02/29/2008

NEWS: Dollar plunges to record low against Euro ($1.52/E) after U.S.
Fed predicts future interest rate cuts. Gold hits new record at $973/oz.

Rapaport TradeWire - Friday, February 28, 2008

02/29/2008

Zales to close 105 stores and eliminate 225 jobs by mid-year in $65 mil. savings program.

Rapaport TradeWire - Friday, February 28, 2008

Gold Furtures Brake Record!

02/01/2008

Gold futures for April delivery broke through a previous record (set Monday) and touched $942.20oz in electronic trading after the Federal Reserve lowered funds rate 50 basis points to 3 percent. The Fed's move was the second rate cut in nine days. Spot gold hit a new high in New York at $937.80oz. after the rate decision. Fed also cut its discount rate, the interest it charges on direct loans it makes to banks, by a half-point to 3.5 percent. As expected, the rate cut softened the dollar.

Gold Hits $859 oz !

by Jeff Miller
01/02/2008

RAPAPORT... After gold hinted at setting a new record in November 2007, the precious metal did so today. As of 12 p.m. in New York, gold was at $859.20 an ounce, which was up $25.50 (or 3.1 percent) for the day.

The previous record was $850 an ounce in January 21, 1980.

The steady climb is being attributed to a weak dollar and political issues in Pakistan.

``With a growing number of politically inspired conflicts, it's easy to understand why investment into gold continues at such a rapid pace,'' wrote Jeremy Charles of HSBC Bank USA.

JPMorgan Chase predicted gold could top-out at $950 an ounce before June, but average at about $800 for the year 2008.

RAPAPORT
Information that means Business

Market Comments June 8th,2007

NEWS: Las Vegas show mixed. Loose diamond sales were slower than expected but jewelry did well. Large better quality diamonds sold out at strong prices in spite of some buyer price resistance. Lower quality small goods were steady but mid quality and prices ranges did not move well. June DTC sight estimated at $610 million with 'average' 5% price hike. Aber Diamond changes name to Harry Winston and reports
Q1-2007 sales +18% to $141 mil, profits -88% to $3 mil after $14 mil foreign currency loss. Diavik mine production +45% to 1 million carats.

Fancies: Pear Shapes did OK at the Vegas show but not as strong as many would like. Relatively good demand for larger Hearts and Ovals.
Cushions OK but Princess and Emerald sales were relatively weak.
Overall demand for high and low end goods was healthy but mid range diamonds were weak. Collection colors were strong and the bigger the better.

RAPAPORT
Information that means Business

Forking Over More For Bling

Diamond supplies are tight and demand is surging. Guess what's happening to prices.

By Parija B. Kavilanz, CNNMoney.com senior writer
March 14 2007: 12:59 PM EDT

NEW YORK (CNNMoney.com) -- Next time you get the urge to splurge on a diamond, be prepared to pay a little bit more.

Some industry experts say last year's film "Blood Diamond," starring Leonardo DiCaprio, which highlighted the horrors related to the illegal trade of "conflict" diamond in Africa, could potentially add to the industry's supply chain costs.
Video More video
The stars of 'Blood Diamond' talk about making the film and its emotional impact on the cast. (February 28)
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Moreover, the global diamond industry is faced with a demand-supply imbalance which is pushing up prices for the precious stone.
Diamond bling shines in China, India

Christopher Jones, analyst with Oppenheimer & Co., said diamond jewelry has become a status symbol among India's rising middle and upper-middle class population and among China's rapidly-growing club of new millionaires.

Both countries traditionally have been big consumers of gold jewelry.

"There are more wealthy people in the world today than 10 years ago. Traditionally we haven't seen high demand for diamonds in countries like China, India or Russia," said Jones.

However, while demand for high-quality diamonds remains robust in America, and more recently in Asia and elsewhere, experts caution that there's also an ongoing shortage of high-quality diamonds that are mined mostly in African nations such as Botswana, South Africa, Angola, the Democratic Republic of Congo and Sierra Leone.

