De Beers released another very small (approximately $250 million) sight in March. It had its intended effect of drying up excess diamond supplies and stabilizing prices in small sizes and some lower qualities, say key diamond executives. Sights were cut across the board, from the smallest dark Indian rough to the over-10-ct. specials. Many sightholders received no goods at all in February and March.

Sources within India, where depressed prices and oversupplies have been most acute, say both began stabilizing at the end of the first quarter of the year.

“Prices are firming across the board there,” says Mark Boston, managing director of H. Goldie & Co., the London diamond broker firm. “Having gone this far with its small sight policy, the Trading Company [De Beers] can’t let up now. This is the CSO’s traditional role.”

New York dealers say the minuscule sights raise the prospect of a severe shortage of larger diamonds. Most retailers say they’ve been able to fill customers’ requests for 1-ct. and larger diamonds, but no one is willing to go on record predicting what will happen this fall.

De Beers’ Central Selling Organisation began 1998 with its smallest early-year sight in a decade, about one-third of January 1997’s allocations. If sharply reduced sights continue until prices stabilize and market confidence recovers, analysts predict the CSO’s rough diamond sales will fall from $4.64 billion in 1997 to less than $3.5 billion this year, which would be its lowest since 1992. De Beers chairman Nicky Oppenheimer told sightholders at a New Year’s meeting that the company would place industry confidence ahead of its own sales volume.

Indian manufacturers need relief. Banks have reduced their credit lines, and prices of some polished goods have fallen below the cost of the original rough, especially in the lower-color small goods and melee. Australia’s Argyle mine has been selling into the void left by the reduced CSO sights, sending a reported $35 million worth to the Bombay market in both January and February. Although Argyle raised prices of its lower-color material about 5% in March, much of it remains cheaper than comparable CSO rough. Indian manufacturers are using the cheaper material to keep their factories going and meet demand from U.S. mass merchandisers. – Russell Shor


Jewelers’ Circular Keystone has added six people to its staff, four in editorial, one in design, and one in sales.

Editorial. Barbara Spector, the new managing editor, joins us from The Scientist, where she held various staff positions until becoming editor-in-chief in 1995. A graduate of the University of Pennsylvania (magna cum laude), she has extensive freelance experience, having written books, magazine articles, newsletters and book reviews.

The new assistant managing editor is Elizabeth Bobrow, who for the past five years worked on two periodicals devoted to IBM computer systems, Midrange Systems and Midrange Channels. She joined the combined staff of those publications as an assistant editor and rose through the ranks to become managing editor in 1996.

Richard Dalglish, now the senior copy editor, has done proofreading, copy editing and writing for a variety of magazines over the past 23 years. He also writes fiction, including short stories and novels.

Joining us in our New York office is Rob Bates, who has five and a half years’ experience covering the diamond industry for National Jeweler and The Rapaport Diamond Report. Rob will be executive editor of New York Diamonds, part of the JCK International Publishing Group, and will also report on the diamond market for JCK.

Design. Matie Anne Patterson becomes JCK’s art director. For the past 25 years she has been designing books, including both covers and text, and magazines for the Springhouse Corp. in Spring House, Pa. Previously, she worked for three years at North American Publishing Co. in Philadelphia.

Sales. The new Italian sales representative is Roberto Laureri. Working out of Milan, he will represent both JCK and its international jewelry magazines. For 30 years, Laureri represented BusinessWeek in Italy, and since 1994, he and his son have run their own sales-rep business in Milan.

Perón Brooch Sells for 8 Times Estimate

Contraband diamonds and an Argentinean flag brooch sold well above pre-sale estimates at Christie’s Magnificent Jewels auction on April 6 and 7.

The auction brought in $31.5 million, close to Christie’s internal projections. Nearly a third of the items were not sold because they did not meet reserve price estimates.

One of the highlights of the sale was a collection of colored diamonds that had been seized from the assets of a convicted drug dealer by the U.S. Customs Service. The diamonds sold for $1.9 million, almost four times the pre-sale estimate. Revenues from the sale of the gems will go toward education and law enforcement initiatives to help slow the drug trade.

Another item, a sapphire and diamond brooch that was designed by Van Cleef & Arpels and once was owned by Eva Perón, sold at eight times its pre-sale estimate. The unidentified U.S. purchaser spent $992,500 (including the auction house premium of $92,500) for the brooch after a prolonged bidding war by telephone.

According to Christie’s, a filled-to-capacity sale room cheered on the anonymous purchaser’s competition, Argentinean television personality Susana Gimenez, who flew from Buenos Aires for the New York sale. She capped her bid at $880,000.

