Statement by Martin Rapaport:
Chairman of the Rapaport Group BS’D
March 20, 2020
Our heart goes out to the diamond community during these difficult times.
We understand that today’s reduction of prices in the Rapaport Price List is upsetting.
The trade is invited to contact me directly at email firstname.lastname@example.org.
We are reading and sensitive to all communications.
It is vital that the Rapaport Price List reflect the realities of the market even when such realities are not pleasant or welcome. We cannot protect the market from price changes and must maintain the credibility of our price information.
It is important to note that the Rapaport Price List is used by buyers and not just sellers. Buyers require and expect Rapaport to reflect the lower price realities of the market. We cannot misrepresent prices for the benefit of sellers and we must not mislead buyers.
Many buyers wait for Rapaport to lower prices before buying. They want to be sure that they are trading at the correct price levels. If we do not lower prices on-time we are discouraging buying activity.
While many in the diamond trade wish to maintain inventory values, this is not possible in the current environment. The most important thing is for the market to resume trading activity and provide liquidity as soon as possible.
Additional Note: The Trade should consider making money in a downward moving market.
Sellers should be comfortable selling diamonds at prices below what they paid for the diamonds.
It is important to understand that the value of inventory is replacement cost.
Sellers can sell existing inventory at a profit above replacement cost and then replace what they have sold. They will end up with the same or better inventory position and a trading profit.
Example: A diamond is in inventory at a cost of $10,000 and can be replaced for $7,000.
Sell the diamond that cost $10,000 for $8,000 (or any reasonable amount over $7,000).
Then replace the diamond you sold at $7,000.
You will then have the same inventory position and a trading profit of $1,000.
In the event no one is buying, you will be forced to wait until there are buyers. However, once trading resumes and buyers are back in the market, keep your focus on replacement costs and trade.
The most important thing is to keep trading. Please, do not freeze up.
Wishing you and your families good health. Stay safe.