A “Diamond Exchange” is a real physical market place where supply and demand meet to get a price. Until a few years ago it was a room with cries, scraps of paper, public phones on the walls…now it is almost everything online.
The city of Antwerp in Belgium hosts the world’s largest diamond district, consisting of: 3 Diamond Exchange for polished diamonds, 1 Diamond Exchange for rough diamonds (the only one in the world) and also hosts the headquarters of the World Federation of 28 Diamond Exchanges all over the world.
Antwerp Diamond Exchange trades about 80% of rough diamond on the market and 50% of polished diamonds in the world, covering a role of great significance commercially and in political terms, perhaps because few people know that the export of diamonds is one of the most important voice of the EU trade balance.
If the world of the diamond is a mystery for many people, fews know about the existence and the operation of rough diamond market. Knowing how to interpret the dynamics of the market for rough diamonds means to forecast the trend of polished diamonds price. Also, unlike gold, diamond is one of the few commodities not yet affected by the “financialization” with the creation of financial instruments or etc funds … probably due to its extreme complexity and variety.
The classification in one of thousands of categories is a complex and long procedure that accompanies the diamond from the moment of mining to the sell to final customer.
Get away from your mind images of black men and children exploited by the local crime seeking diamond with their hands.
The whole process of extraction, production and sale of diamonds is subjected to the Kimberly Process Certification Scheme: an agreement among 80 countries under UN auspices that obliges governments and companies to ensure the traceability and legality of diamonds.
The figure of the explorer in search of fortune is now represented by geologists, lasers and computers, organized with high safety standards to examine the rock mined, classify it and send it on the market through specific and legitimate trade channels.
The rough market was regulated and controlled by De Beers which in recent years has reduced to 40% its market share. If the De Beers still uses the famous Sights (now in Gaborone – Botswana) where it meets the Sightholders, the other giants of the mining industry will directly supply the market, providing the rough material to the highest bidder at the ground floor of one of the buildings of the Diamond Exchange Antwerp, where there is the “Antwerpsche Diamantkring” dedicated to the rough diamond market that works without technology yet.
This rough diamond secondary market is very useful to understand if the prices of the “primary market” are right. The application of premium or discount in the secondary market on the price already paid by traders in the primary market, immediately gives an indication on the fairness of prices.
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