New Online Diamond Exchange as an alternative to RapNet Platform

[BarbBe]

I read this article today and was asking myself what it means for the trade as well as consumers.

Would any trade members provide some insight on this?

WFDB to Debut Online Diamond Exchange Next Week

<p>After hundreds of dealers pulled their goods from the RapNet platform, the World Federation of Diamond Bourses (WFDB) will debut its first online diamond trading exchange next week. The exchange is based on the Israeli Diamond Institute’s Get Diamonds platform, which the WFDB agreed to...

www.jckonline.com

 

[OoohShiny]

Thanks for posting this!

It links nicely to a discussion in another thread! lol

How is Coronavirus impacting the jewellery and diamond trade?

I don’t have a thread, but here are some add’l photos. I got it from Alimamas on Etsy and she was terrific. I love your new ring so much @Jimmianne and thank you, never knew I wanted one before I saw yours!! :lol:

www.pricescope.com

 

[Dizzie]

I read this article today and was asking myself what it means for the trade as well as consumers.

Would any trade members provide some insight on this?

WFDB to Debut Online Diamond Exchange Next Week

<p>After hundreds of dealers pulled their goods from the RapNet platform, the World Federation of Diamond Bourses (WFDB) will debut its first online diamond trading exchange next week. The exchange is based on the Israeli Diamond Institute’s Get Diamonds platform, which the WFDB agreed to...

www.jckonline.com

Bumping this up - would love to hear more opinions from trade members

 

[diagem]

Hi, since an opinion was asked on this platform, this was my direct opinion to this news...
More about my personal opinion on the other thread which @OoohShiny linked above.
In short, I strongly believe the old leadership driving our industry must let go and allow a new fresh thinking generation at the helm. Until then, it is considered old school politics and nothing good can come out of this!

 

[Paul-Antwerp]

Hello all,

Before giving an opinion, I need to explain history and how certain traditions have evolved in the industry. What we know 'from the inside' may not always be the impression people have 'from the outside'.

So, there is the role of Martin Rapaport, his company Rapnet and the price-list they produce on a weekly basis, the Rap-sheet.

I have no idea when the publication of the Rap-sheet started. For me, it has always been there. But it being published, and a lot of the industry accepting it as a standard, definitely was not liked by many in the industry at first. At least, that is what I learned from the real old-timers, who probably hated Rapaport for publishing the Rap-sheet, while they used it as a basis for their dealings anyway.

Fact of the matter is, everybody got used to using the Rap-sheet as a guideline, deciding and communicating prices as a discount (and sometimes) a premium compared to 'Rap'. And Rapnet's influence grew, creating the biggest B2B-platform, where until a few weeks ago, over 8 billion USD worth of diamonds were listed.

The theory of Rapaport is that the Rap-sheet is a summary of prices used in the actual NY-market. To some extent, this may be true. But the reality on the other side is that on Rapnet, all prices are listed in relation to the Rap-sheet. And if on Friday morning, Rapnet publishes a completely different Rap-sheet, automatically all diamonds listed on Rapnet have a different price, with the same discount as on Thursday, compared to a new Rapsheet-figure. Suddenly, the reporting of a higher price automatically raises all prices, almost worldwide. In the same way, the reporting of a lower price automatically lowers all prices. The end-result: Rapaport does not report price-increases or decreases, he creates them.

Now, as long as changes to the Rap-sheet somewhat reflect reality, traders will accept the new sheet, and will adjust their discounts. But if the change of the Rap-sheet is not in line with the reality, as felt by the traders, it creates turmoil.

Essentially, decades have already passed with most of the industry disliking the influential power of Martin Rapaport and his company. But a concerted effort to do things differently never emerged.

A few weeks ago, at the beginning of the corona-era, trading of diamonds on a B2B-level had greatly reduced. But at the supply-level, major miners were also canceling their sales, and we have now evolved into a situation where the mines are generally not producing either. Indeed, there were far fewer transactions, but nobody felt a huge fall in prices.

Still, Rapaport published a new Rap-sheet on March 20, with almost all categories going down 6 to 8%. That change was perceived worldwide as an incorrect report of reality, and the new Rap-sheet was rejected almost completely by the entire industry. Most companies are clearly communicating that their prices is based upon the old Rap-sheet, not upon the new one of March 20. Others are using the new sheet, but have adjusted discounts in such a way, that there pricing is essentially the same as before.

