Inflation, or the new reality in Diamond Prices???

[Rockdiamond]

I'm seeing remarkable movement in the category of yellow diamonds. They've always been an interesting mirror into colorless diamond prices, which are charted on Rap ( and other places)
As an example- Fancy Light Yellow, 2ct size....asking prices are currently almost double what they were selling for in September.

What's everyone seeing out there?

 

[Demon]

I have been curious about that, and have been watching a diamond that's very similar to the one in my avatar....it's one point bigger, lower in clarity, the cut doesn't seem as good, and the fluorescence is strong yellow, rather than the strong green that mine has. Its sitting at $5900.00 more than what I paid for mine (same vendor) 2-3 years ago!

 

[Karl_K]

A better question is what are the chances of the prices crashing in the future as the world's economy changes to be more normal.

 

[oncrutchesrightnow]

If the price of natural diamonds keeps increasing, LGD might become the “new normal.”

 

[RunningwithScissors]

A better question is what are the chances of the prices crashing in the future as the world's economy changes to be more normal.

I've love to know the answer to this question for diamonds, but also for other things like housing materials, etc. that have gone through the roof recently. If only we had a crystal ball!

 

[Garry H (Cut Nut)]

I've love to know the answer to this question for diamonds, but also for other things like housing materials, etc. that have gone through the roof recently. If only we had a crystal ball!

House and diamond prices are rising for the same reason - supply disruptions due to Covid.
India will soon be Omicron vaccinated as they having huge political rallies and festivals.
But there are mines closing down and worker shortages too.

 

[Lookinagain]

I've love to know the answer to this question for diamonds, but also for other things like housing materials, etc. that have gone through the roof recently. If only we had a crystal ball!

Prices go up and down, especially real estate and it's really not a question of "if", it's a question of "when". Supply chain issues seem to be exacerbating it all right now, but it's always something.!

 

[Rockdiamond]

Prices go up and down, especially real estate and it's really not a question of "if", it's a question of "when". Supply chain issues seem to be exacerbating it all right now, but it's always something.!

In my time in the diamond business, that's always how it's been....yet strange things are happening that I've never seen before.
One of my buddies- a local broker on 47th street- is getting calls, and actually selling goods from 47th street to some of the largest cutters in India.....weird....

 

[RunningwithScissors]

Prices go up and down, especially real estate and it's really not a question of "if", it's a question of "when". Supply chain issues seem to be exacerbating it all right now, but it's always something.!

Hey Lookingagain!

I do think you are right about home prices which have always been cyclical. And when the Feds raise the interest rates, which they'll probably do in March, I'd bet home prices start to level off.

But in my original post, I didn't say real estate, I said housing materials - as in raw materials. Many economists and others who study this (my husband works at a research university so we have economist friends who love to talk shop over a glass of wine) are saying that prices for goods and materials in many sectors may not go back down again. And if they do go down, they predict it will only be very slightly, but not back to anything close to what prices were. They weren't commenting on diamonds, or real estate, or oil, as those things have their own unique factors driving prices.

 

[oncrutchesrightnow]

In my time in the diamond business, that's always how it's been....yet strange things are happening that I've never seen before.
One of my buddies- a local broker on 47th street- is getting calls, and actually selling goods from 47th street to some of the largest cutters in India.....weird....

I don’t know what this implies so I liked your post in case you feel like sharing…

 

[RunningwithScissors]

House and diamond prices are rising for the same reason - supply disruptions due to Covid.
India will soon be Omicron vaccinated as they having huge political rallies and festivals.
But there are mines closing down and worker shortages too.

True Garry, supply disruptions from Covid are partially responsible. But there are additional factors for manufactured goods and raw materials in many sectors (outside of diamonds). Just one example is a severe shortage of truck drivers in the US and UK, so it costs more and takes longer to transport goods and materials. Infrastructure problems at ports and labor shortages are creating extra wait times for boats unloading cargo, which makes container shipping more expensive too.

And in the US, there are many economic factors (for example low interest rates) contributing to high inflation which makes everything cost more.

And even apart from Covid, the labor market is going to not be what we are accustomed to for awhile in the US and UK at least. My demographer friends tell me that this is partly due to the fact that the number of humans alive in each generation varies significantly from one generation to the next. For example, Generation X is much smaller than the BabyBoomers, so some positions are going to be left unfilled as the Boomers retire. Also I'm told that because of changing (or previously changed) immigration laws in the US and UK, many jobs, for example truck drives in the UK, which were once filled by new arrivals, are now not able to be filled.

And unfortunately, most of the world's Covid vaccines don't prevent Omicron infections. They keep severe infections at bay, thankfully, but only the mRNA vaccines (Pfiser and Moderna) appear to offer protection against getting Omicron. Here's a New York Times article discussing which countries have which vaccines, exactly what type of vaccine they are, and what protection each provides: https://www.nytimes.com/2021/12/19/health/omicron-vaccines-efficacy.html

So lots and lots of variables! In a way, its the 'perfect storm' for rising prices on just about everything. It will be interesting to see how this all shakes out over time.