Of the 714 lots offered at the two-day auction, there were seven especially high-value lots, of which three sold. According to Simon Teakle, senior vice president and head of Christie’s Jewelry Department for North and South America, “When we put the sale together, we knew we were going into a period of uncertainty in Asia, and to some extent in the Middle East, the price of oil being what it was. There was an element of risk involved given the state of the market in these regions, and we’re delighted with the results of the sale.”

He noted that 70% of lots sold within pre-sale price estimates, but the four high-value lots that did not sell brought the overall dollar value of lots sold down to 65% of overall pre-sale price estimates.


Sales of rough diamonds by De Beers’ marketing arm, the Central Selling Organization, totaled $4.6 billion last year, down 4% from 1996 but the second-highest in value in the group’s history, said De Beers chairman Nicky Oppenheimer.

Combined earnings for De Beers Consolidated Mines and De Beers Centenary were up 1%, to just over $1 billion. Total net earnings, including retained earnings of associates, were down 9%, but a new reporting format accounted for the 1% rise.

Diamond stocks were down 6%, from $4.703 billion in 1996 to $4.439 billion in 1997, although the figure represents a 7% increase from mid-year, the result of De Beers cutting back sightholders’ allocations.

Oppenheimer noted that 1997 was dominated by contrasts in which strong diamond sales in the first half were offset by a poor second half. As a result, sights have been severely reduced, a policy that will continue well into 1998. “This has meant that we are not currently taking delivery of 100% of the production from producers. However, it is certainly much too early in the year to take a view on how the year as a whole will turn out,” Oppenheimer said.

The financial crisis in Asia, which took hold in the second half, hit retail consumption hard, particularly in Japan – a key market for De Beers. The crisis also affected Asian markets for both polished and rough diamonds, Oppenheimer said.

“Obviously we are very concerned about what is happening in Japan and the Far East, while we are very pleased that America continues strong,” Oppenheimer said. “Certainly, if the current trend of reduced sights continues further into 1998, we will face a very challenging year.”

Oppenheimer declined to forecast this year’s earnings since the condition of the diamond market is still uncertain, he said, and could even regain strength.

“As we have proved throughout our history, De Beers tends to thrive on challenges and comes into its own at difficult times,” he said. “The fact that at times like these the diamond industry as a whole invariably looks towards us to provide comfort is a great tribute to our management of the market. Our strength and determination is a key factor in giving producers, dealers, cutters, retailers and the ultimate buyers of diamond jewelry confidence in the future of our industry.”

The company’s net asset value fell $2 billion last year to $13 billion. “This is mainly attributable to the fact that the [share price of the] listed investments in which De Beers has big stakes showed a decline over the previous year,” said Patrick Kell, De Beers finance director.

Prospecting and research expenditures of $145 million were up from $122 million the previous year. – Russell Shor


The third annual Tahitian pearl auction last month suffered few ill effects of the Asian economic crisis, say organizers.

The Tahiti Pearl Producers (TPP) association reports that 66,832 pearls, divided into 114 lots, were sold at the April 3-4 auction for nearly 398 million French Pacific francs (about $3.6 million U.S.), or more than 50% above the reserve price.

Asians dominated the auction, even though some traditionally big buyers were “noticeably absent” – including Mikimoto & Co., Tasaki, Taiyo, Kashiura, Matuso Co., Heiwado and Kan-Marine International Co. The biggest single buyer was Wing Hang Co. of Hong Kong, a newcomer to Tahitian pearl auctions. It bought 11 lots for 57.8 million F CFP ($525,000). Second biggest was Sibani Perles of Tahiti, which bought 10 lots for 53.1 million F CFP ($483,000).

In other auction news, prices for higher-quality pearls at the Paspaley auction in Hong Kong, also held in early April, stayed pretty much the same as last year’s levels, according to sources at Gemworld International Inc. in Northbrook, Ill., publisher of The Guide. Assael International Inc. of New York, the second largest buyer at the auction, purchased 26 lots consisting of about 1,500 pearls for a total of approximately 206,000,000 Japanese yen.

“We were certainly aiming to buy many more goods,” reports Salvador J. Assael, chairman of the board. He adds that he had hoped to purchase more golden pearls. “Unfortunately, we could not find enough quality goods,” he states.

However, Devin Macnow, executive director of the Cultured Pearl Information Center in New York, previewed both auctions and believes the quality, variety and range of items in both were “exceptional.” “There were very few poor quality or lower commercial quality items being offered,” he says.

(See also “The Mystique of Tahitian Black Pearls,” page 96.)