A secondary reaction was for a lot of companies taking their inventory down from Rapnet's B2B-listing. Where over 8 billion USD of diamonds were listed, now less than 2 billion can still be found on Rapnet. And other avenues are used. Some companies use their own website. Others use the main competitor of Rapnet, IDEX, where close to 1,000 new subscribing companies joined in the past three weeks. And diamond exchanges and the WFDB try to set up a competing service to Rapnet themselves.

How this will evolve, who knows? Today, Rapnet risks losing 75% or more of its subscribers in the next year. Whether that will happen, and who will come out the winner of this change, who knows? But the change is massive in the sense that the way the industry offers its diamonds for sale, on a B2B-basis, is probably going to change.

We all know that the monopolistic position of De Beers' changed and ended about 30 years ago. Today still, however, we often need to explain that people explaining the diamond-industry as monopolistic are wrong. Possibly, in a few months, we will work in an industry where the influence of the Rap-sheet is minimalized. Then again, we may have to explain for another three decades that this era has ended.

Live long,

 

[higanbanya]

Hello all,

Before giving an opinion, I need to explain history and how certain traditions have evolved in the industry. What we know 'from the inside' may not always be the impression people have 'from the outside'.

So, there is the role of Martin Rapaport, his company Rapnet and the price-list they produce on a weekly basis, the Rap-sheet.

I have no idea when the publication of the Rap-sheet started. For me, it has always been there. But it being published, and a lot of the industry accepting it as a standard, definitely was not liked by many in the industry at first. At least, that is what I learned from the real old-timers, who probably hated Rapaport for publishing the Rap-sheet, while they used it as a basis for their dealings anyway.

Fact of the matter is, everybody got used to using the Rap-sheet as a guideline, deciding and communicating prices as a discount (and sometimes) a premium compared to 'Rap'. And Rapnet's influence grew, creating the biggest B2B-platform, where until a few weeks ago, over 8 billion USD worth of diamonds were listed.

The theory of Rapaport is that the Rap-sheet is a summary of prices used in the actual NY-market. To some extent, this may be true. But the reality on the other side is that on Rapnet, all prices are listed in relation to the Rap-sheet. And if on Friday morning, Rapnet publishes a completely different Rap-sheet, automatically all diamonds listed on Rapnet have a different price, with the same discount as on Thursday, compared to a new Rapsheet-figure. Suddenly, the reporting of a higher price automatically raises all prices, almost worldwide. In the same way, the reporting of a lower price automatically lowers all prices. The end-result: Rapaport does not report price-increases or decreases, he creates them.

Now, as long as changes to the Rap-sheet somewhat reflect reality, traders will accept the new sheet, and will adjust their discounts. But if the change of the Rap-sheet is not in line with the reality, as felt by the traders, it creates turmoil.

Essentially, decades have already passed with most of the industry disliking the influential power of Martin Rapaport and his company. But a concerted effort to do things differently never emerged.

A few weeks ago, at the beginning of the corona-era, trading of diamonds on a B2B-level had greatly reduced. But at the supply-level, major miners were also canceling their sales, and we have now evolved into a situation where the mines are generally not producing either. Indeed, there were far fewer transactions, but nobody felt a huge fall in prices.

Still, Rapaport published a new Rap-sheet on March 20, with almost all categories going down 6 to 8%. That change was perceived worldwide as an incorrect report of reality, and the new Rap-sheet was rejected almost completely by the entire industry. Most companies are clearly communicating that their prices is based upon the old Rap-sheet, not upon the new one of March 20. Others are using the new sheet, but have adjusted discounts in such a way, that there pricing is essentially the same as before.

A secondary reaction was for a lot of companies taking their inventory down from Rapnet's B2B-listing. Where over 8 billion USD of diamonds were listed, now less than 2 billion can still be found on Rapnet. And other avenues are used. Some companies use their own website. Others use the main competitor of Rapnet, IDEX, where close to 1,000 new subscribing companies joined in the past three weeks. And diamond exchanges and the WFDB try to set up a competing service to Rapnet themselves.

How this will evolve, who knows? Today, Rapnet risks losing 75% or more of its subscribers in the next year. Whether that will happen, and who will come out the winner of this change, who knows? But the change is massive in the sense that the way the industry offers its diamonds for sale, on a B2B-basis, is probably going to change.

