Personal Consultation
By Leibish Polnauer, President & FounderThe Oscar for Best Screenplay, Best Director, and Best Movie goes to… The great Diamond Robbery!
The brazen diamond robbery took place only a few days ago at Brussels Airport, not in Hollywood where such adventures are usually produced. It would be difficult to make a movie Hollywood style about the robbery as the main action was short and sweet. In fact, the total heist was completed in less than five minutes. It was definitely less complex than Argo, which won an Oscar for Best Picture this year, but I am convinced it would have still received extremely high ratings.
Eight armed men dressed in police uniform cut the airport fence and robbed the Swiss Air plane. They drove away in a car that resembled a police car with USD50 million of diamonds and precious metals. Nobody was killed or injured. Not a single shot was fired. It wasn’t a messy operation like robbing a jewelry store or holding up a diamond dealer on the side of the road. In the words of Julius Cesar in 46 BC: "Veni, vidi, vici," (“I came, I saw, I conquered").
I must admit that in my opinion, the script and execution of the robbery makes this movie worthy of an Oscar this year. If properly produced and directed, it would definitely bring in USD50 million, in just the first week!
When designing a plan to steal and move approximately USD50 million of goods one needs to consider the volume and size of the stolen goods. Everything needs to be considered from loading it, moving it, and storing it. In the Arabian Sea many ships are hijacked. Even with a buyer in line, who would steal a huge shipload of USD50 million dollars worth of cotton? No Somali pirate would ever consider it since it would be far too difficult to manage. Diamonds were definitely a good choice.
Let's use a phew images to try and picture what the volume of the goods was.
USD50 million of gold weighs approximately 1 ton/1,000kg/2,200lbs. To schlep away 1 ton of gold is a heavy duty operation. If you disregard the packaging, the diamond heist was divided into about 120 packages. Assuming the average value of the stolen goods was USD1,000/carat you get 10kg (22lb) of diamonds. You can fit USD50 million worth of diamonds in a medium sized bag without a problem.
The goods were likely shipped at wholesale prices. They may have even been undervalued to save expenses. So, the retail value of these goods, I figure, would be around USD75-100 million.
As of today it has not been revealed what percentage of the USD50 million was rough and what percentage was polished. The goods came from the daily shipment of the Antwerp Diamond Office so I assume that at least half are rough diamonds; big lots for manufacturing. They will quickly be smuggled into the major industrial centers like the Surat’s production stream.
Although it was reported as 120 parcels, each of 1kg (2.2lb), it is impossible to know the quality of goods each parcel contained. Once they start polishing the stones it will be very difficult to identify their shady operations and any traceable features will be removed.
In order to liquidate the certified rough: with USD5-10 million worth of rough on the table, you can easily mix in an additional USD2.5 million worth of similar goods. This will create a fair mix of rough that will appear as just another large parcel that needs to be processed. In the same pattern, once distributed between large production streams and small side order diamond polishers in the trade, the goods will go down stream as legitimate products very quickly. The thieves will surely charge far less than the DTC would, reducing the average cost of the parcels which will therefore be easily resold to secondary traders and manufacturers. It will only be “stolen goods” at the very first entry and from that point on, large profits will be made by all.
Unless there are some important larger stones which could go for USD1 million each, it will be extremely difficult to start looking for the rough. Important rough stones will be sent to smaller polishing firms and will be polished making them difficult to recognize as stolen in their origin.
All polished goods under 1 carat without GIA certification, which is most likely the majority of goods, will be mixed in existing parcels. When someone has a 100 carat parcel of 1/3 collection goods, it is relatively simple to mix in another 100 carats of similar products. That will take care of a large portion of the expected proceeds. Furthermore, manufacturing centers like Shenzhen in China can easily absorb USD10-20 million of small diamonds.
Assuming, again since we don't know the exact contents of the shipment, say roughly USD15 million of polished goods have certificates, they will likely enter the market in China, Russia, or Kazakhstan through underworld connections. As GIA stores all information of the certified stones it would be easy to detect if a stone is found. So the larger stones will be re-polished in order to remove their GIA computerized size and identity. They will then most likely then be re-submitted to the GIA for authentication where they will not be able to recognize the diamonds.
The thieves are fully aware of what is required. You are dealing with sophisticated operators who surely thought and considered all the traffic lights ahead of them. No one should expect them to hurry through a red light in the hope that they will mess up. Eventually some of the smaller GIA graded stones will be re-submitted to GIA and with some luck, traced back to their origin. However, that won't be immediate and these eight men will be nowhere to be found. This will probably be years down the road.
Diamonds have no shelf life and they last forever. Even if they choose to wait with some stones for five, ten, or twenty years, they will be as fresh and new as they were the night they were stolen…
Polished white diamonds did not appreciate this year, but they did substantially outperform stocks over the past 5-10 years. Natural colored diamonds like pink and yellow on the other hand, have done exceptionally well this year. Natural fancy color diamonds outperformed colorless stones.
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A fantastic image of a round brilliant colorless diamond next to a bright purplish pink diamond |
The majority was likely colorless diamonds of about 1 carat, of which prices have appreciated by 35% over the past 10 years (source: Rapaport). At wholesale value the USD50 million would have been worth approximately USD37 million 10 years ago.
So the thieves who decide to stow away their share for 10 years will probably fare well with their “investment”…
However, since we are looking at numbers, let me illustrate how 3.00-carat and above Pink Diamonds did in the last 15 years.
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Click to enlarge |
One of the reasons the thieves did not take USD50 million of pink diamonds is that the goods are not around.
To see the USD50 million diamond robbery in perspective let me show you just a few figures illustrating the size of the world’s diamond business. According to recent reports of the Gem & Jewellery Export Promotion Council (GJEPC), India’s polished diamond exports in January 2013 were USD1.689 billion. By volume, polished exports fell 11 percent to 3.122 million carats during the month. USD50 million is less than 3% of USD1.689 billion - no big deal. It appears that USD50 million is not as much money as it used to be.
Since the thought of loading, moving, storing and concealing was obviously considered, how many diamonds could one get for USD50 million?
Let’s see what your money buys today for USD50 million and then take a look at something a little more conservative, like USD5 million. Then you can consider what you can get at LEIBISH (all 100% legitimate goods, not from any diamond robbery) for USD500,000 and then USD50,000. You can even find something sweet for USD5,000.
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A fantastic 3+ carat, Fancy Vivid Blue, Pear-shaped diamond sold by Leibish. Today, would value more than $5 million |
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An extremely rare 0.42-carat Fancy Red Radiant and a pair of matching 3.42 total carat weight fancy green radiants Together, these stones are about 500K |
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0.60 Carat, Oval Fancy Yellow Diamond Halo Ring, retailing for just under $5,000 |
Sir James Goldsmith once said, “A man of substance needs to have 500 million cash at hand in case something comes along.” Don’t get me wrong, I am not saying that USD50 million is not money, but most of us don’t have that sort of money at hand.
I suggest you check out which fancy color diamonds you can find at LEIBISH for USD500,000 and USD50,000, or you might even be pleasantly surprised to find really chic rings for USD5,000, and you will then realize there is no need to commit a robbery…
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