How to generate the maximum returns from your recycled diamonds

How to generate the maximum returns from your recycled diamonds

Show Booklet 12pp.indd 3 29/01/2013 13:27

White Pine Diamonds www.whitepine.com 4

Contents

n 3 Introduction

n 4 The recycled diamond market

n 5 How to choose a diamond buyer

n 7 Pricing your diamonds

n 8 Factors that affect value

n 9 How to maximise the price for your diamonds


How to generate the maximum returns from your recycled diamonds n3

Any clarity, any colour, any size

White Pine believes that every diamond, no matter what size, grade or condition, has a home.

Recycled diamonds can generate significant value and are an increasingly

important part of the diamond trade.

If you are a jewellery retailer, manufacturer, refiner or any other

business that handles recycled diamonds, our guide will provide you with information about how to sell

and generate the maximum returns from your recycled diamonds.


n White Pine Diamonds www.whitepinediamonds.com 4

The recycled diamond market

± Why recycle diamonds? Diamond, because of its hardness, is one of the only gemstones that has a truly robust, vibrant recycled market. Recycled diamonds are diamonds that have been polished and set into jewellery, then removed, sorted and re-cut for sale back into the diamond industry. This sector now generates sizeable revenue for suppliers and buyers alike. Whether it is releasing capital to re-invest in more liquid stock, or generating greater margin on re-purchased diamond jewellery, recycling diamonds should be part of the ongoing strategy for many members of the jewellery industry.

± Pricing expectations. Just as selling the silicon chip from inside a computer will yield a much lower price than the computer containing it, so the price paid in the market for a recycled diamond is generally much lower than that originally paid for a diamond-set piece of jewellery at a retail store. Nevertheless, there is substantial value in carefully sepa-rating out and selling recycled diamonds and the market is growing in size and importance year by year.

± Recycling larger diamonds. Diamonds of a certain size, generally half a carat and above, are traded and processed by the industry individu-ally. Each has its own unique attributes and a corresponding unique market price. Diamonds of this size, whether recycled or not, have a similar market price – you cannot tell the difference between a recycled one-carat diamond (as long as it is undamaged) and a “freshly-mined” one-carat diamond with the same characteristics, and the market does not differentiate them in terms of their price. A grading report from an internationally-respected lab will improve the chance of achieving maximum price on sale, although trained diamond graders will also rely on their own grading of the stone to price it.

± Recycling smaller diamonds. Diamonds of smaller sizes are traded in parcels of similar stones, called “melee” after the French word for mix. Generally diamonds of exactly similar size, cut, shape, colour and clarity are used in a single piece of diamond jewellery. If not the stones would not match and the piece would not sell. Small recycled diamonds are treated differently to large individual stones. A single small diamond has limited value by itself. It is only of use if it can be matched with other similar diamonds, reset into jewellery and sold to a customer, thereby creating value. Small recycled diamonds need to be sorted, recut and resold to manufacturers in large enough parcels to allow them to pick matching stones to set in jewellery.


How to generate the maximum returns from your recycled diamonds n 5

How to choose a diamond buyer

Not all diamond traders are the same. Clearly price is important when it comes to selling diamonds, but here are some other things to think about:

± Consistent / transparent pricing. The diamond industry has a reputa-tion for being opaque and closed. It is important to you that you know how your diamonds are being valued. A dealer who looks at diamonds or mixed diamond jewellery through a plastic bag and throws out an offer is not likely to be giving you the best price. A common misconception is that diamond prices always go up. They don’t – it’s a market, just like the gold market, and prices go up and down on a weekly or even a daily basis. So you cannot guarantee to get the same price each time, but you should be sure that your buyer is methodical and properly values your diamonds. White Pine trains all its buyers to use a consistent process to sort and value diamonds, working off pricing sheets that are updated regularly as the market changes. Our company policy is to be as transparent and open as possible during the valuation process.

± Always prepared to transact. Prices go up and down, and in a rising market, there are generally lots of diamond buyers who think they can make a quick turn. The rising tide of prices should mean they always sell for more than they paid. But in a less buoyant market, many diamond traders stop purchasing completely. This is not much use for a business with a constant supply of recycled diamonds that needs to sell regularly. White Pine will purchase any diamond at any time, in the good times and the bad. Our prices change, but we do not stop buying, as our business functions by trading volume on a consistent basis.

Our New York headquarters gives access to worldwide diamond trading markets



± Quick payment. You should demand and get immediate payment for your diamonds. If we visit your premises to value your goods, White Pine makes payment by immediate bank transfer (which you will receive within 24 hours, usually faster) and once you receive your funds, we will arrange shipment of your diamonds to our offices. If you ship your diamonds to us, we will give you a valuation within a week and immediate payment there-after if we agree a price.

± Buyers without an incentive to underpay. Price is the most sensi-tive issue when it comes to selling diamonds for obvious reasons. Most diamond traders are small, often family-owned, businesses where each member has a good reason to try to pay the lowest price possible. You

should look for a buyer that is incentivised to buy volumes of diamonds. White Pine’s buyers pay at the company’s price, there is no benefit to them for under-paying our price list.