We all know that the monopolistic position of De Beers' changed and ended about 30 years ago. Today still, however, we often need to explain that people explaining the diamond-industry as monopolistic are wrong. Possibly, in a few months, we will work in an industry where the influence of the Rap-sheet is minimalized. Then again, we may have to explain for another three decades that this era has ended.

Live long,

Wow thank you for the incredibly informative reply and @BarbBe for starting this thread! As an outsider I had been rather confused about some of the forum chat regarding Rapnet but your reply has helped me understand the situation a lot better! We live in interesting times indeed!

 

[Rockdiamond]

Really insightful answers.
For the past 20 years, based on our business, the Rap sheet was no more than a passing interest.
Pretty much all the diamonds we invest in aren't even on rap!
So I'm quite used to having to understand the market based on actual trading, as opposed to someone telling me what a Y-Z 3ct Emerald Cut ( for example) should go for.

What I see, relating to the Rap sheet: Clearly, the Rap sheet has taken a huge hit. Will it come back?
Impossible to say right now- but it could.
The "general" purchase of diamonds has been a pretty standard affair for at least the past 20 years, based on Rappaport.
If the trend continues and Rap gets less and less important, it's still going to be necessary for the major sellers to somehow standardize pricing.
It may very well be that the ranks of sellers will be greatly thinned, giving even more power to the few main companies left standing. But even then, there's going to have to be some sort of standardization of prices.

When it comes to specialty cutters and sellers such as Yoram, CBI, and us: We've never really had to live by lists and I don't think that aspect will ever change.

And yes- we're getting emails daily asking us to check out new trading platforms to compete with Rapnet.

 

[Paul-Antwerp]

David, you express that there needs to be some standardization of prices. I wonder if that is correct.

We can discuss for ages where the disconnect with the real world started.

- Is it when somebody started the idea, which everybody repeated since, that the value of a diamond is based upon the 4 C's? Where almost all conveniently forgot to stress the C of Cut-quality?
- Is it when the labs started issuing grading-reports of these 4 C's, conveniently forgetting (almost unanimously) to report the C of Cut-quality? And the best only doing that partially, since a few years.
- Is it when Rapaport started publishing a price-sheet, based upon these 3 C's, conveniently ignoring the C of Cut-quality?
- Or is it the combination of all these events, and their perpetuation?

Fact is, a manufacturer may have a diamond in hand, sending it off to GIA or another lab, and depending on how the axe falls, the decision may be F-VS1 or G-VS2, creating a value-difference of 25%, without the diamond changing in any way.

The combination of lab-reports with a pricing-guide, like the Rap-sheet, combined with everybody in the industry as well as consumers taught to first look at 3 C's, then consider the 'premium' of a better Cut-quality, is ludicrous. It in no way serves the desires of any consumer.

With that in mind, do we need a 'copy' of the Rap-sheet, again dictating everybody that a VVS2 is 10% more valuable than a VS1, a VVS1 another 10% more than a VVS2, while most professionals would be hard-pressed determining either clarity without a lab giving it to them on paper. Similar for Color-grading.

I personally do not think so.

Live long,

 

[Rockdiamond]

Hi Paul!! I hope you and yours are all safe, and well.
I welcome the opportunity to discuss!

- Is it when somebody started the idea, which everybody repeated since, that the value of a diamond is based upon the 4 C's? Where almost all conveniently forgot to stress the C of Cut-quality?
- Is it when the labs started issuing grading-reports of these 4 C's, conveniently forgetting (almost unanimously) to report the C of Cut-quality? And the best only doing that partially, since a few years.
- Is it when Rapaport started publishing a price-sheet, based upon these 3 C's, conveniently ignoring the C of Cut-quality?
- Or is it the combination of all these events, and their perpetuation?

This is the basis of an old, and quite interesting debate.
"Cut Quality" is not something we will find a broad based agreement on. Without a doubt, there's some horribly cut stones on the market.
But there are also quite a few different flavors of super well cut diamonds.
To use an analogy- say we made a scale for the taste of food. I love super spicy tomato sauce, you may prefer a more mild flavor. Neither is "wrong". Neither is "better"
Some people will sacrifice an amount of what we call "light performance" for spread- and I can't see how we can tell them they're "wrong".

