I have been invited to give a brief overview of how diamonds flow from mine to consumer through what we refer to as the Diamond Pipeline and how diamonds are merchandised along the way. A single diamond can be sold and re-sold numerous times before it ultimately adorns a retail consumer. From the outside, the diamond market may appear confusing, fragmented, perhaps even inefficient, but it exemplifies the free market ideals that our American economic system extols. What is most important to note from the diagram is the line drawn between rough and polished diamonds. Most of the polished dealing, jewelry manufacturing, and retailing is done by people who have had no more exposure to rough diamonds than the typical member of Congress.
All polished diamonds start as rough, and once polished, remain polished forever.
A single rough stone is commonly polished into two polished diamonds. Often, a piece of rough yields only one stone, sometimes it yields multiple stones, or it may never be polished and sold for industrial purposes. As we proceed down the pipeline, the frequency of transactions and the number of small businesses involved increase dramatically, while the average size of a typical transaction diminishes in monetary terms. Throughout the pipeline diamonds are constantly assorted, mixed and re-assorted to fit differing commercial requirements. Moreover, polished diamonds are frequently unset and re-set in different jewelry, sometimes alone, sometimes with other diamonds.