The international diamond trade and the Vancouver market
Creators: name: Jordan, Andrew
Publisher: name: University of British Columbia
Year: 2010

description: The subject of this thesis is the structure of the distribution channel of gem diamonds in the world market, and certain vertical stages of the channel are singled out for more detailed study. The main stages of the distribution structure are: the mining of rough diamonds, the largely centralized sorting and distribution of the rough, the manufacture of polished diamonds in a number world centres, the distribution of the polished gems at several bourses connected with the manufacturing centres, and the operations of the local wholesalers, jewellery manufacturers, and retailers. Three areas are singled out for more detailed study: the De Beers group, which, through the Central Selling Organisation (S.C.O.), dominates the distribution of rough; the Israeli diamond industry, the largest manufacturing and distributing centre of polished diamonds; and finally, the Vancouver retail market for diamonds and diamond jewellery, which is one of the many regional branches of the largely unexplored retail end of the distribution channel. Chapter II provides a base for all that follows by describing in detail the four parameters that are basic for the appraisal of a polished diamond: colour, clarity, cut and weight. An Appendix studies the increment in the price per carat of a polished diamond as the weight of the stone increases. It is found, for example, that the traditional squaring rule gives results close to, but consistently higher than, the actual prices. Chapter III studies the prevailing modes of production in the diamond-producing countries, the historical evolution and present activities of the diamond-cutting centres, and the operations of the major trading centres. It is found that certain characteristics of the diamond-cutting industry make it an ideal field for cottage industries and small firms, working in places situated far from either the mining, the distribution, or the consumer centres. Certain recurrent patterns in the creation and development of local cutting industries are discussed. Chapter IV focuses on the development of the Israeli diamond industry. Since the first years of the State of Israel, the exportation of polished diamonds was seen as one of the main sources of foreign currency, and expansion of the industry was energetically supported by the Israeli government. The main factor limiting the growth of the industry, however, was the supply of rough diamonds. The chapter studies the changing relations between the C.S.O. and the Israeli industry, governmental protection of the industry, and the export figures. The second half of the chapter is devoted to a detailed description of the actual trading at the Israel Diamond Exchange at Ramat Gan. Chapter V studies the role of the C.S.O. in the world market, in the frame provided by the history of the De Beers group. The C.S.O.'s avowed policy of stabilizing prices for. the benefit of the industry as a whole is measured against the recent and on-going developments in the world market, characterized by steeply rising prices, speculative trading and relative shortages of rough, and some tentative explanations are proposed. Chapter VI, finally, describes the Vancouver wholesale and retail diamond markets. Since diamonds are sold by retailers almost exclusively as part of pieces of jewellery, a survey was made of Vancouver jewellery stores to find out the relative popularity and average selling prices of the main types of diamond jewellery. The method employed in this survey involved appraising and counting the jewellery pieces displayed, and direct enquiries from the salesmen. The survey was complemented by sales figures and other information on the buying preferences of Vancouver jewellers, furnished by a local wholesaler. The results were tabulated and compared with published Canadian and American data, and explanations were proposed for the differences found. The chapter concludes with a list of questions for future research on the retail market for diamond jewellery.