). Since the dude had it custom made, his market for resale is further reduced by his taste in ring design.

There are some sites on the internet that resell engagement rings, but generally speaking, the dude would be looking at getting less than half of what he paid to make it, minus the websites appraisal and selling fees.

So what is left is prying out the stones and melting down the metals for resale, which brings me back to the beginning of this story. The metal is easy to sell, but the stones? Not so much. It turns out when it comes to re-selling them, they have no value at all, there is really no secondary market for loose diamonds.

As for my friend, I suggested she re-purpose them. It will probably be the best bet. Perhaps she can have them made into stud earnings or something.

 

[acheron]

in the case of diamonds I would think that this sort of pricing is based on the fact that the diamond industry doesn't want a resale market, ever - because that would reduce demand for the supply that they keep a very close control on.

 

[alexd]

in the case of diamonds I would think that this sort of pricing is based on the fact that the diamond industry doesn't want a resale market, ever - because that would reduce demand for the supply that they keep a very close control on.

That is it exactly, but once the selling is out of the control of the cartel you would think the second-hand diamonds market would be flourishing! There are so many loose diamonds floating around out there with nowhere to go. How can the diamond industry exert control over that? There seems to be a huge opportunity here for a secondary market, whether DeBeers wants it or not.

 

[acheron]

I think it would require jewellers to create their own market away from DeBeers - but how would they do that? 99% of the world's diamond merchants are in DeBeers' back pocket. Try getting appraisers and buyers away from a booming business. There's very little incentive for people to leave the fold and go into what would be a very risky venture - especially with DeBeers doing everything they can to discredit them.

 

[newstyle666]

Let me try and debunk a few myths here.

Source: I've purchased and sold a number of 2ct+ solitaire diamonds, both loose and in settings. $17,000 - $35,000 CAD range. I'm sure the Industry would not like you to read what I'm about to advise.

This could be a very very long post, but for the purposes of Tribe I will distill my own experience.

Points:
- The diamond (jewellery) industry is based exclusively on perceived demand. That is rule #1. Always remember this. A diamond is only worth what the market will pay for it in a given year.
- 1 major vertically integrated player: DeBeers. Mine, Distribute Rough to DTS Sightholders (3rd party Polish / Wholesalers) ALSO Distribute rest of Rough in-house to DeBeer Polishers, Wholesale in-house to major brands i.e Tiffany (approx 75% global marketshare)

- Small minority of other market players outside of DeBeer's control (approx 25% global marketshare) as mining ops and/or purchases of Rough outside of DTS Sightholders

Two major distribution channels for loose Diamonds to the Public:
- > Rough Supply -> Cut/Polishers -> Wholesalers (think Victoria/Dundas scumbags) -> Appraisers (GIA, EGL, Gemscan etc) -> Retailers & Jewellers

OR

- > Rough Supply -> Cut/Polishers -> Wholesalers (think Victoria/Dundas scumbags) -> Appraisers (GIA, EGL, Gemscan etc) -> INTERNET

PURCHASING NEW
The best value for purchasing engagement rings is to acquire a loose stone on the internet. That is about the best value available for single stone customers as you are able to remove retailer / jeweller overhead and compare diamond 4 C's with one another. Once you receive the stone, simply take it to your local jeweller for crafting a custom setting, or have an internet jeweller do it for you.

RESELLING
There is no such thing as a "used" diamond. period. Answer me this, walk into Tiffany's or Birks and tell me when any of the diamonds on sale were mined or cut/polished. Please tell me WHEN this occurred. It could of been in 1972 and the diamond having been stripped of its setting and already resold on the market 5 times. Or maybe DeBeers had it locked away in their oversupply vault for 10 years before marketing it etc... The only thing you can reliably know is when it was LAST appraised w / report from GIA etc. Simple.

Therefore use this knowledge to your advantage. Once you discover loose diamonds within the 4 C range of your stone, you have a base market value at RETAIL. Then negotiate its resale excluding typical retailer AND wholesaler overhead. For Birks or Tiffany's, take the retail price and deduct 50% of that value first, followed by another 15% for the wholesaler. Now you have a base resale value. For those of you lucky enough to purchase online, deduct about 20-25% (as the internet retailers mark up slightly more than strictly wholesale to pay for additional overhead operating a complex website and hiring customer service staff to detail with people who know nothing about diamonds).

If you need further advice, you can try contacting DTS Sightholders in Belgium or India. Many are surprisingly friendly and can offer good judgement on expected resale value.

How can you profit from this knowledge? Simple. Arbitrage. In my case, I live in Asia-Pacific and have been able use that to advantage by purchasing from wholesalers in one market and reselling directly to retailers in another. I have also lost money on deals as well, but a fun hobby none the less.

Good luck.

 

[I_bRAD]

That's a lot of money for a pretty rock.

 

[alexd]

Let me try and debunk a few myths here.

Source: I've purchased and sold a number of 2ct+ solitaire diamonds, both loose and in settings. $17,000 - $35,000 CAD range. I'm sure the Industry would not like you to read what I'm about to advise.

This could be a very very long post, but for the purposes of Tribe I will distill my own experience.

