Recessions come and go; a Diamond is Forever

This time last year the sparkle of a diamond really did dull, in economic value terms. The global impact of the recession had hit the luxury sectors hard, leading ultimately for a loss in purchases and demands of diamonds, both rough and polished.

Figures for last year revealed astonishing losses. As obtained from Gem Diamonds, a London-listed miner, the average price per carat of a rough diamond fell from about $2,500 to $1,400. The panic was apparent when news broke of a meeting between DeBeers and Alrosal, the Russian mining group, in the diamond capital of the world, Antwerp, to attempt to tackle the falling prices.  All eyes were turned towards America, who ordinarily account for half of all of the diamonds consumed around the world. December 2008 showed a 20% drop in sales around the Holiday season in America, as well as figures slumping globally.

Bloomberg today reported that ‘London’s economy is recovering faster than the rest of the UK.’ “The UK regions continued to take steps along the road to recovery, with London leading the way,” said Tim Moore, an economist at London-based Markit. Even though parts of the world are still in recession, there is optimism for diamond prices in the near future. As assured by IDEX, the Online Diamond Price Index, between the months of July-September 2009, “it appears that diamond prices have reached equilibrium”. Furthermore, U.S. Treasury Secretary Timothy Geithner recently confirmed the positive outlook for the state that the diamond industry is now in and points to a sign of the times to come; “The emerging confidence and stability of September 2009 is a far cry from the crippling fear and panic of September 2008.” The trends predicted in the near future, suggest a gradual climb to prices that would have been seen before the world was recession-ridden. IDEX predict “at some point, probably in late 2010 or early 2011, we believe that diamond prices inflation will recover to its historic trend line, reflecting annual inflation of 3-4 percent”.  In comparison to the figures from last year, it is evidential that the diamond industry has come a long way in the past 12 months. Investment guru Warren Buffett revealed, “I think the odds are very much against getting significantly worse”, in an interview with CNBC on September 16th this year.

In terms of where consumers stand in the stabilising and ultimately rising prices of diamonds on the horizon, the future seems bright.  Currently, diamonds can be found for up to 30 percent less than their usual industry worth. Thus, a purchased diamond will have a significant increase in value in times to come, once the trends in prices become customary.

The Christmas period sales are an ideal time in which these predictions can be tested. Compared to the figures from last year, a rise in sales this Christmas will signal the more positive times to come. The slight ease of the affects on the recession and the reassuring figures of the stabilising prices of diamonds will hopefully see an increase in sales, which will point to a subsequent trend in the next year, starting 2010.