Therefore, I do not believe we can agree that labs, in general, are completely ignoring or forgetting "Cut Quality". Rather, it's not possible to find an agreed metric. AGSL is as close as we've come. And they surely do a great job. Yet we can still debate certain aspects of how AGSL does it.
Plus, we're limiting this part of the discussion to round diamonds. I do not believe broad based agreement can ever be reached on what the "best" Pear Shape, Marquise, Radiant Cut, etc is.

In any event- cut is yet another of the characteristics a seasoned trader needs to take into account, regardless of what any gem lab says.

Fact is, a manufacturer may have a diamond in hand, sending it off to GIA or another lab, and depending on how the axe falls, the decision may be F-VS1 or G-VS2, creating a value-difference of 25%, without the diamond changing in any way.

This is a great argument for the prominence of GIA.
I get your point about the negatives associated with this but as a trader, I am more comfortable if there's a standard. Even when I disagree with a GIA grade, I know how to deal with it, and easily evaluate the diamond.
When it's an EGL report, the grade is meaningless. I'm sure that as diamond graders- we'd both use our experience to grade and evaluate the EGL stone- but with the knowledge that if GIA overrules our grade, the value we've assigned won't be accepted by the market at large.
We'll agree that AGSL is the premier lab when it comes to cut- but even then, if it's a super valuable diamond, many buyers will require the GIA as well as AGSL.


In my opinion, CBI, as well as Yoram's diamonds and stones of certain other vendors transcend the rap sheet. But they always have. I don't see that changing. But I do feel some sort of standard for the bulk of the market will need to emerge if rap falls by the wayside.

 

[OoohShiny]

re: cut quality, I wonder whether (hope that!) Serg's work on quantifying the more elusive aspects of diamonds might come to the fore some more (e.g. ratings for fire, etc.)

 

[Rockdiamond]

Re-reading Pauls post- he stated

We can discuss for ages where the disconnect with the real world started.

Putting the cut question aside entirely.
I just read the article which the OP linked to.
I also went on Rapnet and checked some of my normal searches....without a doubt- at this moment, Rapnet is decimated.
The biggest players in NYC pulled all their goods.
But putting this in context:
1) it's a simple matter for any selling member to turn off- or on- their listings.
2) Virtually all the companies I looked for on Rap are not open for business at this point in time. Not having their goods on Rapnet, at this very moment, doesn't truly affect the grand scheme of things.

My personal take is that it's just too early to predict how Rapnet will look once trading starts in a more active manner.
There's sure to be fewer buyers at first- so it would seem that eliminating one potential site where buyers can find the goods won't be all that advisable....
It's also possible other sites will become more relevant.

Time will tell.

 

[BarbBe]

A secondary reaction was for a lot of companies taking their inventory down from Rapnet's B2B-listing. Where over 8 billion USD of diamonds were listed, now less than 2 billion can still be found on Rapnet. And other avenues are used. Some companies use their own website. Others use the main competitor of Rapnet, IDEX, where close to 1,000 new subscribing companies joined in the past three weeks. And diamond exchanges and the WFDB try to set up a competing service to Rapnet themselves.

Beyond pricing, I don’t know exactly what services Rapnet and IDEX provide. But if WFDB can use the situation stemming from the crisis and resulting market disruption to provide better services than the traditional platforms, then this may be a digital disruption in the industry. Be it blockchain, building trust through interactions with other buyers, etc. I keep thinking there must be an opportunity here too.

 

[Karl_K]

If Rap goes down, I predict Rap2.0 under one banner or another will rise quickly and may suck even worse.

 

[AV_]

it's just too early to predict how Rapnet will look once trading starts

I see no reason now, however, there are so many other public listings, one day, they will add up - there is attraction to public anything, but the coherence of Rapnet is forced - for @Paul-Antwerp 's reasons & yours & all but to each their own, in my opinion (hoc.)

digressing

 

[Texas Leaguer]

The original concept of the Rap price list was sound. It was needed by a growing industry, and succeeded in to facilitating trading for half a century. The problem that developed had much to do with two things that are interconnected- 1) the top down 'tail wags the dog' nature of the impact of the release of the weekly Rap price list and 2) the opaque nature of the process of arriving at those prices. These two issues, coupled with the seeming unchecked power of Rap to rule the industry created wide resentment among the trade.The enormous impacts of the COVID crisis on business in general provided a break with the status quo which gave an opportunity and common cause to all those diamontaires who have longed for a more rational and transparent pricing architecture.

