STOCK MARKET WATCH -- Thursday, 30 October 2014

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25. Diamond Trading on Web Shines Light on Murky Gem Dealers

http://www.bloomberg.com/news/2014-10-30/diamond-dealers-using-web-shed-light-on-murky-gem-trade.html

Six diamond dealers meet to bargain over $1.5 million of uncut stones. They’re not in Tel Aviv or Antwerp. They’re in the cloud.

In an online trading room that resembles an EBay Inc. auction, deals worth millions are sealed with a click. The button is marked ‘mazal,’ Hebrew for luck, and a holdover from the old ways. But the other practices that defined the trade for generations -- the handshakes, phonecalls, and furtive negotiations -- are being challenged.

The launch last year of the Bluedax website marked the first time the $18 billion-a-year trade ventured onto the Internet. Each month the site lists as much as $50 million of the gems for sale at fixed prices, and it will start auctions in November. Anyone registered can see the results, giving them real-time price data they can use as a reference for deals.

It’s this transparency that sets Bluedax apart. From shabby shopfronts on Manhattan’s 47th Street to the invitation-only “sights” at the Botswana offices of industry giant De Beers, the prices diamonds command are a closely guarded secret. Traders rely on experience, intuition and gossip to fix values for one of the best-performing commodities of the last five years. What a gem is really worth can be anybody’s guess.