SUSTAINABLE AUCTIONS ?

A SILLY TITLE FOR A SERIOUS SUBJECT


August invariably is a rogue month, when situations that are not really unexpected at all still manage to take us by surprise. Such is the case in the diamond market at present where a combination of slower polished sales and a challenging world economic outlook have affected diamond sentiment significantly in the last couple of weeks.

But what has actually changed?

Demand for luxury goods and diamond jewellery remains strong at the retail level and the supply/demand fundamentals would suggest that while the more exuberant premiums were definitely over hyped (and possibly manipulated) recent demand for rough and polished in general has been rational and robust for the right reasons.

Once again, however, the argument for the DTC’s model against that of other producers is thrown into sharp contrast as we see how auctions both distort the reality and disturb a market and industry which needs sustainable pricing and rational behaviour as its principle drivers.

Even a well-informed consumer would struggle to understand why rough prices have dropped at a time when gold is achieving ever higher prices and the share markets are so volatile and investors increasingly look to diamonds as a safe haven.

Sometimes it seems that the diamond industry is its own worst enemy, and it takes surprisingly few of these so-called ‘market makers’ to over react which, with the hindsight of their own experience, is perhaps the one thing they should have learned to control.

Ever since I have been in the industry, the DTC has done its best to create the sense of structure and stability required to allow it to have a vision of its own future. Lose that and what’s left?