Diamond prices on the rise or just me?

[uproar]

I began my search online slowly educating myself reading and searching and searching. One trend I have began to notice was the less bang of the buck compared to just a couple months ago. I've mainly been searching thru JA and BGD, is this unique to these 2 sites? Is it a matter of just dwindling amounts of stock as the good deals have been purchased and stores are in the midst of restocking after the holiday season? Of course like everything the price is bound to rise. Even just reading past threads and seeing what couple be bought for my 18k budget just 2 years ago is amazing!

Edit duh charting of prices on the side

 

[SMC]

I've actually noticed this on JA's site too. My bf purchased my diamond (a 2.02 ct J SI1) at the end of December for $13.8K ($13.15K w/the PS discount) - it's a GIA XXX with a HCA score of 1.7. The cheapest J SI1 on JA's site now is $14.5K. I think this might be the lack of inventory on JA's site right now as they're still getting all their old inventory on their new website. I think that there will be more deals to be found once they get back up to speed. If you use the JA mobile app, you'll find a lot more diamonds than are currently displayed on their website.

I'm not sure what's going on with BGD lately. They don't seem to have gotten much new inventory since early December - or maybe whatever they get is flying off their virtual shelf and I never see it. Their diamonds don't actually seem to have gone up in price, I just noticed that they seem to have fewer diamonds of lower clarities (SI1, SI2) combined with lower colors (I, J) available, so maybe that's why the prices seem higher. BGD SI1 diamonds seem go to the fastest.

I haven't noticed prices going up on other sites like Blue Nile.

 

[kaydizzle]

Apparently there's an annual price rise on diamonds in about early February. Not sure if this is across the board, but this is what I've heard.

 

[diagem]

Apparently there's an annual price rise on diamonds in about early February. Not sure if this is across the board, but this is what I've heard.

As far as I know there is no "annual price rise" on Diamonds systematically.

What happens sometimes retailers need to stock up after successful season which "might" raise prices in certain item categories.
Final & revised season numbers are not in yet and in any cases this season was definitely different from past ones.

But as expected the Indian manufacturers (worlds largest cutting center) are again at it attempting to grab as much rough material as possible, maybe they are experiencing (or expecting) a renewed wave of demand originating in the Far East (India & China in particular)? Or perhaps consistent news on the depleting of some major mines coupled with their moving from open pit to underground work suggesting short term supply will dwindle.

In any case at the moment rough prices are on the upwards direction (and limited in supply) and only time will tell if its sustainable.
So yes, I feel prices are on the rise again at this moment.

 

[flamingoezz]

whiteflash inventory has been almost unchanged since early december.

i started a custom ring design then and reserved a diamond, but have been looking for something slightly larger basically every day since. at the time, customer service told me you probably wouldn't see much new inventory until jan 15 or so...but now 3 weeks after that date (and about 2 months since I put mine on hold), I have seen one diamond within .85 carat of the one I put on hold added to the site. I am using 2 clarity, color, cut grades in my searches.

 

[kaydizzle]

Good to know DiaGem! That online vendor who told me that I'd better snap up the diamond I had on hold quikly due to annual across the board price rises in February was spinning me a story then eh... Naughty naughty!!~

Also good to know about the state of the market as far as rough stones go. verrrrry interesting.... So what was the last year like in your opinion? How was it different to previous years in your experience?

 

[John P]

Of course like everything the price is bound to rise. Even just reading past threads and seeing what couple be bought for my 18k budget just 2 years ago is amazing!

If you originally purchased in 2010-2011 your observation is accurate and timely.

So what was the last year like in your opinion? How was it different to previous years in your experience?

I'm not DiaGem, but I hope he will provide his view. Here are some of my observations about the past handful of years:

In the polished market price increases gained momentum in the mid-to-late 00s due to burgeoning Chinese and Indian demand. As an example, pricing guidelines for a 1.00 F VS1 round brilliant jumped 25% between 2007-2011.

In 2011 the industry lost our minds. Pricing in the 1.00 ct category screamed upward in Q1-Q2 as distributor focus shifted across the Pacific. This was also (arguably) fueled by speculative buying. I recall threads on PS at this time asking what was up with the price hikes.

Then two things happened. (1) The Rupee crashed hard in Q3-Q4 of 2011. This immediately softened Indian demand and took wind out of speculation sails. (2) Consumers in the US experienced sticker-shock and changed their paradigms rather than their budgets: People starting at Tiffany went somewhere with less markup. People who started with "1ct F VVS1" in-mind softened weight, color, clarity or grading report requirements to fit budgets. More people did research and figured a solution to fit their situation. There was a uniform consumer "OMG" which resulted in consumers spending less, or same amount for softened product. What followed was a reverse-adjustment in the guides in Q3-Q4 of 2011. This wan't obvious at all trading levels, since many manufacturers, suppliers and sellers who actually think-for-themselves refused to follow the insanity of 1H 2011 (thank you). But prices still rose around 19%, depending on category, over FY 2011.

http://www.diamonds.net/mediacenter/PressRelease.aspx?ArticleID=38568

Where are we now? The adjustment period of 2H 2011 resonated into 2012, keeping things flat. The net effect, for the past year, has been very little movement in the price guides.

