"Tulipomania" developed not in an organized framework. It was a spontaneous speculative market with few standards, and not a very highly developed exchange with strict standards for classification and trading rules with long-term and stable fundamentals. But as Dutch consumers were interested in buying tulip bulbs, prices grew and remained stable. When they lost interest, prices fell sharply, as on any other asset on the stock exchange at the moment.
The lesson learned from the soap bubble associated with tulip bulbs is that when there is a group of people who understand and share the same idea, together they can create a market. This market will fluctuate when the confidence, moods and expectations of this group change. As in the case of gold, works of art, oil and currency, diamonds can be used as an asset that serves a group educated to understand and accept this asset - provided that the process of such education takes place in an organized and well thought out form.
How to do this
In order for diamonds to serve as an asset to preserve wealth, we need to create a critical mass of people who are interested in diamonds and are confident that whatever diamond they buy, they will find a buyer who will buy from them this asset by paying them Premium, just as we already do it with gold, bonds, shares, works of art, watches, old cars and many others. We should treat diamonds not as constituent elements of jewelry, but as an independent commodity: just as the Dutch were interested in tulip bulbs in the 17th century and just as many people were interested at that time and are now interested in works of art.
This group will create a resale value, which, in turn, will create demand and form a market. To make this happen, we need a critical mass of supporters who will maintain the stability of the value of traded diamonds.
There are many ways to create such a critical mass - mainly through marketing, education and transparency. I will go deeper about these issues later, since this is only the first article in a series on this topic. Today, first of all, I want to clearly emphasize the need to understand that we need to reach the critical mass of educated people who will buy, keep and sell diamonds as an asset. If we reach such a mass, we can cause a profound and profound change in the market. This change will give rise to a new reality when together we will form a new market for a type of diamonds that are rare but still available; Diamonds, which constitute a small percentage of the annual world output, but appear often enough to accurately track prices.
If "tulipmania" disturbs you, think about the art market. In my opinion, diamonds will be bought in the same way as we buy works of art that, unlike "tulipomania," stand firm. Most of the population understands, values and BELIEVES in art. These art buyers are educated in the history of art and know the history of the price increase, have full and free access to all the detailed information about the work of art that they are considering for purchase. This is what enables the market of works of art to flourish and be successful and allows its supporters to buy and profitably sell works of art. This is what we need for diamonds: people who believe in the idea of diamonds as an asset who know how diamonds are valued, And who have access to all the information necessary for an informed, reasonable purchase. Information generates confidence, confidence breeds security, and security generates a market for adherents. Having a critical mass of individuals, investors and financial firms, we will have a new market for diamonds.
Such a market can exist only when the broad community, the masses see the opportunity and can act on this basis. Our task is to create a number of adherents of the market and increase the mass. A good example is the increase in the trade in blue and pink diamonds, which was observed after I sold at a record price diamonds "Blue Moon" (Blue Moon) and "Unique Pink" (Unique Pink). These cases spurred the sales of blue and pink diamonds, including diamonds of "Oppenheimer Blue", "Millennium Blue" and others. This shows how the cost of resale is created with the help of supply and demand. At present, we have a stable market for diamonds of fantasy colors with good and stable prices.
One more thing: the diamond community must support these efforts. Taking into account the growing number of diamonds grown in the laboratory, the resulting reduction in profits, the unequal conditions of the game due to the different rules applied differently in the world, the shift in the centers of trade and the production of diamonds, and the fact that the diamond industry is becoming a provider of services, Or real growth, we can say that we have never faced more significant challenges. It's time to accept the idea that diamonds are a means of preserving wealth: an asset, and not just a constituent element in a piece of jewelry. Through education, transparency and proper marketing, we will be able to change our destiny, turning a new broader base of buyers into like-minded people. I believe in such a rare future, High-quality white diamonds weighing two carats and above. Ultimately, how many diamonds inserted in jewelry can buy one buyer? But buying diamonds as an investment is a completely different matter.
http://www.ehudlaniado.com/home/index.php/news/entry/from-tulips-to-diamonds-why-it-s-time-to-rethink-the-diamond-market
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