 

[whitewave]

Hey Lookingagain!

I do think you are right about home prices which have always been cyclical. And when the Feds raise the interest rates, which they'll probably do in March, I'd bet home prices start to level off.

But in my original post, I didn't say real estate, I said housing materials - as in raw materials. Many economists and others who study this (my husband works at a research university so we have economist friends who love to talk shop over a glass of wine) are saying that prices for goods and materials in many sectors may not go back down again. And if they do go down, they predict it will only be very slightly, but not back to anything close to what prices were. They weren't commenting on diamonds, or real estate, or oil, as those things have their own unique factors driving prices.

I’ve actually read this and it makes me wonder if we do need to build that third house now before things get even worse.

 

[RunningwithScissors]

I’ve actually read this and it makes me wonder if we do need to build that third house now before things get even worse.

It definitely is a rough time for people who want to build or remodel a house. I feel for you! I have no answers.

One couple who my DH and I are friends with are retirement age. They had planned their retirement dream home and had purchased a piece of vacant land on the shore in Delaware and paid it off years ago. They were going to start building on it last year and retire and move in this year. After the pandemic hit, their modest-sized house plans went through the roof in price -- more than doubled -- and now they basically either can't retire, or if they retire, they can't build their retirement house and have to stay put which sucks because they don't like where they live (small rural town in Texas).

 

[Lookinagain]

Hey Lookingagain!

But in my original post, I didn't say real estate, I said housing materials - as in raw materials.

Yes, I see that, but of course new construction, or lack thereof, also plays into the overall cost of real estate. But I do understand your distinction.

 

[whitewave]

It definitely is a rough time for people who want to build or remodel a house. I feel for you! I have no answers.

One couple who my DH and I are friends with are retirement age. They had planned their retirement dream home and had purchased a piece of vacant land on the shore in Delaware and paid it off years ago. They were going to start building on it last year and retire and move in this year. After the pandemic hit, their modest-sized house plans went through the roof in price -- more than doubled -- and now they basically either can't retire, or if they retire, they can't build their retirement house and have to stay put which sucks because they don't like where they live (small rural town in Texas).

We aren’t retired, but yes, that sounds very familiar.

 

[Wink]

True Garry, supply disruptions from Covid are partially responsible. But there are additional factors for manufactured goods and raw materials in many sectors (outside of diamonds). Just one example is a severe shortage of truck drivers in the US and UK, so it costs more and takes longer to transport goods and materials. Infrastructure problems at ports and labor shortages are creating extra wait times for boats unloading cargo, which makes container shipping more expensive too.

And in the US, there are many economic factors (for example low interest rates) contributing to high inflation which makes everything cost more.

And even apart from Covid, the labor market is going to not be what we are accustomed to for awhile in the US and UK at least. My demographer friends tell me that this is partly due to the fact that the number of humans alive in each generation varies significantly from one generation to the next. For example, Generation X is much smaller than the BabyBoomers, so some positions are going to be left unfilled as the Boomers retire. Also I'm told that because of changing (or previously changed) immigration laws in the US and UK, many jobs, for example truck drives in the UK, which were once filled by new arrivals, are now not able to be filled.

And unfortunately, most of the world's Covid vaccines don't prevent Omicron infections. They keep severe infections at bay, thankfully, but only the mRNA vaccines (Pfiser and Moderna) appear to offer protection against getting Omicron. Here's a New York Times article discussing which countries have which vaccines, exactly what type of vaccine they are, and what protection each provides: https://www.nytimes.com/2021/12/19/health/omicron-vaccines-efficacy.html

So lots and lots of variables! In a way, its the 'perfect storm' for rising prices on just about everything. It will be interesting to see how this all shakes out over time.

I had an interesting conversation with a good friend of mine earlier today. He owns a contracting and construction business. He needs one hundred workers to do a large contracting job, and in order to get onsite all have to be vaccinated and then tested once every seven days. On the eighth day without a test the badge for that worker is invalidated.

Forty of his one hundred workers quit rather than get vaccinated for a variety of reasons that are to him, and to me, beyond belief. These are good paying jobs, much better than scale and way above minimum wage and he tells me that at twice what he is paying there are still no trained workers ready to take the jobs.

 

[Garry H (Cut Nut)]

I had an interesting conversation with a good friend of mine earlier today. He owns a contracting and construction business. He needs one hundred workers to do a large contracting job, and in order to get onsite all have to be vaccinated and then tested once every seven days. On the eighth day without a test the badge for that worker is invalidated.

Forty of his one hundred workers quit rather than get vaccinated for a variety of reasons that are to him, and to me, beyond belief. These are good paying jobs, much better than scale and way above minimum wage and he tells me that at twice what he is paying there are still no trained workers ready to take the jobs.

