Here, I will give you a brief overview of diamond market and how its structure is different from gold market.
Through the economics of the diamond industry and the deep understanding of humans, a market was developed for diamonds making them not only a luxury, but a necessity.
In order to read about international diamond cartel and how it operates, check De Beers Diamond Cartel.
Background of Diamond Market
The market of diamond is traditionally regarded as composed of 3 main market segments, Industrial diamond, Investment diamond and Gemstone market. These three markets operate much differently from one another.
In case of industrial diamond, stones are mainly valued because of their hardness and heat conductivity. Roughly 80 percent of mined diamonds are not suitable as gemstones and can only be used for industrial purposes. In addition to mined diamonds, synthetic diamonds are also widely used industrially.
The investment diamonds segment is
composed of rare and high-value diamonds. These diamonds are of high
investment value. For instance, in 2008, a 35.56 carat blue diamond
named the Wittelsbach Diamond was sold at a price of US$24 million at a
Christie’s auction. You must also read prerequisites of investing in diamonds and things to consider while reselling diamond.
In the gemstone market, diamonds are mostly valued due to their gemological characteristics (4 Cs).
A handful of businesses (De Beers Diamond Cartel) control the supply chain of diamond. Most production organizations conform to an explicit set of rules and manage their production in line with demands and stockpile the excess diamonds.
Basic Difference between Gold & Diamond Market
Despite the similarities between gold and diamond (are rare, have unique physical properties and both associated with beauty and wealth), their respective market structure is very different.
These differences are:
So, it can be said that Diamond market is characterized by producer prices instead of exchange traded prices.Return from Diamond Market to Diamond Jewelry Homepage