One of the most important marketing goals for natural polished diamonds is creating the image of a ‘new’, ‘previously unused’ polished diamond offered to a consumer as part of a jewellery piece at a boutique or on the jewellery company’s website. In practice, every seller ALWAYS kindly explains the 4Cs (Colour, Clarity, Cut, and Carat weight,) to a consumer and shows the certificates of a reputable gemological laboratory, and as a bonus, provides a ‘very important’ and ‘very useful’ information that a natural rough diamond from which this polished diamond is cut and polished was formed deep in the Earth 2 to 4 billion years ago. But a buyer NEVER gets a real information about whether this polished diamond was on the market before and who was its owner.
As a result, most of today’s buyers of natural diamond studded jewellery are convinced that they are in the market for goods that are almost similar to seasonal agricultural products: everything is new, has never had pre-owners, polished diamonds were made from rough diamonds mined this year or at least a year ago. This is a myth that plays a critical role in creating the information shell of a natural polished diamond, and when it is destroyed, the diamond jewellery trade becomes very problematic.
The matter is not even that some of the consumers believe in widespread stories about the mystical, healing, astrological, and other properties of precious gemstones that are supposedly capable of “accumulating and transmitting positive or negative energy” from one owner to another and thereby influence the new owner’s fate. This kind of marketing ‘garbage’ consisting of fragments of ancient treatises and their modern arbitrary interpretations, is abundant on many online trading platforms and on the bookstores’ shelves and, no doubt, it reaps some harvest. But the majority of today’s buyers ignore this ‘trash’ and tend to be guided by the rules of normal ethics. They buy a diamond jewellery piece to celebrate some meaningful and rare event in their life, it makes their positive emotions brighter during this event, doesn’t it? And if so, a second-hand polished diamond, and even with some dubious back-story, is not a right purchase for them. This is well understood by sellers of natural polished diamonds, so all the polished diamonds on their counters are allegedly always new, previously unused. But is it really so?
What is the secondary market volume for natural polished diamonds? How many polished diamonds (in carats and dollars) change hands every year? These questions are important for all market players. And there are no clear answers, there are expert estimates varying widely, from 5% to 50% of the annual polished diamond market. But no methods behind these estimates have been published and no calculations have been provided. Six years ago, Blue Nile’s experts reported that, according to their data, the population owned more than $1 trillion worth of diamond jewellery, which exceeded the annual market by more than 10 times, and the secondary market was estimated as “billions of dollars annually”1. The information source is unassailably authoritative, we hope. In the end, the absolute figures for solving our problem are not so important, it is important to understand that the potential secondary diamond market is huge, significantly larger than the primary one.
And now let’s ask a seemingly simple question: where are the rough and polished diamonds confiscated by the Nazis from the Holocaust victims? According to the Nuremberg Trials’ documents, the Nazis killed more than 6 million Jewish people in Europe, their property was confiscated in favour of the Third Reich and largely plundered by the members of the Nazi punitive structures. Many people professionally associated with the diamond market were among the victims of this genocide such as jewellers, owners of jewellery companies and stores, rough and polished diamond dealers (especially in the Jewish communities in occupied Amsterdam and Antwerp). The overwhelming majority of the victimized Jewish people belonged to the middle class, i.e., they were typical consumers (owners) of diamond jewellery pieces. Judging by fragmentary data, a significant amount of rough and polished diamonds ended up in the Nazis’ hands, but it is impossible to tell exact figures2. After the defeat of Germany, there were several cases when valuable jewellery pieces were returned to the heirs of the victims of the genocide, but those jewels were unique rarities that ended up in the collections of the top-level Nazis. The bulk of the looted rough and polished diamonds returned to the market in various ways.
Two decades before WW2, a huge number of polished diamonds confiscated by the Bolsheviks from the Russian first families, nobles, the church and the wealthy people were put on the world market at dumping prices. The details of this operation have now been studied in detail, and the total volume of such supplies (in fact, trade in stolen goods) is estimated at approximately 11 mn carats3.
Their return to the market means that these polished diamonds marked with the blood and tears of the victims of social cataclysms were (sometimes) recut, reset and found their new owners. And later on, they repeated this cycle 2-3 more times because people have no eternal life, unfortunately, and not all diamond owners have the heirs who are ready to cherish their family heirlooms. The silverware market is an example. According to The Silver Institute, the silverware production amounted to 42.7 mn ounces in 2021. In the same year, 24.3 mn ounces of silverware were recycled4. And that’s what was refined, without taking into account the silverware on the counters of antique and second-hand stores as well as in online marketplaces selling pre-owned silverware (C2C business). It is safe to say that more than half of the supplies on the silverware market is formed by the secondary market. But if the population is parting with the family silverware on such a scale, why should we think that the situation with diamond jewellery pieces is different? Where are the American ladies today who received their “eternity rings” with 25 polished diamonds for their ‘silver’ (25th) wedding anniversary in 1965? Is it possible that the heirs set a higher value on the polished diamonds of their late grandmothers than on their silverware? It is unlikely, just the statistics of refineries is available, but not a single jeweller, dealer or retailer would give the details to their clients of the provenance of the polished diamonds for a NEW piece of jewellery.
