Who hasn’t heard of the slogan “A diamond lasts forever”? Diamonds have always occupied a very high status in the world of jewelry. Fueled by tradition and intense marketing campaigns, diamonds have achieved incomparable status. Starry eyed young men present gorgeous diamond rings to their girlfriends. Married couples exchange diamond studded jewelry over the years as symbols to their undying love. Celebrities and personalities don fabulous diamond jewelry whenever they go out in public. There is absolutely no doubt as to how valuable and sought after diamonds are.
As with most things in life, there is always something bad mixed with the good. A diamond may be a woman’s best friend but a diamond can also be the bane of some people’s existence – and I am not talking about the man’s pocket here. The term conflict diamonds, or blood diamonds as others call it, became quite well-known to the average person in 2002 when the James Bond movie “Die Another Day” was released. This contribution to the legendary James Bond saga revolved around the idea of smuggling blood diamonds.
So what is a conflict diamond? The UN formally defines a conflict diamond as a “diamond that originates from areas controlled by forces or factions opposed to legitimate and internationally recognized governments, and are used to fund military action in opposition to those governments, or in contravention of the decisions of the Security Council.” In short, a conflict diamond is any diamond that is mined from an area in which there is war, or armed conflict. The idea is that diamonds are very much in demand and that they fetch such a high price in almost any market. If you mine diamonds and sell them to other countries – of which there is definitely no shortage – you can get a large amount of money for them. Where does the profit from these sales go?
You guessed it – to finance wars and other forms of armed conflict in the affected areas. The manner of mining and selling blood diamonds is usually done in secret. You can just imagine what the reaction of the (average) buyer would be if he learned that he was financing a war somewhere in Africa with his transaction. Thus, people involved in the conflict diamond business do not really advertise what they are doing.
Although these activities have been going on for quite some time, it was only in 2000 that the international community formally recognized the gravity of the situation. In December of that year, the United Nations General Assembly recognized the role of rough diamonds in furthering the conflicts in specific areas in Africa. The General Assembly came up with a resolution aiming to severe the connection between the illegal sales of diamonds and wars in concerned areas.
With this resolution in place, countries that buy diamonds from Africa became more aware of the illicit trade. International sanctions were then put in place. In addition to these sanctions, individual countries set up their own methods and processes to curb the practice of trading conflict diamonds. The idea is that if no one will buy, then no one will sell. People who take advantage of conflict diamonds would have no market and thus the practice would stop.
We all know however, that in the real world, things are never as simple as they usually seem to be.
De Beers, with their ‘Diamonds are forever’ slogan are the biggest player in the diamond industry, controlling 60 per cent of the world’s uncut diamonds, a trade worth $7 billion pounds a year. When their lucrative industry was threatened by controversy, De Beers examined its buying strategy. From being a ‘buyer of last resort’ they repositioned themselves as ’supplier of choice’ and in June 1998 insisted they would only buy Angolan stones with Angolan government’s certificates. Evidently this did not work and a year later they stopped buying diamonds from Angola altogether and closed their buying offices in West and Central Africa to avoid the risk of mixing illicit and legal diamonds. De Beers guarantees their diamonds do not originate in rebel-controlled areas, but pressure groups remain sceptical of their real intentions. “They simply stuck their head in the sand, then they realised the market edge they could get with branding, and the more diamonds that stay in the ground the better. They were scared of a consumer boycott and backlash,” says Yearsley.
minesite.com the leading internet paper for the mining industry, said: “It was good timing for De Beers to combine the announcement of its change in policy from ‘buyer of last resort’ to supplier of choice, threatening to withdraw CSO (Central Selling Organisation) site-holder status from anyone found to be involved in the trade. But that is all it was – timing. Anything that can persuade the authorities in the States [the US district court of New York ruled on 7 August that De Beers had violated a number of anti-trust laws from April 1995-April 2001] that it is now the holy joe of the diamond industry, not just some monopolistic exploiter, has to be utilised.”
What is being done?
NGOs generally refuse to call for a diamond boycott, fearing it would harm clean diamond trading countries such as South Africa and Botswana. A boycott could tarnish the ‘purity’ of the diamond image, “It works better as a threat, an advertising campaign with a picture of a diamond dripping with blood, says David Earnshaw, Oxfam adviser in Brussels. “Jewellers are aware of the threat of public campaigning, this would be very powerful argument, and they know the dangers of not behaving responsibly.”
Last year the diamond industry and a group of NGOs created a certification scheme whereby diamonds would only be exported from producer countries in sealed containers, accompanied by certificates stating the country of extraction.
