RAPAPORT... The diamond industry must invest in new products andethically sourced natural diamonds to boost profitability and counter thegrowth of synthetics, Martin Rapaport, Chairman of the Rapaport Group, stressedat the annual Rapaport Breakfast in Las Vegas. "The diamond trade is not profitable enough to support asustainable supply chain," Rapaport said in an address to approximately 800diamantaires and jewelers at the JCK Las Vegas show on Sunday. "If the tradedoes not change its business practices and adapt to new realities, the diamondindustry will suffer extreme financial and regulatory disruption." He cautioned that the industry needed to stimulate growthby emphasizing the value inherent in natural diamonds, rather than just thesparkle. Disclosing diamonds' source of origin will help defend that value,particularly since the current ethical situation in the diamond market isunacceptable and threatens the sustainability of the diamond trade, heargued. The trade is not taking the necessary steps to excludediamonds involved in human-rights abuses, money laundering and terror funding,Rapaport explained. He pointed to imbalances in Dubai, where rough exports aresignificantly higher than its imports, even though there is no source toproduce new rough in the region. Similarly, exports from the US of polishedgoods below 0.50 carats exceeded their imports by $5 billion, which raisesalarm bells about the trade, he suggested.Rapaport recognized that the challenge from syntheticdiamonds raised awareness of unethical practices in the natural-diamond trade.However, he outlined some unethical practices of synthetics sellers that willultimately harm the wider industry: Synthetics are being mixed with natural diamonds in jewelry and consumers think they're getting jewelry with 100% natural product. Sellers of synthetics make false claims about the ethical benefits of synthetic diamonds but ignore the development benefits of natural diamonds and exaggerate the negative impacts. Retailers are selling and pricing synthetic diamonds in comparison to natural diamonds without disclosing that synthetic diamonds do not retain value due to unlimited supply.Rapaport called on the diamond trade to petition theFederal Trade Commission and demand a disclosure statement be included oninvoices for lab-grown diamonds. He suggested the wording to include: "Pricesfor lab-grown diamonds may diverge significantly from natural-diamond prices asthey can be produced in unlimited quantities, whereas the supply of naturaldiamonds is limited by geological scarcity related to the size and quality ofthe diamonds."Synthetics sellers are earning higher profit marginsbased on the value perception of natural diamonds, Rapaport noted. This willresult in a consumer backlash against all diamonds since these values are notsustainable, he warned. "The claim that synthetic diamonds are exactly the sameas natural diamonds is false," he stressed.As an antidote, the industry must launch new products, investin ethically sourced natural diamonds, and recognize that the product reflectsthe people who provide them, Rapaport continued. "Diamonds are a reflection of all of us, and of thecommitment between people that love each other," he concluded. "When all issaid and done, diamonds are only as good as we are. May our industry be worthyof the product we sell. May we be up to diamonds."