In this era of big data, it should be very possible to create such a system. In fact, Rapaport possesses the biggest data and should be well positioned to do it themselves. The fact that they are forming an 'advisory panel' is a good step. Will it be too little too late? Time will tell. There are others stepping into the vacuum who may be able to devise a system that will gain wide acceptance, especially considering the pool of industry ill will that Rapaport will continue to have to grapple with if they are to overcome this 'revolt'.

One way or another the diamond industry will be changed forever by this crisis. Chances are there will be positive changes that derive from it. There is both danger and opportunity in the market for the entities attempting to drive change. There may be more danger for those attempting to resist it.

 

[Garry H (Cut Nut)]

Great discussion all. And thx DiaGem and Paul and all for great explanations.
One huge benefit of the rap price guide is in negotiating purchases.

I find 15 diamonds from a supplier. They range from D to G and VS1 to SI2 and vary on Rap from -15% to -35%. The average discount is -24.5%. I tell the manufacturer or dealer I will take all 15 for -30%. He says ok but I am removing the -15% and -17% stones.
we go back and forward a few times and settle on -28% for the 15 stones. Mazal.

It makes the process way easier

 

[diagem]

Great discussion all. And thx DiaGem and Paul and all for great explanations.
One huge benefit of the rap price guide is in negotiating purchases.

I find 15 diamonds from a supplier. They range from D to G and VS1 to SI2 and vary on Rap from -15% to -35%. The average discount is -24.5%. I tell the manufacturer or dealer I will take all 15 for -30%. He says ok but I am removing the -15% and -17% stones.
we go back and forward a few times and settle on -28% for the 15 stones. Mazal.

It makes the process way easier

Sure..., commodity negotiating on a non commodity product...
But then again..., how far are triple X rounds from being a commodity?
In any case, the easy way out has proven to be A double edge sword...

 

[Rockdiamond]

I find 15 diamonds from a supplier. They range from D to G and VS1 to SI2 and vary on Rap from -15% to -35%. The average discount is -24.5%. I tell the manufacturer or dealer I will take all 15 for -30%. He says ok but I am removing the -15% and -17% stones.
we go back and forward a few times and settle on -28% for the 15 stones. Mazal.

It makes the process way easier

We agree- buying in such a manner makes purchasing easier.
BUT.....after the purchase, you will now have 15 separate jobs of evaluation. Some stones are surely worth more, or less than others with the same grade.
This has always taken diamonds out of the commodity category.

 

[Garry H (Cut Nut)]

Sure..., commodity negotiating on a non commodity product...
But then again..., how far are triple X rounds from being a commodity?
In any case, the easy way out has proven to be A double edge sword...

Typically I might choose a dozen stones from hundreds as you would know Yoram. I could not care less what GIA calls a cut grade X.
Imagine a world where Rap never existed - I doubt there would be very much of an industry.
Is there a better way - I hope so, but so far I doubt anyone on this most cut focused forum has actually read this article - It may be a decade before it has the desired effect.

http://www.gem.org.au/ckfinder/userfiles/files/GAA_Journal_V25_No3_web2(1).pdf

 

[Garry H (Cut Nut)]

We agree- buying in such a manner makes purchasing easier.
BUT.....after the purchase, you will now have 15 separate jobs of evaluation. Some stones are surely worth more, or less than others with the same grade.
This has always taken diamonds out of the commodity category.

Most vendors have very effective accounts people who apply the pricing discounts across each of the selection.
As for desirability and pricing at our end - we have ways and means. For example our margin drops with increasing prices. So a pair of diamond earrings might sell for 90% each of the individual initial retail price.

 

[Serg]

Typically I might choose a dozen stones from hundreds as you would know Yoram. I could not care less what GIA calls a cut grade X.
Imagine a world where Rap never existed - I doubt there would be very much of an industry.
Is there a better way - I hope so, but so far I doubt anyone on this most cut focused forum has actually read this article - It may be a decade before it has the desired effect.

http://www.gem.org.au/ckfinder/userfiles/files/GAA_Journal_V25_No3_web2(1).pdf

Garry, the crisis is helping a lot. Several big companies are very seriously considering this way now.
Most probably we will see the changes in B2B sales approach and may be even in production process flow in next 2-4 months.

