“This is the United States calling. Is anyone out there? Over.”
A few minutes go by with no answer. So I try it again; “This is the United States calling. Is anyone out there? Over.”
Another few minutes go by before I discover the problem. My ham radio wasn’t turned on. Oops.
The next time I try it, someone says, “Ah mate, this is Australia, we hear you loud and clear.” A few seconds later, “Oh yea! 10 and 15 were wide open into Europe. I got real good skip into Scotland and a couple of stations in Italy on my very first CQ, mostly on 10. I worked a little CW QRP on 15 into England, just 5 watts! All good QSOs! Lotta fun, old man!”
Who doesn’t just love a good ham radio conversation? No, we’re not living in the Twilight Zone. No, we’re not in a science fiction movie. And no, we’re not in a weird, parallel universe. We’re in this thing called ‘Spring’.
Spring is a magical place where the white stuff is replaced by the green stuff. Barren limbs are replaced by leaves. Go ahead and put away all of your coats, sweaters, long johns, and gloves until next winter. Oh, and that blue thing you see way up high, that’s called the sky. Yeah, winter is over. In just a few short months we’re all going to be complaining about how hot it is, but not today. Today, we rejoice.
But, I digress. There is something else going on right now. The proverbial ‘elephant in the room’, so to speak.
Tariffs!
Our industry is global. I like to think that the jewelry industry was the original multi-national, global industry to exist. Way back the 1,600s, diamonds were being mined in one part of the world, cut in a different part of the world, and then sold in every part of the world. What industry did that before us?
Since the beginning of civilization, gold has been mined in various locations across the globe. Then it is refined in other locations, and then sold in every country around the globe. In case you’re not aware, China is currently the largest producer of gold. South Africa has dropped to 8th place, which surprised me.
Diamonds are also mined all over the planet, with Russia now being the #1 supplier of mined diamonds. Let me tell you a little story about Russia and their diamond mining operations, from back in the day.
Back in the late ‘70s, if my memory serves me correctly, the Russian government decided they were going to opt out of the DeBeers distribution system and sell their diamonds directly to DeBeers’s customers. Russia was going to effectively ‘cut out the middle man’ in the diamond distribution system. DeBeers wasn’t amused. At that time in history, DeBeers had a monopoly on the diamond market, with no plans on surrendering any part of that market.
DeBeers basically controlled the production and distribution of the vast majority of the diamond mines across the globe. They would sell their rough diamond production to ‘sightholders’. Sightholders were basically the owners of the world’s largest diamond cutting factories. In the 1980s, it was estimated that there were around 300 sightholders, but DeBeers would never officially disclose the actual number.
When it was time to release diamonds to the market, DeBeers could manipulate the price by withholding diamonds that had fallen in price. If half carat, SI1 diamond sales were flat, none of those diamonds would be included in the parcels that were offered to the sightholders, thus, driving the price back up due to unavailability. DeBeers was good for our industry back then. If you were a sightholder, you bought what DeBeers offered you, and said; “Thank you sir, may I have another?” Being a sightholder was a very big deal.
When Russia decided to go around them and go directly to the sightholders, DeBeers informed their sightholders that anyone that bought diamonds directly from Russia would be banned forever from DeBeers, and they would lose their sightholder privileges.
A few months later, Russia learned their lesson and backed down, and began selling all of their production through DeBeers again. The moral of the story is; DeBeers was so powerful that they were able to make the Russian government quickly back down.
But, back to tariffs. The current administration is hanging tariffs over the heads of practically every country on planet earth. I currently have a big custom job that is being manufactured in India. Like so many of you out there, I didn’t factor politics into my pricing structure on this job. If my supplier is forced to pay a 25% tariff to send it to me, who absorbs that cost?
As a proactive step, I called my supplier and asked them to bump me to the front of the line so that my job is delivered before the tariffs take effect. They informed me that I was the 436th person to call them and ask the very same thing.
So, what is the plan going forward? I have no idea. I don’t spend a lot of time worrying about things that are out of my control. What is in my control though, is how I price the job to my customer. I factor in all known obstacles upfront. Going forward, if the tariffs are put in place, I’ll treat it just like the cost of the raw materials, and the labor, that I have no control over either.
Don’t forget that we are the industry that went from $400 an ounce gold, to $3,000 an ounce gold. We’re also the same industry that went from $3,000 per carat for diamonds, to $400 per carat for lab grown diamonds. We’ve weathered worse than tariffs.
Will wholesalers be forced to raise their prices due to tariffs? Probably. Will retailers scream and cry saying their customers will never pay those prices? Probably. Well let me point something out to everyone.
Our customers don’t buy, sell, and trade in jewelry every day. We do that. The cost of sizing a ring has had to increase in price due to the price of gold. Customers don’t get rings sized every day. The average customer hasn’t had a ring sized in a couple of years. They don’t remember what they paid the last time. They may ‘think’ they remember, but you and I know that they don’t. If you were to pull up their last sizing from 6 years ago, the price they paid, and the price they ‘think they paid’, are nowhere close to the same number.
Whether tariffs go into effect or not, we’ll get through it. We’ve been through worse, just look at the gray in my beard and you can see it. Every couple of years we face this stuff, and every couple of years, people think the sky is going to fall, but it never does. Just do what I said at the beginning. Go outside and look up at that magnificent blue sky, and enjoy the spring. Until next week when we get that final blast of winter that makes you mad because you listened to me and put your coats and gloves away already.
