The huge increases in diamond prices on the Rapaport list is, as the company itself states, not an indication of actual prices but a reflection of the premiums being asked for large goods. The fact is, given the financial turmoil in world markets, large diamonds have distinctly moved out of the sphere of adornment, fashion and romance and into the investor’s portfolio.
This is scary because it only indicates the rush to ’safe haven’ investments all over as energy prices and stock markets fluctuate madly. It does NOT indicate any long-term sustainable demand for these diamonds. These high prices can only exist in these turbulent times. These diamonds won’t appreciate the way they are now when things settle. In fact, when world economies begin climbing back up, there’s going to be a flood of these diamonds coming back onto the market as investors dump them for better prospects. It happened before with catastrophic results. For those of you who don’t know about or don’t remember the diamond crash of ‘82, you can catch up on it here.
Meanwhile, the ‘commercial diamond’ category, which comprises smaller, lower colour and clarity goods, seems headed for battering as demand from the US, the market that soaked them up in huge quantities, continues to fade rapidly. So the ‘bread and butter’ part of the business too is in trouble.
Put everything together and take a good look around at what’s happening in the industry.
