Diamond experts are calling for polished diamond prices to rise after stronger-than-anticipated holiday sales left little extra inventory for diamond retailers. One jewelry business owner in Central Virginia reported an unprecedented number of engagement ring sales in November and December, 2010.
"With total holiday sales rising an estimated 6% over 2009, and Internet sales up more than double that percentage, there are now signs these businesses have the confidence to pay more and pass those increases on to consumers," writes Russell Shor, Senior Industry Analyst for the Gemological Institute of America (GIA), in the G&G eBrief article "Holiday Sales Should Lift Polished Diamond Prices," published by GIA's Gems & Gemology, January 11, 2011.
According to Shor, relatively strong holiday sales in 2010 nearly doubled industry expectations. Moreover, increased sales in the diamond industry represent a significant step forward, following the 2008 global economic crisis.
Diamond and Gem Markets Make Solid Recovery
In the fall 2010 issue of Gems & Gemology, Shor and Robert Weldon, GIA gemologist and manager of photography and laboratory publications, report in their article "An Era of Sweeping Change in Diamond and Colored Stone Production and Markets," that the diamond and gem industries have regained "solid footing in recovery."
This, they write, is due in great part by the recent emergence of India and China as two new and very strong consumer markets for diamonds. As large and increasing Chinese and Indian markets continue to demand diamonds, global availability will decrease, and worldwide consumer prices are expected to increase.
Also, it seems that the overall restructuring of the diamond industry since the economic crash in 2008 has greatly impacted today's market. Particularly notable are recent changes in industry financing and retail consolidations, according to Shor and Weldon. Moreover, they write, new sales venues, such as the internet and television, provide increased access and information regarding diamonds to consumers, "forever changing" the way people in the general public buys diamonds.
Changes in Diamond Industry Indicate Increase in Diamond Prices
New consumer markets, the demise of many old-style retailers, and increased sales and marketing venues are just parts of the puzzle when it comes to the reshaped diamond industry and the impact on diamond pricing for consumers. Other aspects to consider include groundbreaking changes across the industry since the beginning of the 21st century.
These industry transformations consist of: diamond business giant De Beers abandoning its "single-channel seller" role; diamond-producing countries asserting more control over their diamond resources; the Kimberly Process and anti-terrorist legislation; and emerging and new diamond sources around the world. Although precise predictions for future diamond pricing is unclear, according to Shor and Weldon, all indications are that diamond prices for consumers will continue to climb.
"In the 18 months since the diamond industry began to dig out of the world economic crisis, rough prices advanced strongly, eventually surpassing pre-crisis levels last summer," writes Shor in the G&G eBrief article. He continues to write that, by contrast, "polished diamond prices have advanced more conservatively due to heavy wholesaler and retailer price resistance." While diamond rough prices are expected to maintain a slower increase, it is expected that polished prices will rise more sharply to meet the already-advanced pricing for diamond rough.
Some See Diamonds as 'Hard' Investments
Diamond retailer David Friedlander, founder and owner of Rock Diamond Corporation and the internet-based, colored-diamond specialty store, Diamonds by Lauren, says, "Prior to 2008, I never advised consumers to think of diamonds as investments or safe places to park their money. Recently, however, prices for top-end stones have continued going up; today, I see more and more people purchasing quality diamonds as "hard" investments."
Friedlander continues, "During the last few years, we've seen stock portfolios worth millions wiped-out in a day. Combine recent diamond prices with the horrible performance of some traditional investments, and suddenly, purchasing diamonds seems like a relatively secure way to go."
It goes without saying that as consumers put their faith in high-end diamonds, the top of the market will continue to hold strong and prices will continue to escalate. Accordingly, it is a safe bet that the rest of the diamond market will follow.
Graff Pink Diamond Breaks Auction Records for Per-carat Price
Other indicators pointing to the rise in consumer diamond prices are recent auction results for diamonds and diamond jewelry. According to Shor in the G&G eBrief article, auction houses are predicting another banner-year for high-end gem and jewelry pieces, "equal to or better than a record 2010 that saw a single jewelry auction (Sotheby’s Nov. 16 in Geneva) top $100 million and a 24.78 ct Fancy Intense pink diamond draw a top bid of more than $1.8 million per carat." Sale of the huge, Fancy Intense pink diamond, sold to jeweler Laurence Graff, represents the highest per-carat price of any gem ever sold at auction.
Claire Eddins - Writer/editor, award-winning photographer Claire Eddins collects gems, horses, and obsesses over home, art, and design.
