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 Post subject: An Opinion Essay: Inherent Value of Natural Diamonds
PostPosted: Thu Apr 20, 2023 4:04 pm 
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April 20, 23 by John Jeffay of IDEX wrote:
Inherent Value of Natural Diamonds

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Inherent value. That's a phrase that's been swirling about my mind in recent weeks as I've tried to resolve a nagging diamond-related doubt. Thankfully I am now cured, so I shall unburden myself and explain the doubt. And the resolution.
David Kellie, CEO of the Natural Diamond Council, and former SVP of marketing and advertising at Ralph Lauren, spoke of "inherent value" when he drew a parallel between natural diamonds and a branded polo shirt at Israel Diamond Week last month.
"I'm sure these two shirts look pretty much the same," he told the audience. "The difference in those is that the one on the left here is $22. The one on the right there is $110. And the reason why there are two such different price points.
"One is five times the price of the others because of the value the consumer puts on the brand of Ralph Lauren, over US Polo Association.
"And Polo Ralph Lauren is able to sell almost the same product, slightly better, but for almost five times the price because of the values that are inherent in that brand."

I disagreed, immediately and vehemently, at least on a superficial level. Call me awkward, contrary or just a cheapskate, but I would always opt for the US Polo Association shirt over Ralph Lauren.
I'm with Naomi Klein on this (author of the 1999 book No Logo, about brand vs product) and I'm not splashing out almost $100 more for a badge of a chap on a horse.
If push came to shove, I'd actually spend the $100 NOT to have the badge. But I'm being churlish.

I now realize that I actually disagree on a more fundamental level. The difference between the Ralph Lauren shirt and the US Polo Association shirt is not inherent.
It's the polar opposite. It is (I had to search for the right word here) extrinsic. By Kellie's own admission the two shirts are virtually identical. The Ralph Lauren product may be of a slightly better quality, but that's not the reason for the price differential.
The reason, as Kellie went to explain, is "what Ralph has built over 50 years, communicating with consumers, building stores, and positioning the brand".
And that's what made me jump and down shouting: "That's not inherent. It's extrinsic."
The Ralph Lauren shirt is not fundamentally much better than the US Polo Association shirt.
It's just that the customer is shelling out an extra $88 to cover the costs of building a brand. What makes the Ralph Lauren shirt special is not in the fibers, the stitching or the molecules. It's in the badge.
And that is exactly the OPPOSITE of natural diamonds. In a weird way that brings me to the same conclusion - that they are rare and special - but by a very different route.

Natural diamonds really are inherently different from their lab-grown counterparts. But not because of some added spin. For sure there's been some brilliant and aggressive marketing, starting with "A diamond is forever" (De Beers, 1947).
But I draw a sharp distinction here between telling a story of inherent value - all that amazing stuff going on deep below the Earth's surface millions of years ago - and the bolt-on or extrinsic value of a premium garment brand.

The NDC published a super-detailed report this week, addressing myths and misconceptions about the diamond industry. Click on link to view article

All the one-carat diamonds mined in a year would fit inside an exercise ball, it says, and all the five-carats would fit inside a basketball.
Geologists have examined almost 7,000 kimberlite pipes in the last 140 years in search of diamonds. Only 60 have been deemed economically viable for large-scale diamond mining companies.
The report is full of such gems. And it helped crystallize my thoughts on inherent value. Natural diamonds have it. Ralph Lauren shirts don't. (Sorry David).

Have a fabulous weekend.


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 Post subject: Re: An Opinion Essay: Inherent Value of Vatural Diamonds
PostPosted: Sat Apr 22, 2023 9:45 am 
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How big is the beach ball? Because at 3.5 grams/cc, that is potentially a whale of a lot of diamonds.


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 Post subject: Re: An Opinion Essay: Inherent Value of Vatural Diamonds
PostPosted: Sat Apr 22, 2023 11:14 am 
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There is a lot of fluffery, obscufation, and omission in this article. Kind of smells of desperation on the part of the Natural Diamond Council. I have partenered with a lab diamond factory in India. It is doing well. Being mostly retired I sell only a very small number of stones myself. Still, in the last two weeks I have supplied over 15 lab grown diamonds larger than 2 carats to customers, and zero natural diamonds. If this kind of demand ratio is reflected at any level in the broader industry, it must be having a huge impact on natural diamonds.