Among the literature on the Holocaust, one can find evidence of the fate of jewelry belonging to Jewish families destroyed by the Nazis. This is not fiction, these are memoirs. Would you like to have a polished diamond in your engagement ring with such legacy of pain and suffering? Is the chance small? No, it is not small, it is not defined, but clearly above zero, 6 million victims of the Holocaust can make the population of a European country, that is not the smallest one. But, maybe, your polished diamond is older and was cut from a rough diamond mined in the land plot of a Boer whose family died of starvation in an English concentration camp in 1902. Or, maybe, your polished diamond belonged to a Russian Orthodox priest who was shot in 1918. Or it was mined by a black prisoner slave, as De Beers had been using their labour at the mines in South Africa since 1885. Or it was mined from the Ural placers by the prisoners of the Stalin’s Gulag. Or, maybe, it was from a kimberlite pipe, next to which a nuclear explosion had thundered. Or it was bought in Angola from Savimbi’s thugs who slaughtered entire villages for a few of these gemstones. One can keep on guessing and everyone can ask about thirty to forty questions. It seems that the probability of a “negative” provenance of a natural diamond in your jewellery has slightly increased? And you begin to guess now why natural polished diamonds on the shelves of boutiques are always ‘new’ ones and there is not a single serious study showing the movement of polished diamonds in the secondary market?
Well, if you made a well-informed guess about the polished diamond provenance, clear cut objectives for the “Karma” line of the proposed countermarketing model should be formulated. It is necessary that consumers should get an idea - opinion - of the natural polished diamond market as a place where they can unwillingly become the owners of a jewellery piece having a negative and tragic provenance. It is better to bring this idea to the level of a ‘fixed attitude’ (unconscious readiness of the person to act the right way). Although the probability of such a situation is not clear, it is always greater than zero. Moreover, this probability tends to grow rapidly (announcing the Russian rough diamonds - i.e., 30% of the world market as “conflict diamonds” - is a clear proof of this). Thus, the lack of evidence of the natural polished diamonds circulation on the secondary market, the insufficient secondary market structure and its non-transparency should be interpreted (until proven otherwise) as a conscious polished diamond trade strategy aimed at seeking the profit from the repeated resale of “conflict” and “unethical” natural polished diamonds. From the Boer Wars to the today’s conflicts in Europe and Africa, we have terabytes of documented historical content at our disposal to create relevant narratives that are easily adaptable to current and future consumer audiences.
As with solving the problems in the “Cost” line (see Part 1) of the countermarketing model under consideration, the narratives should give rise to the consumer interest in the polished diamond market, since history based on blood and violence traditionally attracts attention. The image of natural polished diamonds turns out to be strongly associated not only with a great financial scam, but it is also bloodstained. At the same time, the image of lab-grown diamonds is created as free from such flaws, both due to a different pricing mechanism and due to the absence of a negative historical background. Consumers just need to make the right choice.
In one of the next publications of this cycle, we will consider possible counter-arguments like “’a study in crimson hues’ about the market for any goods that can be written (no less impressive than that about the market for natural polished diamonds)” or that “the Kimberley Process and other organisations guarantee the ethical purity of natural polished diamonds”.
To be continued.
Sergey Goryainov, Rough&Polished
1https://www.diamonds.net/News/NewsItem.aspx?ArticleID=58484&ArticleTitle=Blue+Nile+Launches+Used-Diamond+Business
2
"Report on the Administrative Development of Operation Reinhardt: Document NO-059: January 1944. Attachment NO-062: Detailed List of Money, Precious Metals, Jewels, Other Valuables, and Textiles". Nuremberg Trials. The Green Series. Vol. 5. Washington: United States Government Printing Office. pp. 728–731.
3 Osokina E. A. Alchemy of Soviet industrialization: the time of Torgsin. / Осокина Е.А. Алхимия советской индустриализации: время Торгсина. М.: Новое литературное обозрение (New Literary Review), 2019. Page (Стр). 65.
4 https://www.silverinstitute.org/wp-content/uploads/2022/04/World-Silver-Survey-2022.pdf
5
The Fifth Diamond by Irene Zisblatt. Dorrance Publishing Company, Inc. 2020
