Rapaport Magazine

Tax Raid Renews Uncertainty

Israel June Market Report

By Avi Krawitz

Trading confidence in Ramat Gan continues to be impacted by the tax fraud and money-laundering allegations in the Israel Diamond Exchange (IDE). Following a one-month suspension of the initial investigation that took place in February, authorities in May raided another company that had purportedly avoided required tax payments.

Yair Sahar, president of the IDE, stressed that the raid did not signal the renewal of the widespread investigation in the bourse but was limited to that one company. He added that IDE has formed a committee that continues to consult with the authorities to work toward an amicable resolution to the recurring — and disruptive — investigations. 

Traders in the bourse noted that ongoing rumors about the allegations impact business. “It has added to the uncertainty and you feel there are fewer stones coming to Israel than before,” said Natan Friedman, a polished diamond dealer. “There is demand and we have requests for goods, but it is not easy to fill them.”

Friedman noted that demand for round diamonds has slowed, while demand for fancy shape goods continues to improve, particularly in the nicer makes. He added that polished suppliers are facing price resistance from buyers when it comes to round stones, whereas recent increases in rough prices are putting pressure on suppliers to raise their prices.

Emanuel Namdar, managing director of Schachter & Namdar Asia, which specializes in .30-carat to 4.99-carat stones, agreed, but added that polished goods are considered expensive in Israel, where suppliers are not in a rush to sell. “Even the small manufacturers are prepared to wait,” he explained. “The mood is not great but people are active — they’re buying and selling and prices are firm.”


Many pinned their hopes during May on the JCK Las Vegas show, which opened June 1, because the Israeli industry continues to export large quantities of diamonds to the U.S. While demand from the U.S. has improved in 2012, it tapered off slightly in April and May.

Moti Ganz, chairman of the Israel Diamond Institute Group of Companies (IDI), expressed confidence in Israel’s ability to maintain its position as the major supplier of diamonds to the U.S. He estimated that more than half of polished diamonds sold in the U.S. are sourced in Israel.


Ganz added that Israel’s relative economic strength during the recent global crises, which raised the country’s profile as a stable and attractive source of diamonds, motivated IDI to launch its 2012 marketing campaign under the banner, “Welcome to Israel, where stability reigns.”

Namdar stressed that Israeli businesses have had to be innovative in every aspect of their operations to survive in the current environment. “The fact that we are surviving means that things are good and happening because we face a lot of challenges,” Namdar said. “There is a lot of innovation in Israel today in all areas, especially in manufacturing and marketing. We are often early adapters of technology and new trends.”


One example of the new trends has been Israeli diamond and jewelry companies capitalizing on the social media craze that has engulfed the web. Terry Schor and Tal-li Soffer, co-founders of T Jewelry Ltd., which designs and manufactures diamond jewelry, said that the company recently launched with the intention to focus on using social media platforms such as Facebook to spread the word about its new designs and jewelry pieces.

“Israel is a small market so social media exposes us to the global market,” Schor and Soffer explained. “You can reach many people at one time. It’s free, fast and accessible and the feedback is immediate.”

Liat Steinmetz, the public relations officer for Yakubov Group, which has diamond manufacturing and retail jewelry operations, agreed that Facebook has become an essential tool to market the company’s products. She added that other internet tools, including Instagram, a photo-sharing application recently purchased by Facebook, have helped enhance the company’s marketing.

Schor, Soffer and Steinmetz all agreed that Facebook is not yet an effective platform on which to actually sell goods, especially diamonds, although the social media giant is preparing to launch a sales platform to compete with the likes of eBay. “For now, it’s all about the opportunity to show your products in a noninvasive way and reach a global audience,” Steinmetz said.

Namdar, who said that he does not use social media since it does not fit with his business model, stressed that the biggest advantage social media offer is their ability to connect small people with bigger players in the market. “Even the trade shows don’t enable that,” he said. “The result is that today Israeli suppliers have clients in the most remote locations.”



  • Demand is focused on commercial-quality VS-SI goods, with pointer and 1-carat sizes the most popular.
  • Buyers are focused on filling existing orders rather than building inventory.
  • Fancy shape diamonds are in demand, with a shortage of well-made goods.
  • High rough prices continue to limit manufacturing and dealer activity because margins are slim.
  • Focus is on triple EX certified diamonds.
  • Demand for better-quality VVS and large stones above 3 carats is soft.

Article from the Rapaport Magazine - June 2012. To subscribe click here.

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