The US passed the Clean Diamonds Act through the House of Representatives. Supported by the Jewellers of America, it will allow only diamonds exported from countries with ‘rough controls’ (an internationally recognised warranty that rough, cut and jewellery diamonds are mined legitimately), into America. Jewellers will then be able to assure customers they are purchasing ‘clean diamonds’. The act was introduce to the Senate in March 2002, where Senator Dick Durbin claimed it would “help put an end to the atrocities that have devastated the lives of so many innocent men, women and children.”
But in the UK, jewellers, according to Yearsley, are not campaigning on the same scale. Indeed one source in the diamond industry referred to conflict diamonds as ‘old hat’. While the source welcomed a certification scheme, they felt it was difficult to follow the line from a supplier from start to finish, acknowledging, “there is an old rogue in any trade.”
Global Witness believes there is still time to develop a strong regulatory system, but some countries may not be prepared to open up their diamond industries to international scrutiny. China and Russia especially have reservations. A Partnership Africa Canada (PAC) report criticised Belgium’s Diamond High Council, the Belgian system is not neutral and an invitation to corruption. PAC, develops policies beneficial to African and Canadian societies and point to links between Antwerp and the Russian Mafia. Russian organised crime has found it easy to work within this poorly regulated market economy since communism collapsed. “Cases of fraud in the Antwerp diamond and banking trade are legendary and Antwerp has become one of the primary world centres for Russian organized crime.” The Russian President has, however signed a decree to extend the ban on uncertified Sierra Leone diamonds.
International implementation of the Kimberley Process (KP) legislation, will introduce tougher background checks on those applying for exploration licenses and mining permits in South Africa. Amelia Bookstein, policy adviser at Oxfam, feels even watered down; KP would result in stronger campaigning against the diamond industry, perhaps even a diamond goods boycott. Recently De Beers and the Jewellers of America (JA) responded to the Al-Qai’da tie to diamonds by urging a swift conclusion to the Kimberley Process.
In the film Diamonds are Forever, baddies Mr Kidd and Mr Wint, after killing a middleman with a scorpion, remarks, “Curious how everyone who touches those diamonds seems to die.” Consumers should be aware that this does not just apply to fiction – many diamonds are helping to fund conflict and terror just as lethal as a scorpion sting.
What Consumers can do
USA
65 percent of the worlds diamonds are bought in the US. In 2001, The US House of Representatives passed a compromise version of the Clean Diamonds Act (HR 2722). This gives the president authority to impose sanctions against countries, which don’t have system of controls on rough diamonds if they are deemed to be a matter of national security. The bill awaits approval from the congressional committee, but there is little doubt that this will happen. Matthew Runci, the Executive Director, of the World Diamond Council says, “The diamond and jewellery industries have been in the forefront of those who have fought for this legislation. Our goal is to keep conflict diamonds out of the United States, which is the world’s largest diamond market. By taking this essential step, we will be on the way toward drying up the profits of those who traffic in conflict diamonds and of ensuring jewellery purchasers throughout the United States that the stones they are purchasing truly are symbols of love and beauty.”
The Jewellers Association of America along with NGOs campaigned relentlessly for conflict-free diamonds with grass roots campaigns and lobbying. Contact global witness for more details.
UK
In 1991 Britain imported 107m in rough diamonds. For almost 41% of these imports Switzerland was recorded as the ‘country of origin’. Switzerland is not known for its diamond mines, which means it is impossible to judge the actual provenance of these diamonds.
The UK government’s policy on conflict diamonds has come under attack from a leading Botswana diamond businessman, Louis Nchindo, the head of Desman (a joint venture between De Beers and the Botswana government) says that the policy is destroying economies counting heavily on legitimate diamond sales, like Botswana. In an interview with the Financial Times, Mr Nchindo says the former UK Minister for Africa, Peter Hain, used the issue to support the Labour governments claim to have an ethical foreign policy.
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Guys who are ready to ask for a woman’s hand in marriage will inevitably attempt to figure out how much money they should spend on a diamond engagement ring, what the diamond will cost them and whether they will be able to afford a diamond engagement ring for their fiance. Most people have heard the expression that diamond engagement rings cost two months’ salary.
Where did the two months of salary idea come from?
The origin of the two months’ salary began with DeBeers, the largest diamond producer and diamond marketer in the world. In 1947, DeBeers decided to promote diamonds following the depressed wartime market. DeBeers launched a marketing campaign with a New York advertising firm. A copywriter penned the famous slogan “A diamond is forever” that is now synonymous with Diamonds.
De Beers wanted to bring diamonds to the masses, make them seem more affordable, instead of the wealthy and select few only being able to buy them. Accordingly, the price of a diamond for an engagement ring was set at approximately two months of salary.
This was a concept that everyone could understand, it was aimed at the groom-to-be and therefore made buying a diamond for an engagement ring achievable no matter whatever his salary was. No longer did people think of diamonds as being something which they could never afford, they now had a figure to relate to in simple terms – two months salary.
Thus the two months salary became the norm and in the mind of the groom it was the predetermined and acceptable price for a diamond engagement ring. As a general guide grooms usually spend between 10 – 20% of their annual salary on a diamond engagement ring.
There is no right or wrong amount to spend on a diamond engagement ring and many men do spend more than two months’ salary on their fiances engagement ring. Lets face it when the wedding and honeymoon are over; What is left? What will she wear every day as a memory?
The Rings! – A symbol of Your Love and Comittment
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Most advertising campaigns by De Beers feature their famous slogan “A Diamond is Forever.” Consequently, women seldom sell a diamond and often feel uncomfortable buying diamonds previously owned by other women. There is a sentimental aspect to diamonds that is very different from other tangible assets like boats, houses or automobiles. However, there are occasions when consumers need to sell their diamonds and, unlike the used car market, there is not a well-developed method for consumers to sell their diamonds.
As a consumer, you face some unique challenges when trying to get the best price for your diamond in a safe and comfortable manner. Your starting point is to know exactly what you are selling. This is much easier if the diamond has a grading report from a major laboratory like the GIA or AGS. You have more of a challenge if there is no formal grading report. In this case, you need to find an independent appraiser who can evaluate the diamond and determine its quality and potential value.
Once you know your diamond’s specifications, you can find the current retail asking price by checking with online retailers to see what similar diamonds are selling for in today’s retail market. It is unlikely you will be able to get the going retail price for your diamond. Selling your diamond at 80% to 90% of that amount would make it sell quicker. Be realistic about your expectations. The lowest cost online retailers, not the expensive jewelry stores with double the price, set the value of your diamond.
You now know your target price and simply have to figure out how to find the right buyer for your diamond. There are several options available to sell your diamond and you need to determine which is best for maximizing your money and safety while minimizing your time and effort.
Your first thought might be to go to the closest jewelry store or pawnshop and sell them the diamond. The key to remember here is that they do not need your diamond. They can get all the diamonds they want on the wholesale market. The only reason they will buy your diamond is if the price is a fraction of the wholesale price. They hope you need the money bad enough to take 25%-50% of what you could be getting for your diamond elsewhere. They might offer you a little more if you “trade up” to something in their display case. However, this often results in you paying more for the new diamond and receiving less for your diamond than if you sold it elsewhere.
Several online brokers specialize in buying diamonds and estate jewelry from consumers. They typically have you ship the diamond to them so they can determine the amount they will pay you. All too often, this amount is much less than their preliminary estimate so you must either pay the return shipping, or accept their price. If your main priority is getting money fast, this is a valid option. If your main priority is getting top dollar for your diamond, there are better selling methods available to you.
Auctions like eBay are very popular for selling jewelry items but there is so much low quality jewelry listed, it is hard for potential buyer to find your quality diamond. You are competing with jewelry retailers whose entire business is selling on eBay so they are experts at writing the descriptions (often with exaggerated quality), taking impressive pictures and shipping their items. Even if a bidder does find your item, the odds of getting your target price are slim to nil because other retailers are advertising items with similar descriptions for about half the amount you want. Notice I did not say they are advertising similar quality, just similar descriptions. Do a search for diamond rings with GIA grading reports and you will see the vast majority of diamond rings have paperwork from sources you have never heard of before.
Other effective ways to find a buyer are classified ads in local newspapers and bulletin boards at church or work. The challenge is reaching enough people to find at least one buyer willing to pay your price. You have to be careful when doing this kind of transaction, especially if selling to a stranger. Do the transaction in a safe place and be sure you have a valid form of payment. You do not want to hand over your diamond and end up with a phony cashiers check or bad personal check.
Some jewelry stores and online retailers will sell your diamond on consignment. Online retailers with a local presence have an advantage in that they have large numbers of diamond shoppers on their website plus walk in traffic that can see your diamond in person. They also have lower overhead and prices so you can get a bigger share of the selling price. With jewelry stores often marking up prices over 100%, your share is likely to be less than half of the selling price.
Just be sure to get a written description of the item you are giving on consignment and the minimum amount you will accept for your diamond. All too often sellers are not being able to get their jewelry items back from a store or only receive a fraction of the amount they expected from the sale. However, if you have patience and a low priced, trustworthy retailer to broker your diamond, you have an excellent chance of getting an excellent price for your diamond without the hassle and safety issues of selling it yourself.