Diamond traders buy and sell quantities of diamonds with the intention of generating a profit from the trade. Many traders are employed by mining companies and diamond distribution firms. In some countries, these traders are referred to as brokers and some of these individuals are employed by investment companies rather than firms involved in the diamond industry.
Major mining corporations and independent minors compete to find uncut or rough diamonds and other types of precious stones in mines located throughout the world. Diamond traders purchase rough diamonds directly from minors and attempt to broker deals to sell these gems to jewelers, investment firms or private individuals. Traders must negotiate prices with mining firms and these prices like the prices of most commodities depend in part upon factors such as supply and demand. Additionally, minors often charge a premium price for particularly large diamonds since these stones can fetch a high price on the international market.
Having purchased rough diamonds, traders sell the stones to firms that finish the diamonds. Some traders are employed by firms that cut and finish diamonds and these individuals are often salaried employees. Other traders work independently of diamond companies and these traders are normally paid a commission. In some instances, diamond wholesalers contract independent traders to broker deals with mining companies and individual minors.
Aside from buying rough diamonds, traders also buy finished diamonds and sell these gems to jewelers and investment firms. Traders may agree to buy large quantities of diamonds which may be used to make earrings, engagement rings and other types of jewels. In other instances, a trader may be contracted to locate a specific diamond that meets the requirements of a particular individual such as a wealthy person who wants to buy an extremely large diamond as a gift or status symbol.
Like other commodities, diamonds are bought and sold by investment companies that are concerned with making profits from trades rather than taking possession of the stones. Investment firms unlike gem companies, have no storage facilities to hold diamonds. Consequently, diamond traders employed by investment firms sometimes have to take a loss on diamond trades if they cannot find a buyer willing to pay a premium for the stone. As with other investment firm brokers, diamond traders are normally paid commissions rather than salaries.
In many countries, there are laws to regulate the activities of diamond traders. These laws are designed to ensure that traders do not buy and sell so-called conflict diamonds that originate in war-torn areas. In the past, proceeds from diamond sales have been used to fund military expenses associated with civil wars and other conflicts. Consequently, traders in most parts of the world have to do keep detailed records proving that they bought their diamonds from reputable sources.