Rough Diamond Suppliers via TradeKey, Alibaba and like sites

Online sellers via trade key and alibaba, the PROS and CONS and the way to make these websites work for you.

1-scammers,some ways to identify

a-ip address originating country does not match the country that the person says that they are in. You will never find a real supplier or broker of rough diamonds with an ip address that doesn’t match their stated country of origin.

b-they will sign contracts and ship the rough to you for a price, sounds great, no travel costs, all the work is done, they will show you a great manifest…..THIS IS ALL FALSE, no supplier will ever ship you goods without prior inspection and or travel to said country.

c-They are on a trade website. 99.9 % of these guys are scammers, the key is how to make the scammer work for you..

d-Rough diamonds are always (almost always at least, if you are going through a legitimate large company such as DGI or DeBeers then you can trust their manifests, if they give you one, with no worries) sold in mixed parcels. Meaning that you will get the good with the bad. Almost all of these “suppliers” on these trade sites will promise you rough diamond parcels with the highest quality and the largest stones only. If a seller actually did this, he would sell off his best quality stuff and be stuck with the garbage stones, they don’t normally like to do that. Every parcel that I have ever purchased has had good and bad stones and this is where an expert comes in. If you have an expert in rough ID with cutting experience, he can give an approximation of the value of the parcel, with that you can calculate your profit margin and negotiate from there. With my buyers, I have always used the Adtec price list as my baseline for rough prices, some buyers like this and some do not, it depends on the buyer. The seller will almost always tell you that this is not a reliable price list and that they are too low, but remember they are there to maximize their profits, not yours. In short, only scammers offer the best of the best unless they are representing a large and well known diamond company.

2-If 99.99% of these sellers on these trade websites are scammers, then why go on these sites.

a-there are always those .01% that are out there, and surfing these trade sites is free, there is no travel cost per day and no risk of getting sick, kidnapped or whatever else can happen out in the bush in Africa.

b-While most of these supposed sellers are scammers, there are a percentage of them (probably 10%) that work as brokers for actual rough suppliers or for another direct broker to an actual rough supplier. This means that they can make a rough purchase happen for, usually, a commission between 1-2% of the sale price. I have done this with these trade sites and it worked well. To find out if they can set this type of a meeting up, just ask them. If they get offended and call you a liar etc, they probably can’t help, but if they agree and give you some contact info in the country you are traveling, it is worth checking into. On a sub-note, never let these guys know the exact month, day or week that you are arriving, they will track the airports and try to find out where you are staying etc. They may try to tell you that you must have a referral for a visa into their country, this is usually not true. I have been to many of the African nations and have been told this many times by brokers or rough suppliers on the ground but have never needed a referral for a visa. Most African nations let you get a visa at their own airport while for some you must apply at your nearest consulate and wait. There are also websites that can handle all your visa needs for a price. The easiest thing to do is to just check into the countries visa process through their local or closest consulate and go from there.

To sum this article up, while the supposed sellers on these trade sites are usually trying to run a scam on you, if you are a savvy buyer and can understand how they work, you can use a few of them to your advantage. Most of these guys are trying to scrape together a living without much opportunity and they will scam you if you let them, when confronted with the opportunity to make money the legit way, they will take it if they can.

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Determining the Value of Your Rough

Determining the value of your rough.

As I have said in a prior article, I use the Adtec price guide for my basic valuation of price for rough diamond purchasing, but this is not an absolute way to value as there are other ways to value rough depending on many factors. In this article, I will discuss one such factor,final cut valuation and how it was represented in a recent article on a popular diamond website.

I just read an article from a website that I will name that uses the final cutting price to determine value, this is a fine way of determining value, especially if you are selling directly to a cutter (you need to realize that there are expenses in the cutting process so he will have to margin those into the final price.) or cutting yourself. This method takes the final price per carat of the cut diamond, for example 1,300, multiplied by the total carat weight of the rough, for example 8 carats, finally multiplied by the cut yield of the rough diamond, for example 35%. Using this method and the examples, we would take 1,300 * 8 * .35 for 3,640 total value. The problem with this is determining the cut yield. The website made the the assumption that a 5 carat rough VS1 D color, for example, will provide 50 percent yield on average. This assumption could not be further from the truth. There are many outside factors that go into determining final yield that make this method complicated.

First off, only a perfect octahedron shaped (there are always exceptions but this is a general rule of thumb that can be used) rough diamond will yield a 50% cut, rough diamonds come in many other shapes normally called flats and macles that are worth less than the octahedron shaped rough. This is because these other shapes do not yield as high a percentage for the final cut and sometimes, they can not be cut into the most popular cuts like round brilliant, princess or cushion. Some of these flats and macle are only good for the more fancy cuts or even figurine type cuts such as a heart or other special cut. The second thing to understand is that the larger a rough diamond gets, the higher your chance that it will have cracks or imperfections that will have to be avoided by the cutter thus making it impossible to cut it into one diamond. Meaning that if you buy a 25 carat perfect octahedron rough diamond, there is still a good chance that this stone will be cut into one 6 carat, and 3 two carat diamonds. Only an experienced cutter will be able to ascertain how the diamond will be cut. This is why I encourage all rough buyers or prospected rough buyers to higher a gemologist that has a cutting background over one that does not. When you take into account all of these variations, using the basic 50% cut value method without an experienced cutter on your team is business suicide and will only end up in blown margins, lost money and another buyer out of the business.

thank you