± Size and disposal methods. For a diamond trader to be able to pay the highest prices, it needs to have the funding available and have a consistent way to sell purchased diamonds for the highest prices. You should research your buyer and establish whether you believe the transactions will progress smoothly, especially if the transac-tion is of a substantial size and you believe you may sell

repeatedly to that buyer. White Pine is backed by a leading Wall Street finan-cial house, we traded nearly $75m of diamonds in 2012, and we hold monthly diamond tender auction events in New York and Hong Kong at which we sell around 30,000 carats of diamond to the highest bidders from around the world.

White Pine buys diamond-set jewellery in addition to loose stones



Pricing your diamonds

± No single price. Every diamond is unique with a combination of factors that combine to determine its price. Diamond value is affected by size, shape, cut, colour, clarity and a whole host of other attributes. Diamonds cannot be melted down so there is no one single price for a diamond like there is for gold; each will have its own price, generally given in the industry as a price per carat (often quoted in US $).

± Larger diamonds. Larger diamonds are priced with reference to industry price lists, such as that published weekly by Rapaport. The Rapaport list gives a price per carat for a number of different colour and clarity grades of diamond. The industry will generally refer to a diamond’s price as a percentage discount or premium to the price in that list. Currently many single certified diamonds are traded in the market at around half of the “Rap” price – referred to as “50(%) back”, but the discount will vary depending on the cut and demand of the diamond.

± Certificates. There are hundreds of gemstone laboratories around the world that publish diamond grading reports (generally – and incorrectly – referred to as “certificates” in the trade). But there is no internationally recognized single diamond grading standard. One lab’s “G SI1” does not match that of another. White Pine grades and bases its pricing on grading from the Gemological Insitute of America (GIA). In general, we will not be able to price diamonds with certificates from other labs sight unseen, and will need to view and grade every diamond ourselves in order to give it a value.

± Smaller diamonds. Recycled melee is generally a mix of all sorts of shapes, sizes and grades, and nearly all will have damage of some sort, a small chip or abrasion or similar. These diamonds generally need to be recut/re-polished before being reset into jewellery, so are treated in the industry somewhere between rough and polished diamond. They have their own pricing unrelated to industry melee price lists (which refer to exactly matching parcels of freshly manufactured polished diamond). It would take too long to price each stone individually in a parcel of hundreds or thousands of diamonds. At White Pine, we sort recycled melee by sieving out into size groups that match those traded in the markets. Once we have each size grouping, we take a representative sample and sort into shapes and grades in order to determine price according to our pricing model.



Factors that affect value

± Shape. Round Brilliant cut diamonds generally command the highest price per carat in the market. Fashions change, and different shapes of diamond have become more or less popular over time. Currently, Princess and Cushion cut diamonds are the next most valuable per carat – we gener-ally see these shapes command around 50-70% of the equivalent price of a Round Brilliant. Marquise, Pears, Ovals and Emeralds are at 45-65% and other shapes may be less. Generally the larger the size of diamond, the greater the discount compared to an equivalent Round Brilliant. Baguettes

and single cuts (8x8) diamonds have their own valuation, much lower than equivalent rounds. Proprietary shapes such as the Millennium cut or the Hearts and Arrows cut have different values, mostly less than equivalent Round Brilliants.

± Colour. Transparent “colourless” diamonds (those in the D to F colour range) command the highest prices (very rare fancy coloured diamonds command even higher prices, but we won’t deal with those here). Further down the colour grade scale, diamonds commonly have either a yellow or a brown tint. Brown tints are priced lower than equivalent yellow tints, by up to 30%. Other colour tints, in particular green, have their own (greater) discounts.

Most recycled diamonds need to be re-manufactured before being re-used in new jewellery



± Cut. The cut of a diamond (the proportions that effect its brilliance) has a huge impact on value, particularly in larger diamonds. As an example, a GIA Excellent Cut Round Brilliant diamond may add up to a 30% premium on top of the more common Good Cut. Improving the cut of a diamond by re-cutting may improve its value, but not if the resultant weight-loss will

mean the diamond ends up dropping below certain threshold weights, for example 1 carat. So a Good Cut 1.05 carat round diamond will not be recut to an Excellent Cut to get a price premium because the resultant stone would be less than 1 carat, and therefore drop in value significantly.

± Other factors. There are further factors affecting price other than those set out here, but some examples include:

® the position and nature of inclusions (natural imperfections in the stone – centrally positioned black inclusions will result in a discount of up to 25% compared to white/transparent inclusions positioned away from the centre); or

® the presence of fluorescence (very strong fluorescence, particu-larly in high grade diamonds, may discount the price by up to 30% compared with a diamonds with no fluorescence).

± As a final point, diamond grading is an art, not a science! A beautiful looking stone will always command a premium price against one that is less handsome, no matter what is contained in the grading report.

