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Worth of gold and diamonds

28 september 2020

excl_28092020.pngInitiatives in Arts and Culture and De Beers recently co-hosted a webinar on the worth of gold and diamonds.

The webinar, which was moderated by Mickey Alam Khan, the founder and editor of Luxury Daily, featured Jeffrey Christian, founder and managing director of CPM Group; Kyle Roderick, an author; Pat Dambe, De Beers vice president of corporate affairs and government relations and Catherine Sarr, a jewellery designer and founder of Almasika Fine Jewellery.

Rough & Polished’s Mathew Nyaungwa attended the webinar and below are some excerpts:

(Mickey Alam Khan) What are your thoughts on diamonds as a store of value and how they compare to gold?

(Jeffrey Christian) There is a big difference between diamonds and semi-precious stones and gold, et cetera…Gold and diamonds both do very well as a store of value except in extremely unsettled political times. So if you want to protect yourself from the vagaries of the economy and the political system, having some of your wealth in gold and diamonds is very good. Where the relationship breaks-down is when you have a civil war or a revolution. Because gold is fungible, if you need gold to buy your way out of the country or out of trouble, you can take an ounce of gold to someone who will buy it and virtually anybody will buy it. They will say this is not pure gold, say ok I know it costs a $1.25 to refine impure gold into good delivery form, so knock the $1.25 from the $2000…and am on my way.

However, the value of diamonds is determined by a guy with an eye loupe and in that crisis moment he knows that you need cash to get out of the country, so that diamond that you paid $10 000 for, that was really worth $10 000 five years ago might be worth $1000 when it comes to time to sell in that kind of an emergence. So diamonds make sense as an investment like gold except in those extreme situations. Now in terms of the current diamond value, we have seen an explosion in diamond production and we have seen a massive change in consumer attitude on luxury goods. I think those two factors have led to a deterioration in diamond prices on the current basis. I do think that is probably a cyclical factor and I do think that diamonds still make sense as an investment except in those circumstances.

(Mickey Alam Khan) Which would apply to gold too if they know that you are vulnerable. We are assuming that everybody is going to pay fair rates for that gold. It’s interesting, I was at Christie’s Auction a few months ago – when you could gather around people and the auctioneer told me something very interesting. They were auctioning this 50-carat diamond and there were some high carat diamonds there (as well). He said one thing to remember is that the best investments in diamonds are under 2 carats because that is very easy to dispose of in an emergency as you pointed out, but the more the carats, the less the ability to sell those diamonds…

(Jeffrey Christian) There are many people who can afford one or two carat diamond and not a lot of people can afford a 50 carat diamond.

(Mickey Alam Khan) Exactly, so that’s the point. Now we have Kyle who knows a lot about jewellery, she is the author of a book called the Bejeweld. In your book you observed that luxurious ethical jewelleries were indistinguishable from other bejeweled ornaments. Your whole book is about ethical jewellery, how do you define ethical jewellery and who are some of the jewellers that you feel their work embody this ethical component…?

(Kyle Roderick) First of all the point that I want to make at the outset is that its visually indistinguishable from other types of jewellery, but ethical jewellery is an umbrella term for … jewellery that has one or more of several distinct facts related to its origin and production. So to begin with, we have the case of ethical diamonds, we have many mines that exist that are complete transparent in how they source, mine and how they conduct environmental remediation. Let’s say they back fill a mine once a certain area has been mined out, they fill it up with land so that people can go ahead and use that land instead of leaving a scar in the earth.

So there is that side of ethical jewellery, mining companies that are extremely responsible environmentally to the point where they won’t even mine on land that they know there are diamonds because they want to preserve wildlife corridors and routes such is the case in Canada with the Diavik mines, those people are very careful to respect the wildlife corridors. Then there are companies like De Beers, they for instance have many different initiatives like the Forevermark, they are leaders because they have traceable stones so that is an ethical stone because they have a lot of paperwork going all the way to the mine that it originates from.

Another type of ethical jewellery is fair mine gold or fair trade gold, which is an assurance system put in place to monitor the environmental impact of the mining and also the safety standards, etc. The community enrichment that results from the gold mining and so these mines that satisfy those heavy rigorous standards they get certified as creating a superior product because their environment is safer, it’s not poisoning communities, so that’s another type of ethical jewellery.

Yet another is the type of jewellery that is a social enterprise system. It’s sold as a way of funding communities that make the jewellery and the people who are actually producing it nonprofits. It’s a business model that is there to enrich communities to give them a sustainable source of income. You see that with pearl farms in the sea and so on. Those are the main types.

(Mickey Alam Khan) Is the demand for ethical jewellery coming from consumers or it is being led by the marketers?

(Kyle Roderick) I wish I could quantify how much marketers are driving this. I can’t do it in terms of percentages but what I can say is that the companies that are most interested in creating relationships with people of all generations and different socio-economic levels, are realising that we have a great opportunity right now to communicate to people.