I actually have to admit that over my lifetime I have made a lot of money off natural diamonds. This help me raise a family, pay for their education, feed and house them. I am grateful for that. I do find natural diamonds beautiful. They are also very useful as accent stones to my real passion, which is natural colored stones. I would never mix lab cut diamonds with natural colored stone is a peice of jewelry.

All that being said, when it comes to larger stones for my own use (Wife), I would absolutely choose lab grown at this point in time. For me Diamonds are ornamental stones not rarities, or collectables, like colored stones.

As far as that beach ball, and exercise ball analogy goes I agree with Stephen, that reperesents a lot of diamonds entering the market each year, with a realatively small customer base. Also, it should be remembered that diamonds are neither consumable, nor perishable. All those ball full of diamonds from the last 100 years are still coming in and out of the market as well.

I do agree that large (say 5ct plus) very fine quality diamonds make up a very small percentage of rough production in any given year. If the diamond mining industry does shrink enough, the catual production of these stone will likely fall to a point where they do in fact become rarities, and availability becomes a challenge.


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 Post subject: Re: An Opinion Essay: Inherent Value of Natural Diamonds
PostPosted: Fri Aug 30, 2024 3:18 am 
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Hi! do you think the concept of 'inherent value' can apply to branded products like Ralph Lauren shirts, or is it only true for things like natural diamonds with unique origins??


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 Post subject: Re: An Opinion Essay: Inherent Value of Natural Diamonds
PostPosted: Thu Sep 05, 2024 12:48 pm 
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That is a debatable question.
Supply and demand comes to mind.
I suspect that a Ralph Lauren shirt would take quite a hit in a secondary market.
Whereas, Hermes handbags seem to be in great demand, therefore, doing well in secondary markets.

The demand for earth mined diamonds is currently at an ebb tide.

Lab grown are getting cheaper and cheaper.....the supply is far greater than the demand so undercutting competitors prices is the only way to insure sales.


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 Post subject: Re: An Opinion Essay: Inherent Value of Natural Diamonds
PostPosted: Thu Sep 05, 2024 1:03 pm 
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Part of the problem is that natural diamond's brand isn't Ralph Lauren, it's Cecil Rhodes.

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Rough and cut classic and exotic synthetic gems:https://store.turtleshoard.com


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 Post subject: Re: An Opinion Essay: Inherent Value of Natural Diamonds
PostPosted: Thu Sep 05, 2024 1:55 pm 
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Still at this moment in time there are probably more Natural Mined Diamonds in the overall market than there are lab grown. Mined Diamonds being heavily consumed for more that 100 years, and Lab Grown being very new. True, most of the Mined Diamond stock is in private hands and not currently offered for sale, but they do exist in that quantity in the market. Lots of things will affect when and how they re-enter the market for sale. But inventory is sure to outstrip demand for a very long time. It is often said that the lowest cost diamond mine in the World today are the streets of America.

Therefore I find it difficult to say that any sort of Diamond has inherent value. It has always been marketing driven and will remain so. I would be willing to wager that from this time forward Mined Diamonds will always cost more that lab. That doesn't make either a good place to put money in a purely financial sense.


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 Post subject: Re: An Opinion Essay: Inherent Value of Natural Diamonds
PostPosted: Thu Sep 05, 2024 5:46 pm 
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I'm with Steve re. colored stones. To me, diamonds are boring. They are great for accent stones, but have little intrinsic value to me - they are so uniform, you can replace one with a near identical one easily. "G color" VSI, 1 carat, ideal cut.... Look it up and find it in a catalog - multiple catalogs.
The industry has defined those characteristics as being the value of the stone, and it is coming back to haunt them.

Now finding two tourmalines that look the same ... that is quite a bit harder.


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