Posts Tagged ‘gems’

Diamonds are suddenly everybody’s best friend

Saturday, May 31st, 2014

Several years ago the term “urban mining” took off. It referred to the discovery of precious metals that were “buried” in people’s homes in the form of personal possessions like jewelry and home electronics that they weren’t using. A lot of cell phones, for instance, use gold and other valuable materials in their circuits, and when the price of these substances was high, brokers would pay premium prices for them, no matter where they came from or what form they were in.

Komehyo outlet in Ginza, Tokyo

Komehyo outlet in Ginza, Tokyo

At the time, gems were not coveted so much, but that’s changed. Right now, the price of diamonds on the world market is about 30 percent higher than it was a year ago, according to a recent article in Chunichi Shimbun, thanks to a healthier world economy. Consequently, well-to-do people in Asia, North America and the Middle East are craving diamonds, and foreign buyers, particularly from the U.S., China, India and Dubai, are flocking to Japan because they think there are a lot of the rocks here “sleeping” in people’s closets and vanity cases.

The reason is simple. During the bubble period of the late ’80s, when the value of various assets was higher than it probably should have been, people with even a little money bought a lot of jewelry that they don’t wear any more. Many of these people probably have forgotten they even have diamonds.

Komehyo, the Nagoya-based retailer that specializes in recycling high-end merchandise such as designer accessories and expensive jewelry, is spearheading the drive to get Japanese people to dig into their tansu (wardrobes). As one of the company’s store managers told Chunichi, another reason foreign buyers are descending on Japan is that the diamonds are already cut, and used cut diamonds tend to be cheaper than new ones, though there really isn’t any difference in quality. Komehyo is hoping to sell used diamonds in bulk and is offering premium prices to anyone who wants to unload theirs. The chain has launched a Diamond Purchase Fair at all its 20 outlets throughout Japan.

In order to get a handle on the market, Komehyo conducted a survey among men and women over the age of 20. They found that, on average, respondents have each spent about ¥780,000 on “jewelry, watches, bags and brand goods” during their life so far.

Several years ago Tanaka Kikinzoku Kogyo, a dealer in gold and other precious metals, carried out its own survey and found that 80 percent of female respondents have jewelry they don’t wear any more, either because they no longer like the design, or lost one earring or just forgot about it. The company calculates that the average woman in this group has ¥40,000 worth of jewelry they never wear. Tanaka was interested in gold, however,

Based on its own findings, Komehyo estimates the average person possesses about ¥160,000 yen’s worth of jewelry and other valuables that they don’t use any more, which means there could be as much as ¥15 trillion worth of diamonds in people’s homes.

How cheap is your love? Diamond appraiser hit

Monday, June 28th, 2010

The prices of love

The prices of love

In May, the Mainichi Shimbun reported that the Gemmological Association of All Japan Co. Ltd., Japan’s largest diamond appraisal outfit, had been accused of purposely overappraising gems. Within the jewelry industry, the news caused quite a stir, since prices are based on appraisals. GAAJ immediately blasted the report as being “not based on true facts,” and said the criticism stemmed from the company’s attempt to readjust its standards with regard to color variations. According to a press release, the GAAJ had been criticized earlier for tending to downgrade diamonds whose color “sat very close to the borders” between grades, and so endeavored to correct the problem, presumably by adjusting the appraisal criteria upward.

Nevertheless, the Association of Gemmological Laboratories Japan has said it will reappraise for free any diamonds that were appraised by GAAJ, in case the owners of those diamonds suspect they may not be worth as much as they thought. Though the monetary value of a diamond is based on “the four C’s” — carat, cut, color and clarity — its intrinsic value is less easy to determine since, for the most part, diamonds are given as tokens of the giver’s love. To a woman who receives a diamond engagement ring from a man, is the love she derives from the stone itself any less intense if she learns that the grade of the color is below what is indicated on the accompanying appraisal certificate? Apparently, the Japanese gem industry thinks so. As one insider told the Asahi Shimbun, “We must work more sincerely so as not to betray the love of the person who gives a diamond.”

Japan is the second biggest diamond market in the world, after the United States, and the bulk of sales are diamond engagement rings. Ninety percent of the engagement rings purchased in Japan have diamond settings. Though diamonds are forever, the diamond engagement ring business has only been around since the beginning of the 20th century, when De Beers, the largest diamond mining and trading company in the world, spun off Forevermark, the company’s retail branch, which not only came up with the “a diamond is forever” motto in 1947, but single-handedly connected diamonds with the idea of everlasting love and commitment. However, it wasn’t until the late ’60s that the idea came to Japan. In 1966, only 6 percent of Japanese men gave diamond engagement rings to their fiancées, and in 1967 De Beers started advertising in magazines, but the most effective promotional tool was advertisements in movie theaters, starting in 1973. The commercials always featured a young Western couple with the man giving the woman a diamond ring. At the time, movies, especially Hollywood movies, were the standard “date course” for young Japanese couples, and the idea caught on quickly. Central to the ad’s purposes was the advice that the appropriate cost of a ring should be about three times the giver’s monthly salary. This number was arbitrary. In the U.S., the advised cost was pegged at twice a person’s monthly salary, but in Japan odd numbers are considered auspicious, and five months’ salary was thought to be too much.

Diamond appraisers started to be trained in Japan in the early ’70s to provide certificates guaranteeing quality with every diamond sold. By the height of the late ’80s bubble era, diamond sales were close to ¥2 trillion annually, but now it’s only about ¥930 billion. In the meantime, the number of diamond appraisal companies has increased, and the competition among them has become desperate in a shrinking market. Whether or not this competition is behind the accusations of overestimating quality on the part of GAAJ, it isn’t clear. According to Mainichi, AGL checked 1,052 diamonds certified by GAAJ and found 139 of them to be over-valued, 27 in the category of color by as much as two grades. The overevaluations occurred between February 2007 and October 2008, and if you think you have a suspect gem (check your certificate), you can go to the AGL home page and find out.

What does it mean to the average consumer? A drop in grade usually translates as decrease in price of ¥20,000 to ¥40,000, but as one jewelry blogger mentioned, what you pay for a diamond engagement ring has more to do with where you buy it than with the appraisal. The thing is, diamonds appraised by GAAJ tend to sell for less than diamonds of the exact same grade appraised by other companies. Also, many people bargain with jewelry stores for engagement rings, so there’s no “set value” for a diamond of a particular grade. In any case, if you think the false appraisal of your diamond engagement ring devalues your relationship with your significant other, you probably need your relationship reappraised as well.

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