Ok this one's a bit different, but as my own personal diamond saga hopefully enters the final chapters (thank you for your support PriceScope!), I've found myself sucked into the world of diamonds more broadly. I saw a post Sledge started a while back that led to a discussion centering around the margins in the industry and trade-offs cutters need to make when establishing a plan/path for a diamond, and it fed into some of the things I've been fascinated/curious and already thinking about so far as it pertains to the industry on the whole. Obviously, industry participant contributions are very much appreciated, but I welcome any insights or thoughts from any of the prosumers and experts (or whoever) populating this place! 
What I'm most curious about are the various steps/stages at which an individual/entity can step in to influence/direct a result, against what the usual course for a diamond is. To lay out an initial framework of the 'normal' path, based on my own incomplete understanding:
1) THE MINER: Here, mine operators do their thing collecting as many rough diamonds as yields will permit. The majority of said diamonds will be set aside and grouped into similar bundles (is that right?), based on size, clarity, color, etc (how accurate a read on color and clarity are miners able to get?). Many said bundles/inventory will be held back in reserve to meter/time their introduction into the market, but the normal chain of events will see these groups sold to processors and/or dealers of rough. I'll call this normal chain TRACK A. Singular/special finds will be set aside and dealt with on a per-item/auction basis, or likewise held back. I'm thinking about the 30ct vivid pinks or ye old 100ct clear D. That's TRACK Z, for being so special.
2) THE 'TRADERS': Here I'm sort of lumping in the acquirers of mass rough quantities that in turn set immediately to cutting/polishing, and the traders/wholesalers that acquire rough in different major diamond centers to in turn, then turn around and sell to smaller operations. What percentage of that "2nd stage" market does each represent... independent traders/wholesalers, vs straight up large corporate operations being fed directly via long-term contracts with the mines? Here I'm going to view the large corporate contracts as a continuation of TRACK A, and the smaller operators/independent traders that acquire and resell/wholesale rough as TRACK B.
3) THE CUTTERS: Ok so this is in a sense the most interesting part for me, and it was the aspect of Sledge's thread that launched me on this. So continuing on TRACK A and the large players/accounts, what does the mandate come down as typically as they send the diamonds off to be cut: maximize yield at all costs? Or is it more fine grained, like... "our end customers are seeing a rising demand in oval stones, let's up the percentage of ovals we produce." Do they target certain breakdowns like "let's shoot for 5% ideal cut and set them aside; the rest, maximize yield," or like, "we need some more 3ct polished stones at this time, irrespective of loss/waste," or... "produce 10% emerald cut, 10% marquis, and the rest brilliant round." And with the TRACK B players, ultimately when those stones get to the cutting table, is it independent operators more or less doing their own thing, cutting diamonds, and selling those stones loose via RapNet and other avenues, or are they to an extent also fulfilling broader orders, like... "gotta pump out those 1ct cushions whenever I have the chance!" How much of the production is speculative (ie forward-facing), vs secured (rearward-facing)?
4) THE RETAIL CHANNEL: From the above, the impression I have at present is that roughly 50% of diamonds get scooped up to go into fixed jewelry pieces (earrings, necklaces, rings, etc) and those items are held as physical inventory by the retailers. The other 50% is loose stones with physical jewelers having a nominal amount on hand, and the larger online players more or less keeping a virtual inventory, serving as an 'overlay' of sorts to their favored/partnered suppliers. But they handle all the consumer-facing operations, regardless. Does a James Allen, for example, give indications to its supplier-partners as to what they feel they need more of, and then the suppliers in turn work to fill that gap? Or do the suppliers more or less have free reign to generate that inventory per their own decision making, and James Allen determines how it will in turn market and/or position those stones? And what percentage of sellers of polished diamonds have their wares pre-committed to certain retailers, vs being able to freely sell their stones on the open market?
....alright so that's the general outline of the complete value-chain I have in my mind (ex-certification, etc)... people feel free to clarify and/or comment on any points! From the above though, the following questions...