 

[Garry H (Cut Nut)]

Garry, the crisis is helping a lot. Several big companies are very seriously considering this way now.
Most probably we will see the changes in B2B sales approach and may be even in production process flow in next 2-4 months.

I sincerely hope so Sergey,
But I am more pared to bet Australia will be Covid free in 30 days than we will have great improvements in diamond beauty.

 

[diagem]

Typically I might choose a dozen stones from hundreds as you would know Yoram. I could not care less what GIA calls a cut grade X.
Imagine a world where Rap never existed - I doubt there would be very much of an industry.
Is there a better way - I hope so, but so far I doubt anyone on this most cut focused forum has actually read this article - It may be a decade before it has the desired effect.

http://www.gem.org.au/ckfinder/userfiles/files/GAA_Journal_V25_No3_web2(1).pdf

Obviously my comments are not personal and not relevant to genuine professionals like you..., but you hit the nail on the bolded writing.

Thats exactly the problem, too much of everything in this industry..., too many diamonds, manufacturers, dealers, wholesalers and finaly retailers!

Rapaport made it possible for people to work in this industry without any real expertise while causing the industry at large to lose any context of real diamond value by his attempt to commoditize a non commodity.
The massive quantities of diamonds allowed people/jewelers to open up shops/businesses with no personal expertise or capital requirements as most wholesalers are in the race to convince retailers to take on their memo'd diamond stocks.

Consumers have been feeling this lack of professionalism over the last decades and keep mentioning this issue as a marketing problem at large.

And because of such reasons, diamond sales have been on a race to the bottom generally, he who has the lowest price sells. I would much rather prefer "less" of such industry!

 

[Paul-Antwerp]

Hi Yoram,

You are offering great points, with passion. I would call however for not blaming Mr. Rapaport to be at the origin of all possible sins. I think that, if certain traditions are crooked, there is also a lot of shared and possible unintended responsibility.

One sentence in your post needs detailed correction, I think. You state: "He who has the lowest price sells."

I would like to add a very important word "apparent" and change it to "He who has the apparent lowest price sells".

The sin is not for Rapnet sharing data on thousands of diamonds through their B2B web-listing. Yes, that makes price-comparisons apparently very easy and it created possibilities of virtual commerce and a lot of entities selling paper without actually seeing any diamond. But that 'sin' applies to all such listings, B2B or B2C, even to the listing here on PS.

For me, the problem lays in the lowest price and the direct price-comparison only being apparent, with too few people explaining that it is flawed.

Far too often, the apparent lowest price is not the lowest. Just go through the random exercise on whatever listing, B2B or B2C, where one can find and compare a lot of diamonds. Take a carat weight, color and clarity of your choice, and compare.

I bet that you will end up with one of the following conclusions:
- The apparently lowest price is for a diamond with the desired weight, but far from the desired diameter for such size. If we were to look for a 1Ct-diamond, the apparently lowest price looks at best something like an 80-pointer.
- The apparently lowest price leaves us with question-marks regarding the Clarity-grade. Very possibly, we can find diamonds with an apparent better Clarity in the lower Clarity-grade. And possibly cheaper.
- Impossible to judge online, but with diamonds in hand, the apparently lowest price can also leave us with question-marks regarding the Color-grade.

So,

- Is Rapaport, or anyone listing a lot of diamonds online, responsible for this mismatch?
- Or are the labs responsible, having built their business on the importance of a 'correct' grade, while they cannot even guarantee its correctness?
- Or are we all responsible, failing to educate and explain again-and-again that the 'apparent' lowest price is not the same as the 'real' lowest price?

I see a similarity with how to fight the current corona-virus. We can choose to blame someone for its existence, like blaming Rapaport for what is crooked in the diamond-industry. Or we ourselves can all make sure to very regularly wash our hands and maintain social distance ourselves, in order to stop the spreading of the virus, just like we can all be as honest and open as possible as to what is important in a diamond, and its selection.

