The breakup has been on going for about 7 years now. As the article says, the old way of buying diamonds was a take it or leave it proposition. About 7 years ago though, some of the smaller players in the field (Dominion, Rio Tinto, Okavango) decided to start auctioning their rough stone every couple of months. They invited dozens, up to 100 bidders for each auction. This was the first time buyers could get a real market price for the rough stone, and there were no repercussionsn if they were outbid. It’s become the industry practice now to sell a portion of the rough using auction software and using that market price to set the prices for these sight holders, who still buy a large proportion of the rough. Even DeBeers and Alrosa use auctions to set prices. The sales of diamonds has changed more in the last decade than it did the previous 100. (Disclosure, my company supplies software for these auctions).
To add to my comment a little, and this was touched up in the article. The vast majority of rough diamonds are sent to India for cutting/polishing, before being sold to the retail channels (Tiffany, Zales, Wal-Mart, etc). The profit margin for the miners is rather small, the profit margin for the cutters/polishers is razor thin, and the profit margin for the retailers is HUGE.
Just speculating here, maybe if you fly to India and visit their cutting shops in Surat.
The fairest prices as I understand it are on BlueNile, which charges about 10-15% above cut price, which is much better than the 100+% you'll find in retail.