But as with any naturally occurring mineral, Jones said it's not easy to rapidly increase production to meet a periodic burst in demand.

In the last decade, he said there's only been one major new diamond mine discovery, in Canada.

"It's not as if you can quickly build the infrastructure to accelerate diamond production when prices and demand spike," Jones said. "And even if you can, only a small fraction of diamonds that are mined are worthy of being sold as premium gems."

Melissa Otto, analyst with WR Hambrecht, thinks "Blood Diamond" has generated debate within the industry about ways to improve conditions for African diamond miners.

"The African diamond industry isn't developed. It's also very opaque and nebulous," said Otto. "The governments don't provide any incentives to improve the systems. And the only people that are profiting are the middlemen. Given these conditions, and diamond still rising, prices for diamonds will go up."

Otto said (NGOs), government and industrial organizations, now want to take a closer look at the overall supply chain of diamonds in Africa, which accounts for half of the volume of global diamond production, followed by Russia and Canada.

"This is not just an issue for Africa. If the monitoring process for conflict diamonds was working, we wouldn't see smuggling of conflict diamonds in trading centers around the world, including the United States," said Corinna Gilfillan with Global Witness, a Washington-based non-profit group that was co-nominated for the Nobel Peace Prize for its work on raising awareness about conflict diamonds.

Before the movie was released, U.S. jewelry merchants feared it would unfairly cast all diamonds, even those that are certified as non-conflict diamonds, in a bad light and hurt their sales.

DeBeers, the world's major diamond consortium, maintains that strict regulations currently in place have reduced the trade in conflict diamonds to less than 1 percent of all diamonds traded.

Additionally, New York-based Jewelers of America, the national association that represents more than 11,000 merchants including Tiffany and Zale Corp., requires its members to pledge annually not to trade in conflict diamonds.

One industry expert with Rapaport Group, a provider of industry pricing information, told CNNMoney.com said that while prices for high quality diamonds had shifted higher, most jewelry retailers said they hadn't yet seen a negative impact on sales because of the movie.

Still, Otto suspects the movie could pressure leading jewelry retailers like Tiffany (Charts), Zale (Charts), Kay Jewelers and their suppliers to do more - and spend more - in efforts to appease public concern.

"From a marketing perspective, retailers may have to invest more money in communicating to consumers and educating them about these measures that protect them from conflict diamonds," she said.

Global Witness' Gilfillan agreed. "A lot more people in the United States know about conflict diamonds because of the movie," Gilfillan said. "Our own survey of jewelry retailers that we conducted after the movie was released showed that consumers were asking more jeweler retailers more questions about their diamond policy. I think this is a unique opportunity for the industry to clean up its act, do more due diligence, act more responsibly and use its power to combat the blood diamond trade."

Eventually, Otto said the combination of greater demand for quality diamonds and pressures from NGOs to improve conditions and the infrastructure for diamond miners in Africa, will push up costs in the diamond industry.

"Ultimately, we think longer term, these additional costs will have to be passed along to retailers and consumers," Otto said, who has a "sell" rating on Zale and a "hold" on Tiffany.

"It will pressure Tiffany's margins as it aims to sell more fine diamond jewelry rather than its (more profitable) silver jewelry," she said.

About Diamond Reports

Don't Get Burned

This year as you set out on you search to find a diamond that you will be proud to offer to your future bride and one that fits into your budget, I would like to bring up some common practices that I have seen repeated over and over again in the local area. I am sure that they are common throughout the jewelry industry world wide, but you need not fall victim to these ploys. It is my hope that this information will help you avoid these situations altogether.