Either diamonds or coloured stones or gold it is really a good product because it makes sense for the planet, for the communities that mine it and for the shoppers and jewellery lovers who either buy it or gift it…The studies show that even people in Asia pacific region are willing to pay slightly higher prices if they know that they are getting a piece of jewellery that has documentation, sustainably produced and people who produced it were paid fairly…

(Mickey Alam Khan) De Beers can take credit for pioneering the engagement ring as we know it today. How as a leading producer of diamonds do you describe the role of diamonds and what it represents?

(Pat Dambe) One of the ethos at De Beers is the heart, everything is done with the heart across our producing countries. We believe that the value of a diamond is directly entwined with critical factors. Firstly, when we talk about how a diamond is mined our view is that no diamond is worth a life. We ensure that each diamond is mined, safely and transparently. And the most importantly in a way that upholds the things that Kyle was talking about – human rights, environmental consideration and is mined with the highest industry standards.

Secondly, it’s important that we talk about the difference a diamond can make to a community and I really want to get into that. I am from Botswana so I am passionate about the impact that diamonds have had in one of the leading countries in the world in terms of producing diamonds. So I speak from a heart and I worked, I believe, for a company that really focuses on the communities in which we reside and demonstrates that every single day through our people, our systems and our operations. As one of our key business imperatives we invest in one of the communities in which we reside. Our focus is investing beyond diamonds and I want to give you an examples of these. These are real, we invest in job creation, it’s so important that we create that socio-economic impact in the communities that we are in. We invest in women and girls through our UN-Women partnership. Imagine how important it is that we follow the protocols and standards that are strictly set by UN-Women.

Particularly focused on accelerating women-owned micro-enterprises. We also invest in our employees and they take that role in terms of our values, they give their time in the communities in the initiative that we have. We fund several sustainable programmes that are focused in our producing countries, youth entrepreneurship, particularly in Africa as you know we have a huge population of young people in Africa. So youth entrepreneurship is primary to our investment in terms of sustainability. With that comes capacity building both in our industry in terms of skills development and in research outside the industry. We invest significantly in NGOs in this very challenging time of COVID-19, gender-based violence is evident in a lot of our communities and is growing. Supporting some of these NGOs is so important to us…

(Mickey Alam Khan) How do you make sure that other jewellery brands communicate the values properly? Are we communicating the values to men the way we are communicating to women…?

(Pat Dambe) The consumer today is so discerning, they are conscious about what they buy and the brands they associate themselves with and believe in terms of sustainable and ethical purchases, so values are important to us at De Beers, it’s in our ethos. Safety first, show we care, shaping the world, built trust and of course being passionate…if you look within our ecosystems at De Beers as well as the countries we are operating in, every journey of the diamond from mine to finger is crucial for a consumer in terms of transparency and provenance.

I really like to get into the idea of what provenance means because I think it means different things to different people. I just want to highlight how we take provenance. From our perspective it’s about the “how”, the “what” and the “who”. The “how” in terms of the practices, which is really about our values, how we practice our responsible sourcing. But the “what” is so important in terms of authenticity. The “who” is definitely the consumer, our stakeholders and the community so I think that this guarantee a sense of value creation and liquidity on that process and also guarantees our process in terms of upholding of ethical practices and the SDGs as we know them.

(Mickey Alam Khan) What are the values that back the creation of your jewellery and the way you market it? Start by telling us what made you go into this, I know you have a background in jewellery, in gold and diamonds, but to launch own your own is fairly bold, especially in an industry full of giants.

(Catherine Sarr) I want to answer your question by [focusing] on the name Almasika. Almasi means diamond in Swahili, a language spoken in East Africa. Sika, means gold in several languages spoken in West Africa and I have been deliberate in choosing some words that have the same meaning in different cultures because that search for commonality is what is at the heart of Almasika. Its linked to my personal story, I was born in Paris and lived 10 years in London and then from there I lived in Abu Dabi and now I live in Chicago, but in that journey across the world, what I have kept is that all the people that I met, from all walks of life, I have managed to connect with them. I have managed to see what we have in common and really I realized that we have much more that unites us than that separates us and that is the essence of Almasika. In designing its translated by finding all the forms, symbols and stories that are common to many cultures. Of course the consumers and the people who buy Almasika are attracted by the jewellery but what I have noticed is that the moment I started to express that mission you will be surprised to know that that’s what really attracts people and they felt really strongly and passionate about it. We talked about the design, the material and the source and for me, design takes a critical part. With the name like Almasika, gold and diamonds, I narrowed my scope, so I work with gold and diamonds for now, but the design is critical because in today’s context I really believe that not one culture should supersede other cultures. I felt that we have a voice and am passionate about that universality…

(Mickey Alam Khan) How has Covid-19 changed things?

(Catherine Sarr) Covid-19 meant that jewellery buyers are very considerate about their choices, this is something because of how we started. We always have had customers who wanted more from their jewellery. The story side, cultural and sometimes spiritual element was very important. So in terms of who we sell to and who we speak to hasn’t really changed. Its more about the many people that are coming to us right now who are looking at what we have been doing from the first day.

Mathew Nyaungwa, Editor in Chief of the African Bureau, Rough&Polished