What Should You Know About The Diamond Business?

The diamond business is a multi billion dollar operation that has been going on for thousands of years. Diamonds were always a sign of wealth and the entire worldwide retail market for jewelry with diamonds summed up to $60 billion in the year 2010. You can easily imagine that it is worth a whole lot more now. If you have the necessary capital, this is a business venture that you may want to start. You can get involved in the following parts of the operation:

Producers And Miners

Statistics show that around 133 million carats of diamonds (rough) are produced every single year. There are not many countries where diamond mining happens and we have even fewer producers. We actually have 4 companies that control around 65% of the entire market: De Beers, Alrosa, Rio Tinto and BHP Billiton. There are just 20 major diamond mines in the world. With such operations profit margins are set at around 25%.

Polishers And Cutters

Producers sell rough diamonds to an intermediary that will polish and cut them. This is a process that is really costly since diamonds will lose half of their weight when cut or polished. Most of the small stones are cut in China and India because of low labor costs. In USA it costs around 100 dollars to cut one carat and in India it costs just 10 dollars.

diamond business

Jewelry Manufacturers

After stones are polished and cut, they reach jewelry manufacturers. Sales usually take place in the office of a diamond cutter. Also, they are bought at exhibitions. Two really big ones are held every year in Las Vegas and Hong Kong.

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There are over 10,000 manufacturers int he world. Most of them are currently anonymous. We also have some that are both retailers and manufacturers like Tiffany, Bulgari, Chanel and Louis Vitton. More money is gained when branding is involved (40% more).

Retailers

There are around 250,000 retailers around the world. Most are locally operated and owned. Nowadays we see a decline in the independent jewelry stores as department stores started to offer jewelry. In addition, internet sales are constantly growing.

Industrial Diamonds

Just half of the carats produced will go towards the jewelers. The rest will go to low-end industrial production as diamonds are normally used for grinding, polishing and cutting. However, these are the stones with the lowest values. Many industrial diamonds are nowadays synthetic.

Pricing

Just like gold, the entire diamond industry has a huge expectation for demand because of the huge emerging middle class in China, India and in Latin America. With dramatic sales noticed in these regions, more money is made by those involved in the process.

Investing in diamonds is now a good idea because the price should remain at the same level or grow. The prices for the really high quality diamonds are on a constant increase. The prices for the more commercial stones are practically the same, with only small increases.

Should You Get Involved In The Diamond Business?

The best chance that you have is to get involved at the retailer level or opt for direct jewelry sales. However, this would mean that your investment capital has to be pretty big at the beginning. The good news is that profit will also be big.

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