When you go into a jewelry store diamonds are offered in many, many different qualities. As common sense would dictate lower quality diamonds are offered for less money and as the quality improves the price increases. The problem is how you as a layperson can determine if the quality assigned to a particular diamond is accurate or not. Many diamonds sold in today market or referred to as house graded stones, this means that the diamonds were purchased ungraded and someone in the store or company has assigned a grade to the stone. This is not a problem if the person grading the diamond is knowledgeable and moral in the grading process. I would like to make it clear that we sale many house graded diamonds, and adhere to the highest standards in our grading. However this is not always the case, I see on a daily basis customers that have purchased diamonds from so-called reputable stores that come no where close to the quality that was were represented to the customer at the point of sale. How and why this happens can vary, perhaps the grader was in a hurry and simply made a mistake, perhaps the grader is unskilled at grading diamonds accurately, or in the worst case the grader intentionality over graded the diamond. The loose diamond business is very competitive and the margins are very low, contrary to common belief. If a diamond is sold graded as an H/SI1, but in actuality is truly an L/SI2 the dealer selling the over graded stone has in effect doubled his profit margin. This is great for the dealer but leaves you the customer in a sad state. Many times the only way to recover your losses will be expensive civil litigation, and the attorney’s fees will in many cases be greater than the lose you incurred, not a practical solution. So in my opinion the best way to avoid this situation is as follows.

1.) You can purchase a diamond that has a third party Diamond Grading Report. This means the stone has been sent to a gem laboratory (prior to your purchase) and has been assigned a Color And Clarity grade. These reports will also contain valuable information about the proportions of the diamonds, which in many cases will affect the value of the diamond more than one or two color or clarity grades.

2.) The laboratories that issue diamond grading reports are numerous and unfortunately not equal or consistent in the stringency of their grading. For this reason I suggest that you choose a diamond that has a G.I.A. (Gemological Institute of America) grading report. G.I.A. is the creator of the diamond grading system accepted in this country and throughout much of the world.

3.) If you choose another Gem grading laboratory then you should only compare stones, which have been graded by the same lab. Due to uneven standards of grading you receive a false comparison if you compare a G.I.A. stone to say an E.G.L or A.G.S graded diamond. You want to compare apples to apples.

4.) Get it in writing! Don’t sit for hours and compare diamonds at every store in town then buy the diamond without an invoice that clearly states the Color, Clarity and Weight of the stone. If it’s not in writing it never happened. This is of particular importance with house-graded diamonds. If it isn’t in black and white, it’s your word against the sellers and you’re in a loosing position.

5.) Don’t think that because someone tells you that they are a Gemologist or a Graduate Gemologist that they are more likely to have accurately house graded stones. And never fall for the line “I am G.I.A. Graduate Gemologist, I can certify it for you” this implies that this person can issued a G.I.A. Diamond Grading report, they can’t. The stone must be sent to G.I.A.’s Gem Trade Laboratory, no exceptions! (Note anyone can certify a diamond, it just means that in his or her opinion this is the stones grade. It does not assure you of any degree of accuracy. It is just feel good paper work.).

Good luck on you quest, and we hope that this may in some way help you avoid problems. We believe shopping for something as important as a diamond for your loved one should be a pleasure from beginning to end. We hope to hear from you during your search, all we ask is a chance to earn your trust and business.

We'll send it to our Jeweler

Where is My Jewelry Sleeping Tonight?

This morning I walked down my driveway to pick up my new phone book, someone had left it laying next to the mailbox. I knew it was a phonebook because of the white plastic bag they always come in, that and it’s the only thing that gets delivered on the ground in the rain. Anyway this is always a big time for me, I get to see all my competitors’ new ads and see what new services and products they will be offering this year. I see mostly the same names and the same sales pitches; I see a few new names, some I know, and some I have never heard of. After twenty-five years working as a jeweler in College Station I have a pretty good handle on who does what in the jewelry industry in town. I know who can do what they claim and who can’t, I know what they charge and the quality of their products. So where am I going with this? What I see in the phonebook today is that almost every single jewelry store in town is listed under the Jewelry Repair section. I find that a bit odd, because everyday I have someone come to our shop that has been to one or two of these stores only to be turned away. Why are they turned away, “sorry we only work on items bought here”, “sorry this ring in channel set”, “sorry we can’t size platinum”, “sorry we would be happy to help you, if you were going to be spending five-thousand dollars with us today, but we don’t have time for your twenty dollar repair”, it goes on and on. Then I see the stores advertising jewelry repair that don’t even have a jeweler in their store, hell they don’t even have a jeweler in town. I think to myself, if I were a customer is this where I would want to take my most precious possessions? To someone that does not and can not do the work him or herself. That may or may not know anything about jewelry and then they send it to someone else, somewhere else hoping they can repair it.

