Market NewsCommentPainful inevitability

Painful inevitability

It is not that often nowadays that I put pen to paper or finger to keyboard this frequently.

Generally, I feel that most of what I see going on is simply a case of deja vue and in that sense rather boring.

It is only when deja becomes grande that I am sometimes stirred.

A couple of things cropped up this past week that caught my eye and allowed even this dried up walnut to expel a long sigh, not of disbelief, but of too much belief, indeed, of painful inevitability.

The first was provided by my good friend Boney who, thankfully, is never one to disappoint.

This last Friday he sharply reduced his prices on his Rap list.

We all know that the market is in as rude health as the Greek economy, but heavens does it need such an extraordinarily damaging intervention and about as sensible as the Greeks rushing off to a referendum to end up with probably a worse deal than they were offered before, if they get a deal at all.

On polishedprices, we saw a sharp fall in prices through January into March and from around mid-March prices rose to just above the January level before falling sharply again to below the previous low, bottoming in mid-May. Since then, prices have risen and are getting close to the January figures.

In other words, we seem to be seeing a smidgeon of a recovery.

Not for good old Boney.

His prices, or more precisely, his opinion was that prices were static through the first fall of the year, just as there was a mild pick up in March he dropped his prices, the actual market continued to pick up.

Again, his prices were static through the second fall of the year and, lo and behold, not to disappoint us all, he drops them as the market picks up.

Yet another amazing own goal for the industry, which must be one of the most proficient at this dubious achievement.

The second groan was sucked from me when I read an article by Rob Bates published on JCK Online, entitled ‘The end of the diamond grading game.’

The piece starts, ‘A friend once asked the head of a lab notorious for over-grading how he lived with himself. Simple, the man replied. If I were supplying such a horrible product, why do I have so many customers?’

Bates quotes a ‘longtime industry observer as saying’, ‘….The current situation suits everyone…The labs like it because it enables them to position themselves, generally relative to GIA… The retailers like the situation because they can cherry-pick reports according to what they are selling and who they want to sell to. The consumers should not like the situation, but for the most part they do not even know there is a situation.’

This observer might just as well have said, ‘Have you heard of anyone having qualms selling stolen cigarettes? They are not short of customers.’

To Bates’s credit, he points out that this is a dangerous game to play and as he continues says, 'As with conflict diamonds, it won’t be pretty if consumers find out.’

However, what Bates fails to draw attention to is that what is being discussed is simple fraud, criminal fraud.

It is laughable that such fraudulent behaviour only begets the admonishment of ‘unacceptable’ from diamond associations and that carrying such ‘fudged’ reports, as referred to in the article, is deemed a ‘trade sin along the lines of non-disclosure of synthetics or selling conflict diamonds – a serious infraction that could subject dealers to bourse sanctions or arbitration.’

All these are simply illegal activities and are not something that should be settled in-house, it is not a question of simply breaking the ‘clubs’ rules. It is breaking criminal law.

We recently suffered the disclosure of diamonds being treated to temporarily improve their colour.

I have not heard of anyone being charged with fraud.

No doubt there are a large number of people within the industry who know who were responsible but nothing has been done.

If the odd diamond dealer who was proven to be guilty of such nefarious activities ended up in clink that might provide a strong inducement to others to stop such practices and potentially destroy consumer confidence to the peril of the whole industry.

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