Q1: Crafted by Infinity, as an example... here's a boutique/niche operator that focuses solely on super ideal cut diamonds. They cut their stones in-house, and I have to think that they source their rough from a number of traders on the TRACK B path between step #2 and step #3. It's nice to be in Antwerp! They then offer those stones through their retail partners, so they in fact themselves occupy a strange space between #3 and #4. But I also imagine they're a bit of an exception in that regard. Is this the case with most "branded" diamonds sold via retail partners (The Leo, Hearts on Fire, etc)?
Q2: On the retail side, for in-house designed/created, branded/super ideal or unique cuts, is it more typical that... A) they source diamonds from cutters they know/trust in the 3rd stage, and they ask those individuals to keep them apprised of appropriate stones/opportunities? Or... B) would they also track/purchase eligible roughs, and then source those out to partnered cutters to produce the final product? Like, if I had a diamond store focusing on a certain cut, would it be more typical for me to purchase appropriate rough at Stage #2 for any gaps in inventory I wanted to fill, and then put it in the hands of my cutters/partners (in house or otherwise)? Or would it be more the case to have partnered cutters at stage #3 that I rely on, and they let me know anytime a qualifying stone falls into their lap to cut to see if I want dibs on it (since my cutting choices might be different accordingly)?
Q3: Do smaller (or larger) independent cutting operations ever proactively reach out to entities further down the chain when they think they may have something interesting, or is it more typical that they simply put it up on whatever exchange and let market forces take their course if that's what they had intended from the start?
Q4: Storied/established players in the industry such as a Tiffany's... do they usually source at the rough stage and have their own cutters? Or do they source at the cur stage, and have instead their steady supply of polished diamonds? Clearly they have access to diamonds pretty far up the chain when they choose to exercise that, and they act ahead of and independently of the standard certification process (which would exist between stages 3 and 4).
Q5: TRACK Z and the show-stopping, auction house diamonds that come to market... what is the decision making process like for what shapes and cuts ultimately get targeted? I can't even imagine the responsibility that goes with cutting a $15M+ diamond, but is the fashion amongst the billionaire set for pear-shaped diamonds? Seems like! Anyway curious as to how that process evolves, who's consulted, targeted, and... how these final pieces would fare under the ASET!
(Yes I've lost my mind...)
What I'm most curious about are the various steps/stages at which an individual/entity can step in to influence/direct a result, against what the usual course for a diamond is. To lay out an initial framework of the 'normal' path, based on my own incomplete understanding:
1) THE MINER: Here, mine operators do their thing collecting as many rough diamonds as yields will permit. The majority of said diamonds will be set aside and grouped into similar bundles (is that right?), based on size, clarity, color, etc (how accurate a read on color and clarity are miners able to get?). Many said bundles/inventory will be held back in reserve to meter/time their introduction into the market, but the normal chain of events will see these groups sold to processors and/or dealers of rough. I'll call this normal chain TRACK A. Singular/special finds will be set aside and dealt with on a per-item/auction basis, or likewise held back. I'm thinking about the 30ct vivid pinks or ye old 100ct clear D. That's TRACK Z, for being so special.
2) THE 'TRADERS': Here I'm sort of lumping in the acquirers of mass rough quantities that in turn set immediately to cutting/polishing, and the traders/wholesalers that acquire rough in different major diamond centers to in turn, then turn around and sell to smaller operations. What percentage of that "2nd stage" market does each represent... independent traders/wholesalers, vs straight up large corporate operations being fed directly via long-term contracts with the mines? Here I'm going to view the large corporate contracts as a continuation of TRACK A, and the smaller operators/independent traders that acquire and resell/wholesale rough as TRACK B.
