Rapaport Market Comment Summary

Overview

Previous Discussion: Analysis of Indian and Chinese retail markets and demand for gold and diamonds
Current Focus: Recycled diamonds and jewelry
Report: "The Future of the Natural Diamond Industry" by Boston Consulting Group, commissioned by De Beers

Market Share: Less than 10% of total supply of natural polished diamonds
Definition: Diamonds previously owned by consumers and reentered the market
- Jewelry can stay intact or metal melted and diamonds resold as loose stones or recut
Term Criticism: "Recycled" criticized for not originating from waste material
Reasons for Reentry: Divorce, financial necessity, death of owner, change in preferences
- Inheritance contributes to ~20% of recycled diamonds, expected to increase
- Non-inheritance factors (80%) likely to remain steady, influenced by diamond prices

Decrease in "As New" Sales: Proportion of diamonds sold "as new" down from 60% (2015) to 30% (2021)
- Seller Value: Vintage jewelry sold intact fetch more value
  - Reintroducing diamonds reduces value by 30%-40% due to dealer margins, costs (melting, logistics, testing, proving authenticity, recutting)
- Buyer Preference: Intact pieces valued for unique design, affordability, and sustainability
Consumer-to-Consumer Platforms: Rise of platforms like eBay, Etsy facilitating secondhand vintage jewelry trade
- Expected trend: Recycled diamonds to become smaller proportion of total natural-diamond supply

Complete Market Reflection?: Question on representation of average-quality recycled goods
Gold Prices: Record high suggests potential for recycling jewelry for gold while reselling loose diamonds

Factors that could alter the industry’s basic growth pattern as per Boston Consulting Group forecasts