Why Are Diamonds Expensive, DiaEx Experts Explain
Diamonds are indeed expensive, the arrival of synthetic diamonds has not managed to cause a dent in the price movement of natural diamonds. So why are diamonds priced high, is there a logical reason to explain the price structure of diamonds.
Rarity: Diamonds are rare and more than 70% of the diamond mass that is mined is of an industrial grade. You might be surprised to know that, a few industries and products, totally unrelated to glamor and jewelry, utilize natural diamonds in some way or the other. You could have as many as 15 to 20 grades of diamonds, within the category of stones that are suited for jewelry applications.
Status Symbol: Historically diamonds have symbolized power, prosperity, truth and prosperity. Smart advertising by DeBeers, widely known as the god father of the diamond supply chain (until recently) made diamonds, an absolute essential to mark a wedding or engagement. The exclusivity attached to the glittering stone, allows it to command a high price. And don’t forget that matrimonial related celebrations are generally, marked by significant spending.
Grading: It might come as a surprise if we told you that, the accurate grading of diamonds has resulted in the stones becoming expensive. A diamond is a diamond but, not all diamonds are the same. Internationally accepted grading standards using, the 4C (carat, cut, clarity and color) parameters, differentiate between the grade and therefore the quality of diamonds. Two diamonds with the same size (dimensions), weight and shape can show a tremendous price variation – even as much as 50% to 80%. Sellers realize that, buyers will be willing to pay more in their ‘quest’ for a ‘better’ diamond.
Middlemen: Not many experts are willing to tell you this but, it is a factor that can significantly push up the price of a diamond. The supply chain for diamonds has always been dominated by brokers and middlemen. Diamond owners generally, release their stones to brokers. A single diamond can pass through a number of brokers before, reaching the actual buyer. Each middleman, piles his share of profit or commission on to the price tag. Besides adding to the price of the diamond, the practice also cloaks the original price quoted by the actual seller.
Overheads and Payments: With diamonds changing multiple hands (middlemen) through the supply chain, there is a duplication of activities like, clerical recording, book keeping, transport, insurance etc. It might seem that, payment for a diamond happens only when a buyer buys the piece but, there is one important process before this that also, calls for payment to be made. Rough diamonds need to be cut and polished before, they can show their gorgeous glitter. Diamond cutting houses buy rough diamonds and perform the rest of the process. Payments can be substantial, banks are known to require lengthy procedures to be completed, stiff bank fees also add to the cost of doing business. These expenses are quite obviously added to the cost of the diamonds.
Diamond buyers consist of both, professionals and casual buyers. Spending big on a diamond can be a risky affair, fakes and synthetics are known to be sold under the guise of ‘real’ diamonds. The possibility of being overcharged and the 4Cs of a diamond being overstated, can also result in getting lower value for the amount paid.
DiaEx: The Glitzkoin project is promoted by a second generation diamond veteran. CEO Navneet Goenka comes from a family that, has been closely associated with the diamond industry for over five decades. The DiaEx diamond exchange is an important part of the Glitzkoin project. The project was initiated to increase efficiency and improve the market scope for the glittering stone. The DiaEx trading platform, restricts listings to certified natural diamonds. There is no room for synthetics and fakes, this is obviously a big confidence booster for buyers. A diamond certificate from a reputed testing lab, will also provide an accurate and unbiased assessment of the 4Cs of the stone. Buyers and sellers located at any point in the world and irrespective of their size, can directly interact with the DiaEx diamond exchange. No middlemen or brokers are required to facilitate smooth trade on the Glitzkoin platform. Navneet Goenka is well aware that, diamond traders have for long, wished to have an alternate payment option. Glitzkoin has deployed the GTN crypto token to be the mode of payment on the DiaEx platform. Traders will no longer need to put up with cumbersome procedures laid down by banks. The cost of transferring funds on blockchain technology, is very much lower than what banks charge. It is no surprise that Glitzkoin aims to eliminate some of the major challenges that, the multibillion dollar industry has been facing for decades.