Recent dramatic changes to the widely used Rapaport Diamond Report price list caused considerable consternation at The JCK Show ~ Las Vegas. The biggest changes include boosts of 25 percent. There also were smaller increases in some listings, and decreases in others.
In a note sent out a few days after the increases, Rapaport advised the trade not to raise prices in response to his actions. “Do not change your price per carat,” the note said. “The new higher prices in the Price List already include the premiums. While you can and should set your prices at whatever level you wish, the price adjustments in the recent Rapaport Price List are not a reason to increase your prices. You may have to recalculate your discount level against the new list.”
As a result of the moves, angry audience members grilled Rapaport about the changes at his traditional Monday morning breakfast at The JCK Show. Some argued that the price changes hurt the ability of suppliers and vendors to negotiate.
Rapaport responded that he was reflecting the volatility of the market. He told JCK that he adjusted the list because the market was paying premiums to prices on the list, something that hadn’t happened since the ill-fated investment boom of the late 1970s. “We don’t think the buyers should pay more than the Rap list,” he said. “I resisted going up for so long, that’s how we got the premiums. But I see a firming consensus as to where prices are settling. In a way, we are legitimizing a significantly higher price level. That’s a big thing. We are concerned about it.”
He said he didn’t implement more-gradual price increases because that creates “anticipatory speculation,” where people raise prices expecting his list to go up.
As to why he did it right before The JCK Show, Rapaport argued that the show is a “wonderful” time to raise prices. “Why should Rapaport be below prices at the most important show of the year?” he asked. “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.”
He added: “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 percent 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.