How to Beat the Middle Man: A Guide to Buying Diamonds

Diamond Mines

Tremendous forces and pressures deep within the earth’s crust are required to create a diamond.

Volcanic activity brings the rough gemstones close enough to the surface that they can be mind through relatively conventional means.

Other Jewelry Stores

Broker/Agents

These entities are responsible for distributing the rough diamond stones.

Historically, De Beers pioneered an ingenious method of protecting the price and supply of their rough diamonds by selling them in sealed parcels of fixed quantity and mixed assortments known as “sights.” The privilege to buy a sight was bestowed on only a carefully chosen handful of “sightholders” who were required to buy the entire parcel without fail; otherwise they would lose the advantage of buying diamonds directly from the source. While the exact process has become markedly less rigid recently, the sightholder system continues to be the main method in which rough stones are distributed to the diamond cutting centers. The Jewelry Exchange is a sightholder.

The Jewelry Exchange

There was a time when De Beers was responsible for mining nearly all the rough diamonds in the world.

Nowadays, they mine just over one-third, while a few other large, multi-national companies such as industrial-mining giants BHP Billiton and Rio Tinto produce the remainder.

Diamond Manufacturers

Diamond manufacturers, also known as diamond cutters, are responsible for cutting, shaping, and polishing the freshly-mined rough diamond stones that were purchased in the sight, creating beautiful, faceted gem-quality jewels. The process is very difficult and requires careful planning, exceptional skills, and specialized tools. This can be extremely time-consuming, with the planning stage taking up the majority of the time due to its vital importance. The planning involves careful consideration of the physical characteristics of the rough stone to determine the best way to maximize the value of the finished gem. Analysis, both practical and scientific in nature, provides the best insight into choosing the ideal shape and exact cutting process in order to minimize the appearance of natural flaws and inclusions, while maximizing prized characteristics such as luster and light dispersion, while retaining as much weight as possible in the finished diamond gem. The Jewelry Exchange has a diamond cutting factory located overseas.

Diamond Traders

After the rough diamond gets cute and polished, the cutting factory is done with their pivotal role. After having just taken a rough mineral deposit and transforming it into a sparkling diamond gemstone, the last thing they want to do is be responsible for distribution as well. So they sell the freshly-faceted diamonds in large bulk quantities to diamond wholesalers. The world’s largest diamond wholesalers can be found all over the world in cities of major diamond activity such as Antwerp, in Belgium, Tel Aviv, Israel, or New York City, where officially-registered diamond exchanges known as bourses are located. Diamond Wholesalers will sort them and divide them into smaller lots that are more conducive to selling to their customer, the jewelry manufacturer.

Jewelry Manufacturers

Manufacturers of jewelry acquire sizable lots of finished diamond gemstones at the Diamond Wholesaler level and use them to produce all manners of diamond jewelry: rings, pendants/necklaces, earrings, bracelets, and more. The Jewelry Exchange manufactures nearly every piece of its own diamond jewelry, and as a sightholder with a cutting factor, we procure our diamonds without incurring the markup in price that occurs at the levels of the distribution chain in between.

Jewelry Wholesalers

Some Jewelry manufacturers end their involvement in the distribution chain right then and there, opting to sell their bulk goods to an intermediary jewelry wholesaler. The jewelry retailer that doesn’t manufacture jewelry themselves or purchase directly form manufacturers will purchase from a jewelry wholesaler.

Retail Stores

The final stop in the distribution chain before it reaches you, the customer. Online or in a brick and mortar jewelry store, the retailer has to markup the price once again in order to make a profit. The Jewelry Exchange has 12 locations across the United States and a website, jewelryexchange.com that you can use to satisfy all your diamond jewelry cravings; but because our distribution chain is much, much shorter, the prices of our diamond jewelry ends up being about half as much as what you would find at most other jewelry retailers.

End User

Most of the well known jewelry retailers that you can think of, the recognizable brands that you find at malls and such, only want to be in the business of selling jewelry and operating jewelry stores. The online-only jewelry retailers don’t even want to do that much, opting only to sell jewelry that they may or may not even have in their inventory at the time of your purchase. Because of this, the jewelry items that the online & offline jewelry stores sell have seen every link in this distribution chain, and are priced accordingly, having been marked up at every subsequent level.