Live long, (and stay safe and healthy),

 

[diagem]

Hi Yoram,

You are offering great points, with passion. I would call however for not blaming Mr. Rapaport to be at the origin of all possible sins. I think that, if certain traditions are crooked, there is also a lot of shared and possible unintended responsibility.

One sentence in your post needs detailed correction, I think. You state: "He who has the lowest price sells."

I would like to add a very important word "apparent" and change it to "He who has the apparent lowest price sells".

The sin is not for Rapnet sharing data on thousands of diamonds through their B2B web-listing. Yes, that makes price-comparisons apparently very easy and it created possibilities of virtual commerce and a lot of entities selling paper without actually seeing any diamond. But that 'sin' applies to all such listings, B2B or B2C, even to the listing here on PS.

For me, the problem lays in the lowest price and the direct price-comparison only being apparent, with too few people explaining that it is flawed.

Far too often, the apparent lowest price is not the lowest. Just go through the random exercise on whatever listing, B2B or B2C, where one can find and compare a lot of diamonds. Take a carat weight, color and clarity of your choice, and compare.

I bet that you will end up with one of the following conclusions:
- The apparently lowest price is for a diamond with the desired weight, but far from the desired diameter for such size. If we were to look for a 1Ct-diamond, the apparently lowest price looks at best something like an 80-pointer.
- The apparently lowest price leaves us with question-marks regarding the Clarity-grade. Very possibly, we can find diamonds with an apparent better Clarity in the lower Clarity-grade. And possibly cheaper.
- Impossible to judge online, but with diamonds in hand, the apparently lowest price can also leave us with question-marks regarding the Color-grade.

So,

- Is Rapaport, or anyone listing a lot of diamonds online, responsible for this mismatch?
- Or are the labs responsible, having built their business on the importance of a 'correct' grade, while they cannot even guarantee its correctness?
- Or are we all responsible, failing to educate and explain again-and-again that the 'apparent' lowest price is not the same as the 'real' lowest price?

I see a similarity with how to fight the current corona-virus. We can choose to blame someone for its existence, like blaming Rapaport for what is crooked in the diamond-industry. Or we ourselves can all make sure to very regularly wash our hands and maintain social distance ourselves, in order to stop the spreading of the virus, just like we can all be as honest and open as possible as to what is important in a diamond, and its selection.

Live long, (and stay safe and healthy),

Hi Paul,

Great explanation, I couldnt have done it better than you. The issue, I am completely with you on everything you wrote..., I dont blame Rapaport at all, I actually greatly respect him, I also am well acquainted with him. I in contrary to most professionals dont hold a Rapaport membership as I dont really use any of his services except his news media which I read regularly.

Which is probably why the only differentiation we currently have is you believe Rapaport "dictates" prices while I claim Rapaport merely reports retroactive categorial value changes based on his and numerous other opinions (a big problem I have with his model).

An excerpt from a short article I wrote a couple of weeks ago:

"...I couldn't help from noticing of the huge Diamantaires vs. Rapaport feud going on, I fully understand the frustration and I too am pondering why Mr. Rapaport chose his recent price-list move but I genuinely can't understand the fierce reaction from some in this industry.

Rapaport does not dictate diamond prices, he merely reflects retroactive segmented value movements based on information collected. If we should be mad at someone it should be us (Diamantaires) for enjoying and abusing the Rapaport price-lists for decades to a point of full over reliance. And then on rainy days we blame the system we invented ourselves."

And I actually glad you finetuned my quoted text "He who has the lowest price sells" by the addition of the importance of the word "apparent", thank you.

Another word you used which correctly applies is "passion", yes, I definitely have a lot of passion for my profession, and I truly believe we are at a cross road at this time..., I plan to push our young generation forward because time has come, and its definitely time for changing of the guards.

If we dont, we will be sorry for generations to come......

 

[Rockdiamond]

I plan to push our young generation forward because time has come, and its definitely time for changing of the guards.

a wonderful sentiment!!
What I have found, over many years, is that the bulk of our industry is concerned with the bottom line above all else. I guess this is pretty common across most industries today.
I know Garry, Paul, you and many of the professionals posting here are motivated by more lofty aspirations. Exceptional light performance. Diamonds as art.

I’ve always needed to identify with that side of the business to keep the passion.
But from where I sit, I don’t see the newer generation following. Here in NYC anyway, the young folks coming into the business have been born with silver spoons in their mouths. They are moguls as opposed to mavens.

