Do We Sell Diamonds or Carbon?

By Joseph Schlussel, president, The Diamond Registry Inc. -- JCK Online, 9/1/2007 2:00:00 AM

The biggest threat to our industry is not synthetics manufacturers who turn carbon into diamonds. It's commoditizers who want to turn diamonds back into carbon.

For centuries, diamonds were revered as the ultimate expression of love. Then, in the mid-1970s, the investment community began selling diamonds as a standardized commodity. Every Monday, price lists would appear in the Wall Street Journal showing prices heading to the sky. At the market's peak, a 1.00 ct. D Flawless reached $65,000/ct. Shortly afterward, the bottom fell out, and the price plummeted to less than $10,000/ct. The investors went looking for the next fast buck. In the end, nobody gained, certainly not the industry the investors left in ruins.

WSJ stopped printing price lists, but the legacy of treating diamonds like pork bellies is still with us. Now there are new proposals to sell diamond futures and derivatives to the public.

People who have devoted their lives to diamonds know they can never be a true commodity. All VS diamonds aren't equal. Inclusions can vary in size, color, and location. People don't even agree on what the Ideal cut is. Would a narrow range of sizes and grades represent all diamonds?

We must get back to selling precious gems, not standardized sorted and graded pieces of coal. Let us educate the consumer about not only the steak but also the sizzle—the beauty, fire, brilliance, and scintillation of nature's masterpiece. Some people say it's OK if diamonds are commoditized; you can make money on the mounting. That's like saying forget about the steak, the real action is in the ketchup! The carbon market is hot at the moment, but coals can turn into ashes. Diamonds are forever.