Points:
- The diamond (jewellery) industry is based exclusively on perceived demand. That is rule #1. Always remember this. A diamond is only worth what the market will pay for it in a given year.
- 1 major vertically integrated player: DeBeers. Mine, Distribute Rough to DTS Sightholders (3rd party Polish / Wholesalers) ALSO Distribute rest of Rough in-house to DeBeer Polishers, Wholesale in-house to major brands i.e Tiffany (approx 75% global marketshare)

- Small minority of other market players outside of DeBeer's control (approx 25% global marketshare) as mining ops and/or purchases of Rough outside of DTS Sightholders

Two major distribution channels for loose Diamonds to the Public:
- > Rough Supply -> Cut/Polishers -> Wholesalers (think Victoria/Dundas scumbags) -> Appraisers (GIA, EGL, Gemscan etc) -> Retailers & Jewellers

OR

- > Rough Supply -> Cut/Polishers -> Wholesalers (think Victoria/Dundas scumbags) -> Appraisers (GIA, EGL, Gemscan etc) -> INTERNET

PURCHASING NEW
The best value for purchasing engagement rings is to acquire a loose stone on the internet. That is about the best value available for single stone customers as you are able to remove retailer / jeweller overhead and compare diamond 4 C's with one another. Once you receive the stone, simply take it to your local jeweller for crafting a custom setting, or have an internet jeweller do it for you.

RESELLING
There is no such thing as a "used" diamond. period. Answer me this, walk into Tiffany's or Birks and tell me when any of the diamonds on sale were mined or cut/polished. Please tell me WHEN this occurred. It could of been in 1972 and the diamond having been stripped of its setting and already resold on the market 5 times. Or maybe DeBeers had it locked away in their oversupply vault for 10 years before marketing it etc... The only thing you can reliably know is when it was LAST appraised w / report from GIA etc. Simple.

Therefore use this knowledge to your advantage. Once you discover loose diamonds within the 4 C range of your stone, you have a base market value at RETAIL. Then negotiate its resale excluding typical retailer AND wholesaler overhead. For Birks or Tiffany's, take the retail price and deduct 50% of that value first, followed by another 15% for the wholesaler. Now you have a base resale value. For those of you lucky enough to purchase online, deduct about 20-25% (as the internet retailers mark up slightly more than strictly wholesale to pay for additional overhead operating a complex website and hiring customer service staff to detail with people who know nothing about diamonds).

If you need further advice, you can try contacting DTS Sightholders in Belgium or India. Many are surprisingly friendly and can offer good judgement on expected resale value.

How can you profit from this knowledge? Simple. Arbitrage. In my case, I live in Asia-Pacific and have been able use that to advantage by purchasing from wholesalers in one market and reselling directly to retailers in another. I have also lost money on deals as well, but a fun hobby none the less.

Good luck.

But are there sites where an individual can sell loose stones? Or are you selling yours directly to a buyer yourself?

 

[newstyle666]

Further Insight tidbits:

Anyone can have a diamond reappraised. Why do this? Well GIA diamonds fetch a significant premium on the market. So if you purchase a wholesale loose stone and it was not graded by GIA, price this into your offer. Send it away for 3 months for GIA to grade it, but expect carat down about 10% due to girdle measurement, colour to slip 1-2 grades and clarity down at least 2 grades. So 2.1ct E Colour, VVS1 by EGL will come back 2.0ct F Colour, VS2 clarity. However the market value is now at a premium for this stone in its range.

What I suggest is then selling it to a RETAILER as I've been doing. You should be able to re-sell for a 12-15% premium over your purchase price for this. For example, take the stone to Hong Kong or Singapore and walk directly into a high end jewellery store and pitch your wares. Serious.

Believe it or not, about 10%-20% of the diamonds these jewellers buy are from "industry walk ins". Often Jewish (long history) they come in with a breastpocket full of various loose stones and do deals. Always insist on cash and offer any/all ID documents. These are conflict-free diamonds, as if you have it reputably graded it would of already required a Kimberly certificate prior to being cut.

 

[newstyle666]

But are there sites where an individual can sell loose stones? Or are you selling yours directly to a buyer yourself?

There is no official channel for selling loose stones as an individual. You could try convincing an "end user" consumer to buy a stone from you -- but without the bullshit trappings of authenticity, it is very difficult to make that fly. Thus the reason I choose the shady middleman route. Cold call and ask to speak directly to the owner. Set up an appointment and walk on in. It works for Canada as well, from experience. Just make sure you dress like an international maverick and bring your own jewellers loupe! Thats about all you need. Alex, since the South Africans are all over this business in Toronto you would do well actually lol.

Remember the industry also profits enormously from confused heartbroken engagement ring re-sellers. Don't fall pray to their tactics. If you are unsure what they are asking, just tell them you'll have to get back to them about it or leave the store with your goods. It is rarely advertised, but some retailers and internet wholesalers will buy-back your engagement ring for a steep discount. They usually offer only 30% of retail price for a stone, strip the fitting and offer gold value for it. The loose stone is then re-polished and re-sold at 100% its retail price as "new".

