Well It's a Tough Time to Be In the Diamond Business - February 2023 News
Wars, inflation, interest, rate hikes and natural disasters tend to have a depressing effect on consumers.
What money is being spent is shifting away from goods and going to services. Jewellers are surviving on their workshops. Their inventory is not moving. India's stock of diamonds is depreciating in value. One carat brilliant cut natural diamonds have fallen an average of 17 percent in the past year. During the same period, laboratory grown characters have decreased in value between 70 to 75 percent. I believe that laboratory grown diamond sails are reaching a crescendo. I have spoken to people in the industry who feel that the market is oversaturated and prices could drop to as low as three hundred dollars per carat. It is for this reason that no one wants to invest in lab-grown inventory.
Idex reports that natural diamond demand is soft and sentiment is weak. However, in opposition to this downward diamond price momentum, the closing of the argyle mine and sanctions on Russian rough have caused prices of smaller rough and polished to increase dramatically. A shortage of strictly graded polished diamonds continues resulting in large price variations when comparing Gia Diamond reports.
De Beers has reduced the price of rough that yields polished diamonds of 50 points and larger and increased prices on rough that produces melee. That being said, the price of all rough is too high for cutters to feel confident about rough purchases.
Business in the bourses and larger diamond houses is grinding to a halt. Cutters, dealers and retailers across the globe are nervous and everyone is sitting on their cash. There is a consensus throughout the industry that sales during the next few months will be slow. Trading and profits at the wholesale level are down substantially. However there has been a marked uptick in interest in jewelry shows but conversion to sales has been disappointing.
The next test of the market will be later this month at the Hong Kong jewelry show. Regal Imports has responded to the current diamond price deflation by dropping prices on existing inventory. Prices of desirable fancies have fared much better than round brilliance.
I expect diamond prices to stabilize and perhaps regain some momentum in the early fall. Regal price adjustments mean that many of the sales that we will make in the next few months will be without profit and possibly at losses. I have seen Cycles like this before and they are never pleasant. When the market stabilizes, I will reinvest. Presently it's just not a happy time.
And as the old saying goes, and please excuse my language, when you have to eat eat it with a big spoon. I assure you that I wouldn't partake in such an unappetizing meal if I didn't think it was the right thing to do.
Mel Moss
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