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I work at a company that helps companies sell their rough diamonds, so I've seen the seismic shift in the rough diamond market over the last few years. There's

I work at a company that helps companies sell their rough diamonds, so I've seen the seismic shift in the rough diamond market over the last few years. There's a common belief amongst those in our area - "the diamond industry has changed more in the last 5 years than it did in the previous 100". That's probably an understatement. The decline in market share can't be understated on its effect on the diamond industry - DeBeers market share has gone from 90% to 40% in the past 10 years, and as a result, their pricing power has disappeared. Before, DeBeers had a take it or leave it price - sight holders essentially had a choice to accept the price DeBeers offered, or basically go out business. Now, any company who wants to buy rough diamonds has the ability. Whereas most people here have commented that the prices of diamonds should decrease, on the contrary, prices have increased. More people have access to the diamonds - demand has exploded. The decline in market power of DeBeers has been an exciting time in the industry. If be happy to answer any questions - it's a fascinating industry.

bane 12y ago
> Whereas most people here have commented that the prices of diamonds should decrease, on the contrary, prices have increased. Could that just be an effect of an already conditioned market? If I were to sell diamonds from my own mine, and they were moving at the prices De Beers set on their product, why wouldn't I keep my price high?
- bluedevil2k 12y ago
  You don't "keep your prices high". Your prices reflect the market price now (whereas they didn't before). Auctions ensure that the market price is found by inviting a significant number of participants.
  - chc 12y ago
    Then why do used diamonds go for such a small fraction of the price?
    - bluedevil2k 12y ago
      Ask your significant other if she wants a diamond that was owned by someone else before her. In all seriousness, do not confuse the price of a rough diamond with the price of a polished diamond at a retail store - there's likely a 100% markup. If you were to trade in used rough diamonds, you'd find the price close to freshly mined rough diamonds (though the profit margin for the cutters/polishers is tiny).
      - judk 12y ago
        Your SO would never know the diamond's history if you didn't chose to share it.
        irq 12y ago
        Nothing says "true love" like jewelry deception...
        Jedd 12y ago
        And diamonds are nothing like true love. http://blog.priceonomics.com/post/45768546804/diamonds-are-bullshit http://blog.priceonomics.com/post/45768546804/diamonds-are-b...
        CalRobert 12y ago
        If they need a diamond they aren't worth your time.
        jljljl 12y ago
        To be fair, if you promise a diamond but then deceive about it's origin, you probably aren't worth their time either.
        CalRobert 12y ago
        Eh, just as well then.
  - bane 12y ago
    My prices can be whatever I want, I can price them under or over the market as I wish. I might not stay in business, but there are valid reasons for doing either. For example, I want to beat my competitor. So why I don't I dump diamonds on the market at some ridiculous price and eliminate De Beers virtually overnight? Once I've cornered the market and have a monopoly, I can start to jack up the price again saying whatever I feel like (there's a new diamond shortage) and charge whatever people are willing to pay, which would hopefully be eventually close to what the market was paying before or even higher. Or I might sell my diamonds at a price higher than De Beers and make some marketing claim that my Diamonds are only of the highest and rarest quality for <insert reason> and if I do a good job and am lucky get people to move up to my price. Or I might certify my Diamonds with a 100% money back guarantee within 1 year of purchase or some nonsense (betting that most people won't sell back their Diamonds that soon after purchase, but using that guarantee to justify the higher price) or whatever. I can keep my prices at De Beers' high price or do whatever I want. The Market merely informs me of what will sell, defining the envelope of how I can manage my business to stay in business.
    - acchow 12y ago
      A challenger can't undercut an incumbent and drive them out of business. Who would finance such a move? And why wouldn't that financier back the incumbent instead? In reality, it's this opposite case that occurs. This practice is generally considered anti-competitive and illegal.
      - bane 12y ago
        It's done all the time, and it's on the front page of HN probably multiple times per week.
        bluedevil2k 12y ago
        It's done by companies with small barriers to entry - if you wanted to be a startup in the rough diamond world, you'd need billions of dollars in start up capital, and access to a mine that's producing diamonds, which aren't just lying around. Figure billions more to buy a mine. Even then, you might get 3% market share, not enough to meet demand or alter prices in any way.
- bluedevil2k 12y ago
  Interestingly, it's been theorized that DeBeers actually sold their rough diamonds below their monopoly price - to keep participants happy and not "rock the boat".

bane 12y ago

> Whereas most people here have commented that the prices of diamonds should decrease, on the contrary, prices have increased. Could that just be an effect of an already conditioned market? If I were to sell diamonds from my own mine, and they were moving at the prices De Beers set on their product, why wouldn't I keep my price high?

bluedevil2k 12y ago
You don't "keep your prices high". Your prices reflect the market price now (whereas they didn't before). Auctions ensure that the market price is found by inviting a significant number of participants.
- chc 12y ago
  Then why do used diamonds go for such a small fraction of the price?
  - bluedevil2k 12y ago
    Ask your significant other if she wants a diamond that was owned by someone else before her. In all seriousness, do not confuse the price of a rough diamond with the price of a polished diamond at a retail store - there's likely a 100% markup. If you were to trade in used rough diamonds, you'd find the price close to freshly mined rough diamonds (though the profit margin for the cutters/polishers is tiny).
    - judk 12y ago
      Your SO would never know the diamond's history if you didn't chose to share it.
      - irq 12y ago
        Nothing says "true love" like jewelry deception...
        Jedd 12y ago
        And diamonds are nothing like true love. http://blog.priceonomics.com/post/45768546804/diamonds-are-bullshit http://blog.priceonomics.com/post/45768546804/diamonds-are-b...
        CalRobert 12y ago
        If they need a diamond they aren't worth your time.
        jljljl 12y ago
        To be fair, if you promise a diamond but then deceive about it's origin, you probably aren't worth their time either.
        CalRobert 12y ago
        Eh, just as well then.
- bane 12y ago
  My prices can be whatever I want, I can price them under or over the market as I wish. I might not stay in business, but there are valid reasons for doing either. For example, I want to beat my competitor. So why I don't I dump diamonds on the market at some ridiculous price and eliminate De Beers virtually overnight? Once I've cornered the market and have a monopoly, I can start to jack up the price again saying whatever I feel like (there's a new diamond shortage) and charge whatever people are willing to pay, which would hopefully be eventually close to what the market was paying before or even higher. Or I might sell my diamonds at a price higher than De Beers and make some marketing claim that my Diamonds are only of the highest and rarest quality for <insert reason> and if I do a good job and am lucky get people to move up to my price. Or I might certify my Diamonds with a 100% money back guarantee within 1 year of purchase or some nonsense (betting that most people won't sell back their Diamonds that soon after purchase, but using that guarantee to justify the higher price) or whatever. I can keep my prices at De Beers' high price or do whatever I want. The Market merely informs me of what will sell, defining the envelope of how I can manage my business to stay in business.
  - acchow 12y ago
    A challenger can't undercut an incumbent and drive them out of business. Who would finance such a move? And why wouldn't that financier back the incumbent instead? In reality, it's this opposite case that occurs. This practice is generally considered anti-competitive and illegal.
    - bane 12y ago
      It's done all the time, and it's on the front page of HN probably multiple times per week.
      - bluedevil2k 12y ago
        It's done by companies with small barriers to entry - if you wanted to be a startup in the rough diamond world, you'd need billions of dollars in start up capital, and access to a mine that's producing diamonds, which aren't just lying around. Figure billions more to buy a mine. Even then, you might get 3% market share, not enough to meet demand or alter prices in any way.
bluedevil2k 12y ago
Interestingly, it's been theorized that DeBeers actually sold their rough diamonds below their monopoly price - to keep participants happy and not "rock the boat".