If you have been considering a diamond purchase as an investment or a gift – now is the time to do it. Diamond prices have fallen sharply over the past two years and according to Bloomberg Business are the lowest that they have been since the 2008 financial crisis. This opens up a unique buying opportunity for diamond consumers in the U.S. that can’t be ignored. The question is, what has caused such steep price drop in a large commodity trade like diamonds?
The Quick Answer: China
As we all have watched China’s over-inflated stock market crash at rates of up to 7% per week, there has been a massive ripple effect in the diamond trade as well. Over the past few years, diamonds became an incredibly popular investment commodity and gift option as the Chinese economy emerged. In fact, China has become the second largest diamond market in the world behind the United States.
As the Shanghai index continued to climb, many Chinese investors switched from buying diamonds to buying stocks with unfortunate timing. The Shanghai index collapsed under it’s own weight, the Yuan has been devalued, and discretionary spending in China has decreased significantly.
All of the factors above have contributed to a massive selloff of the Chinese diamond inventory, which along with the depressed global diamond market have made prices extremely low.
The other issue for the price of diamonds? Global supply is high while demand is low, which is obviously a recipe for low diamond prices across the board for both polished and rough diamonds. De Beers – the largest diamond producer in the world – lowered prices and production in 2015 in an effort to stimulate demand. There has also been a decline in Russia, Israel, and the U.S., which has further contributed to the drop in price.
What Do These Diamond Prices Mean for The Consumer?
It’s pretty simple honestly: right now is a rare diamond buying opportunity for anyone in the market. There were similar downturns in the diamond market in both 2001 and 2009. Both times, prices took less than two years to recover, which means that buyers (ourselves included) have a limited time to capitalize on the low diamond prices.
January did see a bump in diamond sales, helped by diamond producers De Beers and Alarosa PSJC’s combined 1 Billion in sales. However, many experts are not confident that we will see an upward trend this year, and expect the market to be volatile.
Our advice? Strike while the iron is hot, but with the right company. As a smaller diamond seller, Jonathan’s is able to adapt quickly with the downward market trend and adjust our diamond prices accordingly. Large mall stores and specifically the blue box store will likely hold prices steady and force customers to negotiate their prices down!
Interested in learning more? Give us a call (713) 977-9885 or schedule an appointment to learn how the downward trending diamond market can help your bottom line. For the latest diamond and fine watch trends – like our Facebook page or follow us on Twitter and Instagram: