Diamond prices are plummeting as people spend their money on these instead
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It’s certainly no secret that the pandemic has left many people’s budget plans a bit disjointed. As such, it is no surprise that we’ve seen a significant decrease in luxury item purchases, including that of diamonds!
Global rough diamond prices have dipped in the last year, with the Zimnisky Global Rough Diamond Index noting its lowest value in over 12 months.
Why? Well, as you can probably guess by now, it all comes down to how deep the consumers’ pockets are.
During the pandemic, people had less money to spend on things like travel and dining out, which left them with extra 'discretionary purchases', according to Paul Ziminsky, a Global Diamond Analyst.
As people cut back on luxuries, many opted for services and experiences—like food and travel—over jewellery, which put diamonds at a disadvantage.
'Diamonds are a completely consumer-driven market,' Edahn Golan, an independent diamond analyst, said.
A plummet in demand for diamond jewellery caused a decline in prices, as retailers poured hundreds of millions of dollars into advertising to stoke consumer demand.
Looking back, however, it’s clear that the rough diamond market enjoyed rapid growth in 2021 and 2022.
‘There was a parabolic move up, and now there's a correction on the other side,’ Mr Zimnisky noted.
So, with reduced demand and harder market conditions, could we expect to see a decrease in the market price of diamonds at our favourite jewellery shops? Sadly, that’s not the case.
Retailers don't usually adjust their in-store prices based on the rough diamond market. This means that prices would stay the same, regardless of whether the product had become cheaper or more expensive on the back end.
Mr Golan stated that ‘retailers set a price point, and they're fiercely protective of their gross margins’.
Despite the decreasing price of rough diamonds, a one-carat round-cut diamond bought at a store is, on average, 3 per cent more expensive today compared to January 2020.
‘In the short term, if wholesale prices fall, some jewellers are going to try to use the opportunity to capture more margin,’ Mr Zimnisky explained.
So, what now? Industry analysts anticipate sales to jump during the winter season and into early 2024, as Christmas and Valentine’s Day are sure to keep jewellery companies afloat.
However, it won’t be enough to balance out the market altogether.
'Overall, we’re going to see a year-over-year decline of sales in the holiday season,' said David Johnson, a spokesperson for the world’s largest diamond company, De Beers.
Mr Zimnisky painted a rather optimistic future, citing that the economic indicators in the United States could soften the market this year compared to the previous years.
‘The stock market is performing relatively well, and employment is strong,’ he explained.
What’s your take on this story, members? Share your thoughts in the comments below!
Global rough diamond prices have dipped in the last year, with the Zimnisky Global Rough Diamond Index noting its lowest value in over 12 months.
Why? Well, as you can probably guess by now, it all comes down to how deep the consumers’ pockets are.
During the pandemic, people had less money to spend on things like travel and dining out, which left them with extra 'discretionary purchases', according to Paul Ziminsky, a Global Diamond Analyst.
As people cut back on luxuries, many opted for services and experiences—like food and travel—over jewellery, which put diamonds at a disadvantage.
Diamond prices have fallen this year. Credit: Anna Nekrashevich/Pexels
'Diamonds are a completely consumer-driven market,' Edahn Golan, an independent diamond analyst, said.
A plummet in demand for diamond jewellery caused a decline in prices, as retailers poured hundreds of millions of dollars into advertising to stoke consumer demand.
Looking back, however, it’s clear that the rough diamond market enjoyed rapid growth in 2021 and 2022.
‘There was a parabolic move up, and now there's a correction on the other side,’ Mr Zimnisky noted.
So, with reduced demand and harder market conditions, could we expect to see a decrease in the market price of diamonds at our favourite jewellery shops? Sadly, that’s not the case.
Retailers don't usually adjust their in-store prices based on the rough diamond market. This means that prices would stay the same, regardless of whether the product had become cheaper or more expensive on the back end.
Mr Golan stated that ‘retailers set a price point, and they're fiercely protective of their gross margins’.
Despite the decreasing price of rough diamonds, a one-carat round-cut diamond bought at a store is, on average, 3 per cent more expensive today compared to January 2020.
‘In the short term, if wholesale prices fall, some jewellers are going to try to use the opportunity to capture more margin,’ Mr Zimnisky explained.
So, what now? Industry analysts anticipate sales to jump during the winter season and into early 2024, as Christmas and Valentine’s Day are sure to keep jewellery companies afloat.
However, it won’t be enough to balance out the market altogether.
'Overall, we’re going to see a year-over-year decline of sales in the holiday season,' said David Johnson, a spokesperson for the world’s largest diamond company, De Beers.
Mr Zimnisky painted a rather optimistic future, citing that the economic indicators in the United States could soften the market this year compared to the previous years.
‘The stock market is performing relatively well, and employment is strong,’ he explained.
What’s your take on this story, members? Share your thoughts in the comments below!
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