Diamonds that have been newly mined pass through an international diamond exchange, which is essentially the central distribution point in the diamond supply chain. There are a number of factors taken into account when the diamonds are reviewed for sorting, after which they are then passed on to dealers and manufacturers. Once they reach that point, the diamonds are cut and made ready for sale. Tel Aviv, Israel is home to Ramat Gan, the world’s largest international diamond exchange. Ramat Gan makes it’s home in the Diamond Tower, which is where you will find the largest diamond trading floor in the world. It is also home to several other international exchange buildings.
Diamonds are a global business, which is why you will also find exchanges in places such as Antwerp, Belgium and New York City. It is in these exchanges where traders buy the rough diamonds that have been recently mined. Clarity, color, shape, and size are all characteristics that factor into the value of a diamond. People who work in the exchanges need to know a lot about the gems in order to come up with a fair value. It goes without saying that all diamond sorters are required to go through rigorous background checks. Once the diamonds have been sorted, ultra-sensitive scales are used to weight the stones. It is worth noting that you only usually get roughly one ounce of useable stone from every 142 carats.
With the sorting and weighing complete, international diamond exchanges then move on to distribution. The stones that are sent out to dealers are the ones that have been deemed useable by the sorters. Once the dealers take possession of the stones, they will very often send them off to factories to be cut and polished. Diamonds can change hands many times before they are actually delivered to market. It is the profit that the sorter makes which determines the difference between the buying and selling price of diamonds. On average, sorters show a profit margin of somewhere around 10%. The Ramat Gan diamond exchange is responsible for sorting roughly 65% of all the rough diamonds in the world, which explains why the sorters who work there earn more than most.
There are some dealers who are allowed to conduct transactions with Israeli exchanges. These dealers are known as sightholders. These dealers are granted access to bundles of stones that may not necessarily be in accordance with the request that the sightholder submits. The only option they have it to accept or reject the bundle based on the selling price. Once the bundles have been accepted, sightholders are then expected to market and distribute the stones to consumers in order to drum up more interest in the Israeli diamond exchange.