Industry Awash with Downfall Rumors

Alongside the continued economic crunch felt by most firms in the diamond and jewelry industry, rumors are continuing to circulate about the well being of some firms. The rumors discuss small companies and Sightholders, traders and manufacturers, retailers and wholesalers. The problem is that in many cases the rumors are wrong and in an industry based on trust and one’s good name, they can be harmful even to solid firms.

Fueled by free and idle time, diamond traders in the exchanges are spending time agonizing over how tough the situation is, while tossing around names of companies they think are possibly on the brink of closure.

A large New York firm was a victim of these rumors when his office in Israel asked to return goods. Currently, talk is focusing mostly on an Antwerp based Sightholder and a medium size Israeli manufacturer.

With the closure of Christian Bernard, who filed for Chapter 7 bankruptcy the day after Christmas, traders were quick to look at the list of creditors to find out who was hit. In Israel, the rumor mill quickly picked up one of the mentioned companies, Diamond Trading Company (DTC) Sightholder A. Dalumi. Phone calls and exchange hall questions quickly led the company to understand that the talk is that they are owed a lot of money.

“They have two stones on memo from us,” a company director told IDEX Online. “The debt is minimal, less then $15,000,” adds Yuval Kemp, head of Marketing at the Dalumi Group.

Kemp also mentioned that although the company saw an obvious drop in sales in the U.S. market, the company's Asian markets had a strong performance in December and achieved higher sales then in December 2007.

“The company believes that these markets will continue to perform strongly in 2009,” Kemp said about the direction the company is taking.

Another company hit by romurs said they do not want to deny them, for fear that the denials could be actually understood as a confirmation.

The worried mood that gave birth to the talk is now set for an even greater test. After it first became clear that a tough period is ahead, now with the weak holiday season behind them traders are waiting to hear from their retailer clients. Many are concerned that retailers of all sizes plan to return a lot of goods, some will not be able to pay for the goods they got and a few may actually go under. This is fueling the harmful talk even further.