 

[Paul-Antwerp]

Cool exchange, Yoram. And thank you for sharing.

I do not believe that Rapaport dictates prices. And I also do not believe he reports existing prices, as much as he may state that is what he does.

But here is the result of the interaction of his Rap-sheet and his Rapnet-B2B-database. All entities listing diamonds on that database (we are not using that service, just to be clear) enter their price as a discount to the Rap-sheet. If, during the night of Thursday through Friday, the Rap-sheet is adapted (upwards or downwards), automatically all pricing on Rapnet has changed. Instead of reporting what has happened in the market, a Rap-action has actually created a change in the market. And if the report of that price-change was correct, the publication of a new Rap-sheet has simply doubled the change.

Then, it is up to each individual company listing diamonds on Rapnet, to adjust their discounts to the new Rap-sheet. A lot of them will, others won't, but the fact that the mere change of the Rap-sheet created an extra price-change, possibly very limited in time, is undeniable.

Live long,

 

[diagem]

a wonderful sentiment!!
What I have found, over many years, is that the bulk of our industry is concerned with the bottom line above all else. I guess this is pretty common across most industries today.
I know Garry, Paul, you and many of the professionals posting here are motivated by more lofty aspirations. Exceptional light performance. Diamonds as art.

I’ve always needed to identify with that side of the business to keep the passion.
But from where I sit, I don’t see the newer generation following. Here in NYC anyway, the young folks coming into the business have been born with silver spoons in their mouths. They as opposed to mavens.

I agree with your sentiments David, no doubt there is a shortage in the potential of the younger generation, after all, most grew up in family owned businesses and unfortunately they were never intellectually and/or financially challenged!! A true pity and a dying breed unfortunately..

But something flared up this month, and it all started from a handful of youngish (40-50+ yrs) Israeli Diamantaires which I know personally, I fully respect their charge although I would hope for a better strategic plan by now.

It really doesnt matter at this time yet and the turmoil is still very on as I follow their inner communications. (Rapnet inventory value down from $8B to 2-3B while the new platform Get Diamonds is up to $4 - 3.5B), this is quite a milestone for something that started by just a handful only three weeks ago?

What really amazes me, quite a few global industry leaders & associations jumped on the wagon while identifying its potential, already endorsed the change but for some reason are not mentioning nor inviting any of the young to co-navigate!!

And if it fails, the blame will be on them again, current global leadership must put the keys down.

 

[Rockdiamond]

I think a big part of this is the lack of opportunity for young people who don’t start out with a connection.
In 1976 when I started at Winston I was part of a group of about 50 young people which were non industry connected. Training. The bulk of my classmates found gainful employment in the industry- some becoming very successful.
There’s simply nothing like this today. The only young folks I see in the NY market are offspring of owners, or immigrants usually working for fairly low wages with little chance of significant advancement.
Are apprentices learning diamond cutting in Israel nowadays?
Where is the future for our business to grow employment outside of India?

 

[OoohShiny]

This thread is really excellent, thank you to everyone contributing

...
I would like to add a very important word "apparent" and change it to "He who has the apparent lowest price sells".
...
For me, the problem lays in the lowest price and the direct price-comparison only being apparent, with too few people explaining that it is flawed.

Far too often, the apparent lowest price is not the lowest. Just go through the random exercise on whatever listing, B2B or B2C, where one can find and compare a lot of diamonds. Take a carat weight, color and clarity of your choice, and compare.

I bet that you will end up with one of the following conclusions:
- The apparently lowest price is for a diamond with the desired weight, but far from the desired diameter for such size. If we were to look for a 1Ct-diamond, the apparently lowest price looks at best something like an 80-pointer.
- The apparently lowest price leaves us with question-marks regarding the Clarity-grade. Very possibly, we can find diamonds with an apparent better Clarity in the lower Clarity-grade. And possibly cheaper.
- Impossible to judge online, but with diamonds in hand, the apparently lowest price can also leave us with question-marks regarding the Color-grade.

I have had to re-read this to try and get my head round it...

I think I'm correct in saying that it basically summarises as something like:

'the cheapest X ct G VS2 is not the cheapest X ct G VS2, because it's actually (looking like) an X-0.20ct H SI1' ??



(and, of course, we haven't even included Cut quality )