 

[newstyle666]

One more reason there is no website for individual stone resellers: inventory. Blue Nile and the hundreds of other online outlets do not carry any inventory... even Spence Diamonds followed suit by displaying "replicas" for "made to order". Instead they receive an inventory list from DTS Sightholders and transparently display the stones without having actual physical possession. To set up a website for consumer buy-back at fair value would probably require the company to purchase these stones as most consumers need cash sooner rather than later. You would be swamped with overhead very quickly at the .5ct - 3ct+ market range and have a difficult time convincing your customers to buy "used" stones (which as previously discussed do not exist!!)

 

[Ho||yw0oD]

Wholesalers (think Victoria/Dundas scumbags)

Hey easy there! After researching diamonds for months, following diamond index, using Rapaport, etc. I got my wife's engagement ring there. Got an awesome GIA certified diamond at an awesome price.

 

[solacevip]

IF YOU ARE LOOKING FOR SOME ICE TO BLING YOU CONTACT newstyle666....

No seriously.... I like how informative this thread is.

 

[octo]

the value/demand for diamonds was created by an advertising campaign.

the whole "diamonds are forever" thing contributes to the basically useless/non existent used diamond market.

my grade 9 geography teacher told us about this scam

"Last year, Americans spent almost $7 billion on the rings. But in 1938, when a De Beers representative wrote to N. W. Ayer to inquire whether “the use of propaganda in various forms” might boost the sale of diamonds in the United States, their popularity had been on a downward trend, in part because of the Depression.

N.W. Ayer conducted extensive surveys of consumer attitudes and found that most Americans thought diamonds were a luxury for the ultra-wealthy. Women wanted their men to spend money on “a washing machine, or a new car, anything but an engagement ring,” Ms. Gerety said in 1988. “It was considered just absolutely money down the drain.”

Still, the agency set an ambitious goal: “to create a situation where almost every person pledging marriage feels compelled to acquire a diamond engagement ring.”

Because De Beers controlled the world supply of rough diamonds, antitrust laws prohibited the company from doing business in the United States. The ads could not promote De Beers, or even show pictures of jewelry, so the agency commissioned bold paintings by artists like André Derain and purchased pre-existing works by Dalí and Picasso."

http://www.nytimes.com/2013/05/05/f...ned-to-love-diamonds.html?pagewanted=all&_r=0

 

[newstyle666]

Hey easy there! After researching diamonds for months, following diamond index, using Rapaport, etc. I got my wife's engagement ring there. Got an awesome GIA certified diamond at an awesome price.

Sorry to sound negative about them. Unfortunately there are a LOT of bullshit stones coming out of that place. For example, I had an EGL USA graded stone and needed it re-appraised. Gemscan (GS Laboratories) is a Toronto-based appraiser recognized within Ontario that most of the wholesalers inside the Yonge/Victoria area building are using. Gemscan is also located in the same property. The frustrating part is they grade the wholesaler stones who do regular business with them much more leniently than independents needing an appraisal. This gives the dealers an edge in the marketplace and allows them to push the CCCC's above that of GIA for the same stone. Since its recognized in Ontario by retailers and consumers - it makes those stones appear better than they actually are. Or at least better than GIA would consider them to be.

GIA stones are a good bet in any market -- but the problem with these dealers is they often ensnare the public into thinking they are getting a "wholesale price" -- and convince you with the double entrances, buzz thru security, loose stones in ziplock baggies. In reality they know you are an amateur and have priced the stone maybe only 20% below retail cost. So the deal isn't really that great in most cases, but probably better than buying a stone straight out of Tiffany.

 

[alexd]

While I understand what you are saying in your posts newstyle666, the subject in this thread is about diamonds that are less than investment grade: smaller diamonds - in my friends case they range from .14 carats to .27 carats, which I suspect is average size for the mainstream jewelry market. I would think there'd be a secondary market for these types of stones - much like stamp and coin shops that still buy and sell stamps even if they aren't the most expensive rare ones.

 

[newstyle666]

I am not talking about investment grade diamonds. That's a different category and market.

The same industry principals apply to all diamonds up to 4cts or so. Most consumers focus on stones between .2ct - 1ct. For engagement rings -- the avg Toronto diamond purchase is > .5ct in my opinion.

 

[DJ_Psyence]

It's a fascinating topic because of the industry vs the used diamonds circulating, the certificate game, etc. I'd lean towards making sure the diamond (either mounted on a ring or loose) has a recognized gem lab's appraisal attached to it, and then posting a picture and any other details of the certificate when putting it up for sale. Today there are quite a few services that let the public list loose diamonds beyond Kijiji & Craigslist, while keeping the profits with the person listing the diamond for sale. If you opt to meet in person then you stand to make even more than the online marketplaces that require you to mail the diamond to them before they pass it on.

I'm more particular to one service started in Toronto by a group of friends with a background in tech and the wholesale diamond industry, called MyDiamond: MyDiamond™ | Buy and Sell Diamond Jewelry Nearby

However, you can also find competing services like diamondbistro for diamond-specific listings. I'd recommend posting on the popular services like Kijiji and Ebay, along with a few niche ones (like MyDiamond.io) to cover all ground.