Martin Rapaport: Focus on Polished Not Rough

Wrapping up the first day of the Buyers Week, Rapaport suggests guidelines for diamantaires.

The first day of the second US & International Diamond Week was concluded by Rapaport Group pricelist publisher Martin Rapaport, who provided a comprehensive overview of the worldwide diamond market, and how India, Israel and the United States can strengthen their positions.

He suggested that diamantaires focus their efforts on dealing in polished and not rough where a number of factors were helping to push up prices which he said were “unsustainable”.

He said that "irresponsible banks" financing rough diamond purchases were also part of the reason for rising prices. And he warned diamantaires “to leave the banks before they leave you”, suggesting a cash-basis for dealing in diamonds was the best option. “Develop a cash business, not a credit [based] business.”

He also warned the audience about the problem of becoming overleveraged since interest rates, particularly in the United States and Europe, will eventually start rising.

"Expect bank liquidity to tighten up; expect volatile demand and prices; and expect rough diamond prices to continue being manipulated," he said. "Expect higher interest rates and tight money, don't manufacture unprofitable rough, and support small businesses because they can bring about change, not large fat companies. Don't chase rough goods, don't chase the banks. Chase customers.

"Leave manufacturing that is not profitable to the suckers to do. Don't manufacture – buy polished from them. Buy from small companies and support them since they are the one who can bring about change.

He also advised members of the global diamond business not to concentrate their efforts in one market, such as Asia, but to have business in several regions, including the United States.

He said the Indian government’s moves in introducing a tax on polished imports and gold had been a huge mistake.

As for Israel, it should further consolidate its position as a trading center and not go back to trying to be a manufacturing center. “Israel adds value by getting the right diamonds to the right people at the right price and the right time. Stop wasting your time with rough, and invest in finding customers since they are the source of your strength.

"Do business with companies that don't speculate since the future belongs to firms that are transparent, fair, honest and competitive. Don't base your profits on rising diamond prices but on the added value you can bring to diamonds."