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Archive for October 3rd, 2011

Cheaper Diamonds Outside the US

Monday, October 3rd, 2011

Cheaper Diamonds Outside the US
Some people think that it is cheaper to buy diamonds from outside the US. Others consider it is more expensive to do so. In fact there is little difference in the diamond price where ever you buy diamonds in the western world. This is primarily because diamonds do not have the bulk discount that other commodities or products may have.

At the wholesale level the price of diamonds is more or less fixed. In addition throughout the world diamonds are bought and sold in US dollars in the diamond trade so there is no disparity with exchange rates. The factors that may influence diamond prices between diamond dealers or diamond jewelers are such things as stock turn over rate and the range of diamonds any given jeweler may have either in stock or available on notice.

Wholesale Diamonds
All diamonds dug out the ground eventually make their way to the diamond wholesalers. They will sell to each other diamonds in what are called ‘parcels’ , small packets of diamonds for shipment around the world to jewelers and jewelry manufacturers. The very poor quality diamonds, unsuitable for Jewelry are sold to industry for use in manufacturing of tools, diamond cutters etc.

All diamond jewelers buy their diamonds from wholesalers who buy them from the mining industry. There is little variation in the wholesale price of diamonds. A bit is added along the way with the retail jewelers taken perhaps the biggest margin. So if diamonds are being traded in Belgium, Israel or the UAR, the basic principle, pricing and method of buying and selling diamonds remains the same.

Diamond Stock Turnover
If a diamond dealer has a slow turnover then the cost of that diamond for him will increase. If he buys, for example, a diamond wholesale for 5000 US dollars and does not sell it for a year, then he will add his costs and overheads for the year and his profit margin, say 20 percent, he will then add 1000 dollars to cover his profit margin and overheads. Usually he already knows the profit margin he is expecting and it is the overheads that will determine the final sale price. Knowing his overheads for a year, the faster the dealer can sell his diamond the less he will have to charge for it to include his overheads. If he can sell it in a month then he would likely not have to add 20 percent but would only need to add say 5 percent. Most dealers know the average amount of time it takes to sell their diamonds so they have a fixed percentage they will tack onto the wholesale price of their diamonds to cover their profit margin and overheads.

Some dealers do not actually carry stock and have an arrangement to order on a one for one basis from another dealer or wholesaler when they get an order. They can be a lot cheaper as do not have to invest money into stock but simply buy as orders come in. In some respects these are not diamond dealers so much as diamond resellers.

Benefits to Buying Diamonds in your own Country
If you live in the US, Australia, UK or anywhere else in the western world, there are benefits to buying diamonds from dealers in your own country. Firstly there is no exchange rate to be concerned with. As diamonds are bought and sold in US dollars there is going to be little difference in the price jewelers pay for the diamonds.

Buying online will tend to be cheaper as there are fewer overheads to pay for. This means that the jeweler can charge less for their diamonds. Additionally, there are a heap of diamond jewelers online so there is some fierce competition. As the difference in price is minimal jewelers offer other incentives, guarantees, cheaper shipping (which should be cheaper anyway when buying in your own country.

One fact that can make a difference is sales taxes. In the UK there is VAT. In Australia GST. It can be a good idea to check this when buying diamonds from overseas as there is often no or less tax to pay. By way of example. In Australia a lot of retail business are complaining that many of their customers are now shopping online and avoiding shopping in Australia due to cheaper prices and no Goods and Services Tax (GST).

Buying in your own country also means that there is no customs tax or duty or hold ups at customs. Customs, these days will open any parcel from overseas they consider suspicious. It can be disconcerting to receive your parcel of diamonds only to find the package has been opened.

You receive more protection from local laws if you buy in your own country. Not so if you buy from overseas and you are dependent upon your own due diligence to ensure that your purchase is secure and the jeweler is bona fide.

Lastly, if the jeweler is not to far from you, in the same city for example, you can even view the diamond(s) before you buy and also collect your diamonds yourself and so avoid shipping and insurance charges.

So it is not necessarily cheaper to buy diamonds from outside the US and nor is it more expensive. One simply browses the better known jewelers and, with some sensible due diligence, can find a jeweler one can be happy with. We provide reviews on about 24 or the main jewelers you can buy from online and in shopping malls so I recommend you start by checking out some of those.

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