Experts predict that increases will resume in 2013. We will see. They're bound to resume at some point as a supply and demand equation: The world's largest diamond mines are becoming depleted. New mines are in-development but will fall short of demand projections if the east grows as-predicted. No discoveries of significance have occurred recently and it takes 5-10 years to bring a mine online. It will be interesting to see how pricing develops as we approach 2020.

For anyone interested, this topic was also raised in a weight-category thread that's ongoing right now.
https://www.pricescope.com/forum/rockytalky/carat-magic-numbers-why-7-and-9-t185069-30.html

 

[kaydizzle]

That is really interesting to know.
I would love to hear all of the other professionals on this topic, to see whether that is a general concensus.

It's true though, that if demand is growing for a depleting resource, the reality can only mean upward pricing.

Thanks John!

 

[diagem]

I agree with John's view in general but believe the industry is changing at a rather rapid pace. A pace which is extremely volatile for an industry which habits didn't change much for the last couple of decades.

A "little" History...

-1600's to upper mid 1800's Diamonds belonged to royalty and the ultra rich aristocrats.
-Late 1800's with the discovery of African Diamonds mines and the birth of De Beers the industry as we know today was established. Diamonds became a product to be marketed to the newly 'industrial revolution' rich and later on also to the masses and everyone in between. 
-1900's significant advancements in cutting techniques, tooling and processes as well as mass-marketing (A Diamond is Forever etc...) which basically accompanied the industry well into the 70's &80's,  De Beers was the 'Syndicate' which monopolized the world Diamond market up until 2000. 

http://en.wikipedia.org/wiki/De_Beers

De Beers controlled generally over 80% of rough Diamond material originating in mines scattered all over the world. De Beers were the ones who decided which clients (called sightholders) they will sell monthly allocations (called sights) to as well as dictate the quantities, qualities and of course price!

The industry was on "basically" on some kind of automatic pilot..., the sightholders were mostly divided into three marketing paths, 
a) rough dealers which meant they re-assorted & sold the rough directly forward to a variety of cutters and manufacturers.
b) rough preparers (which is 'general' in terms of today's preparing standards) who pre-sawed or cleaved the rough and then sold on to cutters & manufacturers. 
c) manufacturers who cut & polished their allocations marketing most of the polished outcomes.
And "d" all of the above...

I believe there are still some sightholders who have been client of De Beers for decades. Can you imagine?

A recent interesting article by Chaim Even-Zohar which shockingly shows how primitive this industry acts sometimes with the help of the modern justice system.

https://www.diamondintelligence.com/magazine/magazine.aspx?id=11290

The new Millennia....

De Beers chooses to buy back their public stocks and go private.
Rough stockpiles (or as some called buffer stocks) are (inteligently) poured into the market for this purpose which was translated to super steady prices and supply for a few good years (sounds comfortable
At the same time De Beers are loosing their market share (and monopoly) deliberately to the level of around 30% (some will argue on a lesser percentage number). 
Even though De Beers were not considered the industry custodian anymore other miners previously selling their Diamond run-of-mine production directly to De Beers followed the De Beers cost structures for a few more years.

Present times... (approximate 2006-2012)

Extremely volatile period not to mention the 2008 "Great Recession" as some called it and it's still present effects.

Miners finally go independent with price structures with the help of tenders which are appearing like mushrooms after the rain. 
These tenders reveal[ed] new  information not available before on rough purchase behaviors which are currently adapted to present price structures which seem to be more confusing than ever.

The world became smaller more efficient with the Internet, we are witnessing the rise of the East (a force unimaginable yet to Western known standards) and maybe the setting down of the West. The world is changing rapidly and so is the Diamond industry amongst other industries. 

The majority of Diamond industry professionals are used to market their products with the 'added value' concentrated on 'price' mostly. This old model is History and it's a pity most industry members do not seem to cope with this now already known fact. 
Innovation and further advancements are clearly not a strong hold with the majority and will materialize only through education, education & more education.
Industry professionals must learn how to add value to their Diamonds which is other than price. ('in general terms only' as there are splendid Companies out there but they are a tiny minority).

Future glimpse...

We are witnessing the start of a new'ish movement which IMO will change the value balance of Diamonds as we know today, giant retailers are aggressively competing with the manufacturing segments for rough material. it's not uncommon for cutters & rough buyers employed by those retailers competing for same rough lots at tenders.

Industry members will need to adapt to these upcoming changes if they wish to survive, consumers are too changing the landscape on the demand side as they become more educated know what they want and expect. industry members must listen to consumers to be able to move forward.

 

[Rhino]

Very excellent summary and history DiaGem & John.