Global Diamond Industry Transparency And The Culture of Provenance, Series III

Our last series about Transparency and Provenance discusses the issues with Rapaport and his relationship with dealers around the world. Dealers took real action recently which this time will affect his and their future.

What does the future hold for Rapaport and Rapnet?

This love hate story between dealers and Martin Rapaport goes back decades, to the late 70’s when Martin Rapaport started charting down a few prices for diamond dealings. I remember seeing his framed list in his office next to the diamond exchange in Tel Aviv a few years back during an office visit.

Over the years, the Rap list became standard and used by most in the industry, but it came at a price; Control. 

As Rapaport grew the list, he also grew his services and with that came the conflict of interest. Rapaport started to deal in diamonds in various ways. To me it was clear as it was for all dealers, you cannot publish a price list for diamonds and trade them as well, why? it was each Thursday that a new list was published, so what was the problem with selling on Wednesday, dropping the list price and buying back goods at cheaper prices, next week raise prices and sell, and so on…Many felt this way since Rapaport was very opaque on how prices were determined. At various high points in Rapaport, over a million diamonds were listed at over $8.5 billion value. 

I remember issues arising between dealers and Rapaport back in 2014, when another slowdown in the industry started and he lowered prices. Many dealers came out and declared a war, mostly Indian suppliers. They banned together and listed their inventory on his platform Rapnet, at full list price, which made his price index jump by over 12%. 

At this point I want to mention that since 2014 Rapaport changed a few times how his rap index evaluates the diamond price trend. By the end of February 2015, that is when the first blow out happened and Indian traders decided to act. They listed their inventory at rap price list and that is when it was up almost 12%

On march 19, 2015, Rapaport fought by: The RapNet price index (RAPI) has been revised to reflect the average price of the ten best priced diamonds in each category”. My simple question is: how is that representative of the 1,368,766 diamonds listed that day? by the way, the majority of transactions actually taking place, do not take place o the platform itself. The index uses best asking prices, which does not make sense whatsoever. Any data should be based on factual and actual transactions.

Going forward to march 2020, and now due to Corona virus, dealers have had it, and I have covered it not too long ago. It is funny that things happen during the month of march….

Conclusion

We need our Industry leaders to lead by example. All these service providers, and dealers as well, need to increase Transparency and Provenance ( also previously discussed). This is the only way to increase consumer desire and consumption for diamonds. Every year there is about $75 billion worth of jewelry offered globally according to Bain & Co. these can easily be sold and turn over to consumers. It is all about increasing confidence in consumers.

The DPA (Diamond Producers Association) has just announced a change of direction, both changing their name and changing their strategy, which will be announced by June 1. “a diamond is forever” lasted way longer than DPA’s “ Real is Rare, Real is a Diamond”. Let’s see what will change.

Feel free to comment or ask questions.