Note from the Publisher: Sourcing

Lots of people say the secret to making money in the diamond business is to buy right. As the Yiddish saying goes: What a fool can buy in five minutes a wise man cannot sell in a year.

So what does buying right mean? At the most basic level, it means buying at the lowest price. But that’s not really correct. You need the right kind of diamonds that meet your customers’ needs, a very good eye for detail, and real market experience. Ideally, you are a consistent buyer of the same types of diamonds from a variety of competing suppliers.

For over 100 years, that was all you needed to become a successful diamond trader. And then things began to change. Anti-money laundering (AML), counter-terrorist funding (CTF), and now sanctions with irrational Office of Foreign Assets Control (OFAC) regulations. Where you buy and how you buy have become as important as what you buy.

There are three important factors to consider.

1) Where the diamond was mined.

2) How you document your supply chain.

3) How you capture the added value of source certification.

The idea that some buyers will pay more for a diamond if you can document the legitimate source of the diamond is a defensive strategy for brands, but it is not enough to support our broad markets for all types of goods.

The fact that a diamond is not bad is not good enough for us to make decent profits. We must add value to our diamonds by sourcing diamonds that make the world a better place and then selling that benefit to consumers.

It’s not just altruism. Adding value through selective sourcing based on benefit to the people from where the diamonds originate and benefits to the workers that manufacture the diamonds is a business proposition. Adding value by differentiating and communicating the benefits that your diamonds bring society is an important and vital way to increase your profitability.

There is a reason G-d gave diamonds to the poorest people in the world and made the richest desire them. Bridging that gap is “tikkun olam” — fixing the world.

That is why the diamond trade exists.