I would like to personally ask you to give Besco Jewelers the chance to earn your trust. We work in gold and platinum, we do simple repairs, to complete restoration work, custom design, and we do it ourselves and we want your repair work!. So you know that if we’re working on your jewelry it is tucked away safe and sound here in our office, not out roaming the countryside in the backseat of a delivery boy's car.

The Survivor

A customer sent this one to me from Sweden.

The only survivor of a shipwreck was washed up on a small,
uninhabited island. He prayed feverishly for God to rescue him, and
every day he scanned the horizon for help, but none seemed forthcoming.

Exhausted, he eventually managed to build a little hut out of
driftwood to protect himself from the elements, and to store his few
possessions.

One day, after scavenging for food, he arrived home to find his
little hut in flames, with smoke rolling up to the sky. The worst
had happened, and everything was lost. He was stunned with
disbelief, grief, and anger.

"God, how could you do this to me?" he cried.

Early the next day he was awakened by the sound of a ship that was
approaching the island. It had come to rescue him. "How did you know
I was here?" Asked the weary man of his rescuers. "We saw your smoke signal," they replied.

It's easy to get discouraged when things are going bad, but we
shouldn't lose heart, because God is at work in our lives, even in
the midst of pain, and suffering. Remember that, the next time your
little hut seems to be burning to the ground. It just may be a smoke
signal that summons the grace of God.

.You Never Know Who Feels Like Their Hut Is On Fire Today...

"Faith untested is just a hunch."

Designer Lines

As always we would like to thank our customers for a wonderful start to the year. We are working hard to find you the best prices for strictly graded, ideally cut diamonds of all shapes and sizes. This year we are creating more custom designed, one of a kind engagement rings and wedding bands than any year in the past. To make things even better we are able to create these items for far less money that the quote, quote “Designer Lines.”

Designer Lines are those supposedly super high end, limited edition jewelry designs that you often see in the bridle and fashion magazines. They all seem to have fancy Italian names that conjure images of an old master putting his final touches on the item, love and romance drip from the air. You know it must be really great with and name and price tag like that, it’s not just a ring, it’s a piece of art. Bingo, that’s the marketing idea, you have to consider these items art to pay those kind of prices. Don’t get me wrong there are some very nice, very stylish rings out on the market . Some of them are worth every penny for the uniqueness and quality of there manufacture, but not many. I ask myself the following questions when I look at these type of mountings.

• What is the cost of the components that comprise this ring?
• How different is it from other rings that are basically composed of the same amounts and qualities of metal and gem stones?
• Is the design worth the difference in price?
• Will the design of the ring stand up to the test of time, or is it going straight down hill from the second it is removed from the case?
• How much can I have a similar ring made for?

A couple of other things to consider about “Designer Lines” while shopping from your perfect engagement ring. The jewelry industry, like many others is suffering because of transparent pricing caused by the internet. Nobody has to pay retail prices for anything anymore unless you choose to! The days of retail jewelry stores making 3 to 5 times markups so they can pay for elaborate, plush stores and maintain large inventory are quickly vanishing. In an attempt to stop the price slide marketers have started using “Branding” (those fancy Italian names) to make customer feel like these are special, one of a kind items. Another thing that they do is come into an area an make deals with retailers that go something like this. The retail store wants to sale the Designer Lines merchandise. In order to do this the manufacture requires the store to make a large initial purchase of there products, and must buy ex number of dollars more in the course of the year. For making this commitment the manufacture agrees not to sale there products to anyone else in the area. They will also stipulate that the store may not discount the “suggested retail price” of there merchandise or the retailer will be in breach of contract. How does this affect you? You’re fiancé walks into a local retail jewelry store and sees the ring of her dreams. You have very little choice about it, her happiness in this matter is all important. You decide to shop around and see if you can get a better price, no one else carries that mounting. You get on the internet and contact the manufacture, they refer you to the retail store you started at. Doesn't seem to be such a free marketplace now.. Your next step, call Besco Jewelers……..

