It is Always a Challenge Running a Successful Independent Business - May 2023 News
Sure, you can predict how things usually happen, but as technology changes, economic and political events unfold, or catastrophes occur, predictions can just fly out the window.
Inflation changes everything -- exchange rates, interest rates, rent, taxes, and wages, not to mention the cost of sales, promotion and purchasing new inventory. However, there are instances when the cost of inflation can be neutralized by the rising cost of goods already purchased and still in inventory.
Gold is a perfect example. The price of gold has been rising steadily in tandem with inflationary fears. The slowdown in demand for gold jewelry has been offset by the extra profit achieved when selling existing stock at current prices. Let's face it: almost everything involving the cost of living or doing business is going up. That is except the price of cut and polished diamonds, which continues to fall.
In March, I mentioned that I was happy to see that the drop in diamond prices was levelling off, but unfortunately, that was only a short blip. Diamond prices slipped another 2.1 percent in April. Even more concerning -- the lower cost of diamonds is not stimulating demand. The inflationary consequences with regard to Diamonds is different than gold. Gold is witnessing fewer retail sales, however, gold prices are rising. Diamonds are witnessing fewer retail sales while prices are dropping. Idex reported that in March, India's Diamond exports fell 33 percent year on year and yet there has been little reaction from the diamond mining community. There is no shortage of rough diamonds, and the Rappaport and Idex lists are overflowing with polished diamonds for sale. Polished diamond prices have gone down about five percent since the beginning of this year. Polished diamond dealers and jewelry retailers are nervous and not willing to commit to large purchases. The overall drop in the price of polished diamonds since March of last year has been quite spectacular. Polished diamond prices have tumbled close to 20 percent year over year.
I have purchased very few polished diamonds in the last several months and have found it necessary to cut the prices of my existing inventory for the second time this year. My suggestion to retailers is to check your suppliers' inventory lists carefully. If their prices are not dropping, then they are not presenting current prices. There is one thing that diamonds do have in common with gold, and that is that they should always trade at today's prices.
At Regal Imports, we believe that businesses must rely on accurate information. We deliver consistently accurate information on grading standards and how they can affect diamond prices. We report both positive and negative news as we see it because informed decisions stem from straightforward information delivered in a concise and timely manner.
Mel Moss
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