White Pine produces some of the finest recycled assortments in the industry



How to maximise the price of your diamonds

± Don’t damage on removal. Diamonds are very hard, but they are also brittle and fracture easily, so don’t manually remove the stones from diamond-set jewellery unless you are skilled at doing so. Forcibly removing diamonds using pliers is a sure way to destroy its value! A diamond with a large chip is often worth only half that of an undamaged diamond, simply because in recutting the diamond, we will lose half its weight. Better to sell diamond-set jewellery whole and let someone else deal with the stone removal. White Pine will buy precious metals, including gold and platinum, at a market price. We are not a gold-buying company, but would rather purchase the gold and carefully remove the diamonds ourselves, than buy broken diamonds. We can also arrange an acid-recovery service for you which uses an “aqua regia” acid refining process to dissolve precious metal from jewel-lery (which is later recovered) leaving the diamonds whole and undamaged.

± Clean your diamonds. By cleaning your recycled diamonds, you will likely yield a higher price than if they are left dirty because a diamond buyer will be better able to grade and value them more accurately. To clean, you can simply use detergent or surgical spirit. There are lots of expensive jewellery cleaning tools on the market, but we tend to think the simplest methods are just as good!

± Volume. As we’ve said, you will generally get a higher price for a bigger parcel of melee diamonds, since it is worth more to the industry. White Pine arranges a personal visit by one of our buyers for a parcel of more than 50 carats of melee, although larger single stones may make a visit viable for a smaller parcel. We also offer a free shipping service to customers with smaller parcel sizes.

White Pine buys and sells more than 30,000 carats monthly


About White Pine

• WhitePineisawell–establishedinternationalrecycleddiamondcompany with its UK base in Birmingham’s Jewellery Quarter. We are headquartered in New York, with offices and buyers around the world, and customers from the smallest jewellery retailers and pawnbrokers to the largest manufacturers.

• Webuyrecycled,polisheddiamondsofallsizesandgradeseitherlooseor in second-hand diamond jewellery, from the very smallest melee to one carat and above.

• Weremanufacturechipped,damagedandpoorlycutdiamonds,inorderto homogenise appearance.

• WedistributeourdiamondsprimarilyintheUSandAsiatoanetworkof industry participants, including retailers, jewellery manufacturers, diamond manufacturers and some dealers.

• WehavebeenoperatingsinceFebruary2010andarebackedbyaleadingindependent, privately owned financial services firm.

• WhitePinefollowstheKimberleyProcessandtheDTCBestPracticesPrinciples. It is a proud member of the Jewelers Board of Trade, the Jewelers Vigilance Committee and the National Pawnbrokers Association in the US, and the British Jewellers’ Association, the Company of Master Jewellers and the National Pawnbrokers Association in the UK.

• WearefullyaccreditedbytheBetterBusinesBureauintheUnitedStates. All BBB accredited businesses have agreed to live up to BBB Standards for Trust. Their Standards for Trust are a comprehensive set of policies, procedures and best practices focused on how businesses should treat their dealings – fairly and honestly in all circumstances.

www.whitepinediamonds.comT: 0121 638 0135 E: [email protected]

212/213 The Big Peg, 120 Vyse Street, Hockley, Birmingham B18 6NF


Carat weight ROUND PRINCESS MARQUISE OVAL

www.whitepinediamonds.com

0.005 1.000.010 1.300.015 1.500.020 1.70 1.30 x 1.30 2.00 x 1.000.025 1.800.030 2.00 1.50 x 1.500.040 2.20 1.75 x 1.75 3.00 x 1.500.050 2.40 1.90 x 1.900.060 2.50 2.00 x 2.000.080 2.80 2.25 x 2.25 3.00 x 2.000.100 3.00 2.50 x 2.50 4.00 x 2.000.120 3.20 4.25 x 4.25 3.50 x 2.000.140 3.30 2.75 x 2.750.160 3.50 3.50 x 2.500.180 3.700.220 3.90 5.00 x 3.000.250 4.10 5.50 x 2.50 5.00 x 3.000.300 4.20 3.75 x 3.75 6.00 x 3.000.330 4.40 5.00 x 3.500.350 4.50 7.00 x 3.000.380 4.60 4.00 x 4.000.400 4.75 7.00 x 4.00 5.00 x 4.000.460 4.900.500 5.10 4.50 x 4.50 8.00 x 4.00 6.00 x 4.000.600 5.40 4.70 x 4.700.650 5.60 8.50 x 4.50 6.50 x 4.500.750 5.90 5.00 x 5.00 9.00 x 4.50 7.00 x 5.000.850 6.25 9.50 x 4.501.000 6.50 5.50 x 5.50 10.0 x 4.75 7.50 x 5.50

Actual millimeter sizes may vary depending on the cut of the stone. All stones should be weighed seperately for accuracy

Diamond sizing chart Weight in carats, size in millimetres

mm mm

mm mm mm

mm mm


How to generate the maximum returns from your recycled diamonds

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