3) THE CUTTERS: Ok so this is in a sense the most interesting part for me, and it was the aspect of Sledge's thread that launched me on this. So continuing on TRACK A and the large players/accounts, what does the mandate come down as typically as they send the diamonds off to be cut: maximize yield at all costs? Or is it more fine grained, like... "our end customers are seeing a rising demand in oval stones, let's up the percentage of ovals we produce." Do they target certain breakdowns like "let's shoot for 5% ideal cut and set them aside; the rest, maximize yield," or like, "we need some more 3ct polished stones at this time, irrespective of loss/waste," or... "produce 10% emerald cut, 10% marquis, and the rest brilliant round." And with the TRACK B players, ultimately when those stones get to the cutting table, is it independent operators more or less doing their own thing, cutting diamonds, and selling those stones loose via RapNet and other avenues, or are they to an extent also fulfilling broader orders, like... "gotta pump out those 1ct cushions whenever I have the chance!" How much of the production is speculative (ie forward-facing), vs secured (rearward-facing)?
4) THE RETAIL CHANNEL: From the above, the impression I have at present is that roughly 50% of diamonds get scooped up to go into fixed jewelry pieces (earrings, necklaces, rings, etc) and those items are held as physical inventory by the retailers. The other 50% is loose stones with physical jewelers having a nominal amount on hand, and the larger online players more or less keeping a virtual inventory, serving as an 'overlay' of sorts to their favored/partnered suppliers. But they handle all the consumer-facing operations, regardless. Does a James Allen, for example, give indications to its supplier-partners as to what they feel they need more of, and then the suppliers in turn work to fill that gap? Or do the suppliers more or less have free reign to generate that inventory per their own decision making, and James Allen determines how it will in turn market and/or position those stones? And what percentage of sellers of polished diamonds have their wares pre-committed to certain retailers, vs being able to freely sell their stones on the open market?
....alright so that's the general outline of the complete value-chain I have in my mind (ex-certification, etc)... people feel free to clarify and/or comment on any points! From the above though, the following questions...
Q1: Crafted by Infinity, as an example... here's a boutique/niche operator that focuses solely on super ideal cut diamonds. They cut their stones in-house, and I have to think that they source their rough from a number of traders on the TRACK B path between step #2 and step #3. It's nice to be in Antwerp! They then offer those stones through their retail partners, so they in fact themselves occupy a strange space between #3 and #4. But I also imagine they're a bit of an exception in that regard. Is this the case with most "branded" diamonds sold via retail partners (The Leo, Hearts on Fire, etc)?
Q2: On the retail side, for in-house designed/created, branded/super ideal or unique cuts, is it more typical that... A) they source diamonds from cutters they know/trust in the 3rd stage, and they ask those individuals to keep them apprised of appropriate stones/opportunities? Or... B) would they also track/purchase eligible roughs, and then source those out to partnered cutters to produce the final product? Like, if I had a diamond store focusing on a certain cut, would it be more typical for me to purchase appropriate rough at Stage #2 for any gaps in inventory I wanted to fill, and then put it in the hands of my cutters/partners (in house or otherwise)? Or would it be more the case to have partnered cutters at stage #3 that I rely on, and they let me know anytime a qualifying stone falls into their lap to cut to see if I want dibs on it (since my cutting choices might be different accordingly)?
Q3: Do smaller (or larger) independent cutting operations ever proactively reach out to entities further down the chain when they think they may have something interesting, or is it more typical that they simply put it up on whatever exchange and let market forces take their course if that's what they had intended from the start?
Q4: Storied/established players in the industry such as a Tiffany's... do they usually source at the rough stage and have their own cutters? Or do they source at the cur stage, and have instead their steady supply of polished diamonds? Clearly they have access to diamonds pretty far up the chain when they choose to exercise that, and they act ahead of and independently of the standard certification process (which would exist between stages 3 and 4).
Q5: TRACK Z and the show-stopping, auction house diamonds that come to market... what is the decision making process like for what shapes and cuts ultimately get targeted? I can't even imagine the responsibility that goes with cutting a $15M+ diamond, but is the fashion amongst the billionaire set for pear-shaped diamonds? Seems like!
Anyway curious as to how that process evolves, who's consulted, targeted, and... how these final pieces would fare under the ASET! (Yes I've lost my mind...)
300x240.png)