Diamond traders buy and sell large quantities of diamonds in order to profit from the transaction. Mining companies and diamond distribution companies employ a large number of traders. These traders are known as brokers in some countries, and some of them work for investment firms rather than diamond companies.
In mines all over the world, major mining corporations and independent minors compete to find uncut or rough diamonds and other types of precious stones. Diamond traders buy rough diamonds from minors directly and try to broker deals to sell them to jewelers, investment firms, or private individuals. Traders must bargain with mining companies about prices, which, like the prices of most commodities, are influenced by supply and demand. Furthermore, because large diamonds can fetch a high price on the international market, minors frequently charge a premium for them.
Traders sell rough diamonds to diamond finishing companies after they have purchased them. Some traders work for companies that cut and finish diamonds, and they are usually salaried employees. Other diamond traders work independently of diamond companies and are usually compensated with a commission. Diamond wholesalers sometimes hire independent traders to help them broker deals with mining companies and minors.
Traders buy finished diamonds and sell them to jewelers and investment firms in addition to buying rough diamonds. Traders may agree to purchase large quantities of diamonds for use in earrings, engagement rings, and other jewelry. In other cases, a trader may be hired to locate a specific diamond that meets the needs of a specific person, such as a wealthy person looking for a large diamond to give as a gift or as a status symbol.
Diamonds, like other commodities, are bought and sold by investment firms that are more interested in profiting from trades than in acquiring ownership of the stones. Unlike gem companies, investment firms do not have storage facilities for diamonds. As a result, investment firms’ diamond traders may have to take a loss on diamond trades if they are unable to find a buyer willing to pay a premium for the stone. Diamond traders, like other investment firm brokers, are usually paid commissions rather than salaries.
The activities of diamond traders are regulated by law in many countries. These laws are intended to prevent traders from purchasing and selling so-called conflict diamonds that come from war-torn areas. Diamond sales have previously been used to fund military costs associated with civil wars and other conflicts. As a result, traders in most parts of the world must keep meticulous records to prove that they obtained their diamonds from trustworthy sources.