The Wedding Ring Spiel

Every person that comes into my store to purchase wedding jewelry gets it. Anyone that I run into on the streets that asks about wedding jewelry gets it. So now it‘s your turn. This is my personal opinion about the rings that are going to adorn the ring finger of the left hand of any married person. Having been a bench jeweler since 1981, I’ve probably worked on 10,000 wedding rings. So, I speak from experience when I give “The Spiel“. Plus, in person, I say it with such authority and conviction that it’s gotta be true.

THE ENGAGEMENT RING:

Every young couple about to take the plunge starts the shopping process. The woman starts looking at all of the magazines with the newest designs. The man starts looking at that “Two Months Salary” thing. The woman will start showing her “soon to be” all of the styles that she likes, which by the way, are all more than two months salary. The man, total confusion. There are hundreds of urban legends about the guy that buys the big Diamond and it turns out to be fake. How do you buy a Diamond? How do you know if you’re getting what you paid for? Can your friend’s cousin really be trusted? What about the internet? What about the mall? Well, if he’s lucky he stumbles into my store and I put him at ease with all of the above.

The very first thing I tell all men about to make this purchase is “DON’T GET FANCY!” Women are bombarded by all of the fashion magazines about what’s hot this spring. Well guess what? Jewelry designs run hot and cold as well. If you allow yourself to get caught up in the fashion sense of it all, you’re going to be really disappointed by your second anniversary. Who wants to be seen wearing out of date fashions? Secondly, forget about the mounting. Yeah, I know she’s shown you lots of pictures she’s cut out of magazines. It’s platinum, with baguettes, two trillions, and twelve round Diamonds. It’s also $4,200. If your budget is $5,000 and you spend $4,200 on the mounting, that $800 Diamond in the center is not going to impress anyone. What most women want is a really kick-butt Diamond that kicks all of her girlfriend’s Diamond’s butt. You can buy a really nice 1 carat, set in a simple tiffany style engagement mounting for around $5,000. All of her girlfriends will say it’s the most beautiful Diamond they’ve ever seen. All of your guy friends will look at it and say “That was 5 grand?” I try to convince every man to spend all of his budget on the Diamond. That platinum mounting she likes so much will make a great 5th anniversary gift. Since I’ve only had someone with an unlimited budget NEVER, the cost of the engagement ring is always an issue. I’d much rather see him buy a nice Diamond over a nice ring. And it will never go out of style!

THE WEDDING BANDS:

Once again, “DON’T GET FANCY”. Jewelry designers, since the beginning of time, have designed jewelry that displays well. If it looks good in the case, it’ll sell. But not everything that looks good wears well. Not everything that looks good can be sized. There are three certainties in life; Death, taxes, and the fact that your finger size will change over the course of 50 years. A wedding ring is not a fashion statement, it’s a life statement. Any jeweler can look at a man or woman 50 feet away and tell if they are married, or not, by their jewelry. Wedding rings are the universal sign of “Off the market”. Married or not married sets an immediate precedent about how two people interact with one another. If you’re single, and the new girl working in the mall isn’t wearing a wedding ring you will try to get a date. If she’s sporting a 1 carat, tiffany style engagement ring with a half round 5mm band that’s screaming “MARRIED”, you wouldn‘t (or shouldn‘t) even think of asking her out. Another criteria I have about wedding rings is their ability to look brand new at any time. A simple half round, comfort fit band is designed to last 50 years. You can’t scratch it so badly I can’t polish it. You can’t bend it so badly I can’t straighten it. You can’t get so fat that I can’t size it to fit your finger. And it makes the statement it was designed to make. You don‘t even have to utter a word. Just position your rings in someone’s line of sight and “I’m married, so leave me alone!” rings loud and clear.

by Chuck Koehler

Reproduced with permission of Chuck Koehler

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