The Rap Price List Uproar

As I wrote yesterday, Martin Rapaport has faced quite a bit of criticism for the changes he made to his famed price list, which included some increases as much as 25%. He also went down in some sizes, and had smaller increases in others.  In response, Rapaport’s organization has sent out statements to his subscribers, including a "FAQ" (apparently not online yet.) He also met with me last night to give his point of view. Highlights follow:

We adjusted to get rid of the premiums. The premiums to [certain items on] the list were not based on speculation anymore. We looked at the world. This year, the Hong Kong auction broke all records. Oil prices are going, wow. The dollar hit new lows.

We don’t think the buyers should pay more than the Rap list. The last time there were premiums on the Rap list was in the 1970s. I resisted going up for so long, that’s how we got the premiums.  I have to be very careful in how we do things. But I see a firming consensus as to where prices are setting. In a way, we are legitimizing a significantly higher price level. That’s a big thing. We are concerned about it.

On why he didn’t do more gradual price increases: That creates "anticipatory speculation." It becomes everyone chasing Rapaport’s tail. In December, when we went up slowly, we had “anticipatory” speculation [people raising prices, anticipating Rapaport would], and we wanted to avoid that.

On what the trade should do: My advice is “relax.” Keep the same price-per-carat. We are telling people not to raise prices.

Why this was done before Vegas: I think the show is a wonderful time to raise prices. Why should Rapaport be below prices at the most important show at the year? If we do this at a time when the entire industry is going on vacation, when it’s Death Valley Days, it’s hard for a consensus to develop. The show is a great time to develop consensus. By next Monday, everyone will have figured out the new game in town.

It is true that this inconveniences people but the world I’m looking at is filled with inconveniences, and inconsistency about prices. People should be looking at diamond prices and questioning them. We are the beginning of a real roller-coaster ride. If Rapaport’s increase of 25% is frightening, I’m sorry but that is the world we are living in. If gold can go to $1,000, then hit $880, the same thing can happen to diamond prices. That’s why I’m asking people: Please, don’t speculate.

He also didn’t see future dramatic price increases in the weeks ahead, even though his list’s increases could cause prices to go up. “We want to avoid an echo effect,” he said. And, as Rapaport notes, in the end, the "prices on the Rapaport list are the opinon of Martin Rapaport."