Friday, October 5, 2012

Ira Weissman: Some Diamond Truths For Millennial Men

The responses to the interview questions may not represent the views of The Echo Boom Bomb's author. These interviews are provided to inform readers of information from experts and provide these experts with a medium where they can answer questions without any content changes. You can also read other interviews at this link. All media in articles, unless otherwise stated, was added by Tim Smith.

Diamonds Aren't A Man's Best Friend

In the United States, we've seen a rise in cohabitation while witnessing a drop in the marriage rate. And Echo Boomers may choose to opt out of marriage in higher numbers than former American generations, like Generation X or Baby Boomers. This may spell disaster for the diamond industry. But for the few Echo Boomers who decide to marry, what are some facts about diamond engagement rings? For any Millennial male looking to make a purchase for his soon-to-be-spouse, Ira Weissman is the go-to-guy.

Who Is Ira Weissman?

Brief Bio:

Ira Weissman is a diamond industry veteran with a decade of experience at one of the world's largest diamond polishers. He has traveled the world buying and selling diamonds and now dedicates his time to helping consumers make the most of their diamond buying decisions. He has been featured on Anderson Cooper, CNBC, and has been quoted by MarketWatch, The Village Voice, and BankRate. Visit Truth About Diamonds to educate yourself about diamonds.

You can find him on Twitter.

So, About Those "Shiny" Stones ...

1. I've heard two major advantages to diamond engagement rings: they are a tradition and they are an excellent investment. True?

Actually, Tim, this is not true. While men have been betrothing women with gold rings for at least two thousand years (such customs are recorded in the ancient Jewish Talmud), the advent of the diamond engagement ring is only about a century old. Also whereas the use of gold in currency and jewelry is something that has evolved naturally and has become an inseparable part of the collective human psyche, the value of diamonds is something that was created artificially by the clever marketing by the same people who owned the diamond mines.

Unfortunately, this true is one of the most common misunderstandings about diamonds. Diamonds are a retail product like any other. Yes, it's true that they don't suffer from wear and tear, so in a sense, they do maintain their value. Even if we assume that diamond market prices will steadily climb over the years, you have to keep in mind that when you buy a diamond, you're paying someone who sold it to you a profit margin - that's not the case with other investment vehicles where you would only be paying a minimal transaction fee or commission. Who in their right minds would buy gold bullion as an investment and pay someone a 15% commission on the purchase? You'd be crazy to do that because you'd likely be washing away several years' worth of returns up front.

With diamonds, in the best case, you'd be paying 15% up front in profit margin - most likely that figure would be significantly higher.

Even aside from this issue, there's the greater issue of how to sell it. Diamond dealers aren't going to pay market price to buy your diamond. If they're going to pay market price, they're going to expect great payment terms (ie, 90 days) or even to be able to borrow the diamond (ie, consignment, or "memo" in industry-speak). Any diamond dealer or jewelry store is likely to only offer you 30% below market price. This is their opportunity to really make some money as they know that most people selling their diamonds are hard-up for cash.

What this means is that if you tried to resell your diamond right after purchasing it, you're looking at a likely 50% loss.

2. Based on your own view, how do you think diamond engagement rings mesh with our current culture of materialism, especially regarding weddings (I've heard the average cost of weddings range from $25,000 to $30,000)?

I'm not against people spending what they want to spend on things - it's a free country and people shouldn't feel pressure from either side of the argument. In an ideal world, people would be free to make their own spending decisions without any outside influence. What bothers me is that De Beers marketing has become so successful that a diamond engagement ring is no longer optional. It's a luxury item that has become a staple. Every Joe Shmo has to buy one if he wants to get married, and I think that's not fair because it's an extremely taxing financial burden coming right at the time when people should probably be saving money and not blowing it on things which have no utilitarian value and a completely manufactured emotional value.


A video example of De Beers marketing.

3. Okay, so instead of a ring costing several thousand dollars, what do you think makes a good investment for a couple looking to begin a marriage?

Once you decide to not follow the herd and steer clear of diamond engagement rings, it really opens the door up to an endless number of possibilities. Wouldn't it be great if a groom-to-be could find something that's uniquely special to his relationship to his beloved and propose with that instead of a generic diamond?