Common sense was never common.
A bit like an arrogant tennis player who thought telling people he had already had covid (when the only evidence came from his shady government). Given Macron said

Macron's vow to 'piss off' the unvaccinated sparks outrage​

https://www.france24.com › France 24 › France



5 Jan 2022 — French President Emmanuel Macron said in an interview published late Tuesday that part of his coronavirus strategy was to "piss off" the ...

 

[Serg]

There is not any science reason to demand vaccination from persons who have COVID antibodies . It does not matter how a person received antibodies by vaccination or he had COVID. it does not matter that vaccine type had been used( USA, USA-German, UK, Russian, Chinese) if it creates necessary level of antibodies . Many government rules are very ineffective and just destroy world economy , that is real reason very high inflation . Most natural products will be much more expensive in next years including natural diamonds. Everybody will pay high bills for very ineffective solutions and protectionism . Lockdowns destroys human immune system and economy that does reduce feature Health care. it is more wise to invest in new hospitals than in lockdowns.
To receive cheaper diamonds the diamond industry has to start cut for demand instead cut for stock according rapaport price list . but most of us select easiest ways, minimum changes, minimum risk : Governments start new and new lockdowns, cancel visa for the nice tennis player , the industry cuts to stock, we pay higher bills

 

[whitewave]

Common sense was never common.
A bit like an arrogant tennis player who thought telling people he had already had covid (when the only evidence came from his shady government). Given Macron said

Macron's vow to 'piss off' the unvaccinated sparks outrage​

https://www.france24.com › France 24 › France



5 Jan 2022 — French President Emmanuel Macron said in an interview published late Tuesday that part of his coronavirus strategy was to "piss off" the ...

I’m so glad Aus sent him back.

 

[Garry H (Cut Nut)]

There is not any science reason to demand vaccination from persons who have COVID antibodies . It does not matter how a person received antibodies by vaccination or he had COVID. it does not matter that vaccine type had been used( USA, USA-German, UK, Russian, Chinese) if it creates necessary level of antibodies . Many government rules are very ineffective and just destroy world economy , that is real reason very high inflation . Most natural products will be much more expensive in next years including natural diamonds. Everybody will pay high bills for very ineffective solutions and protectionism . Lockdowns destroys human immune system and economy that does reduce feature Health care. it is more wise to invest in new hospitals than in lockdowns.
To receive cheaper diamonds the diamond industry has to start cut for demand instead cut for stock according rapaport price list . but most of us select easiest ways, minimum changes, minimum risk : Governments start new and new lockdowns, cancel visa for the nice tennis player , the industry cuts to stock, we pay higher bills

I agree largely Sergey, However the antibodies do seem to be specific for omicron. Astra zenica and many others have low response to reducing transmission. But booster shots or seemingly recent infections work well.
In the case of the tennis star, he claimed to have caught covid just about 2 weeks before coming to Australia and therefore was eligible to come under our rules. But apart from the Serb government there is no evidence that he was ever infected and he attended events unmasked when 'supposedly infectious' and did not record overseas trips on his Aussie visa application.

 

[DAF]

It definitely is a rough time for people who want to build or remodel a house. I feel for you! I have no answers.

One couple who my DH and I are friends with are retirement age. They had planned their retirement dream home and had purchased a piece of vacant land on the shore in Delaware and paid it off years ago. They were going to start building on it last year and retire and move in this year. After the pandemic hit, their modest-sized house plans went through the roof in price -- more than doubled -- and now they basically either can't retire, or if they retire, they can't build their retirement house and have to stay put which sucks because they don't like where they live (small rural town in Texas).

I, too, was planning to have a home built in Lewes, DE. I started looking at land at the beginning of 2020, and then the Pandemic took off. The cost of building materials has skyrocketed, as have land prices. It appears that no one wants to live in the cities anymore.

 

[Garry H (Cut Nut)]

I, too, was planning to have a home built in Lewes, DE. I started looking at land at the beginning of 2020, and then the Pandemic took off. The cost of building materials has skyrocketed, as have land prices. It appears that no one wants to live in the cities anymore.

A small % of Aussies went sea or tree change. Mostly within a couple of hours drive or train ride. They tend to be the better off who can easily work from home, and often that was a second home or a downsized town home and sizeable rural property.

 

[Rockdiamond]

Another Friday- and yet another, across the board increase in the Rap list....

 

[caolsen]

It’s an interesting question. Many of the macro economic pressures that classic economist would label as causing inflation would have a highly manipulated impact on natural diamonds - aka several near monopolies in play, limited distubution channels, limited competition, etc.

Are LGD prices going up? If so, that’s much more likely a classic inflationary effect. If LGD prices aren’t rising, what’s happening in naturals could very much be market manipulation and labor prices increasing since it is not as if the raw material has changed or become less available.

 

[Rockdiamond]

Are LGD prices going up?

What a perceptive question!!
No, I don’t see the same sort of across the board increases.
But there are spot shortages- and in those cases, “normal” economic principles seem to apply. Signet bought up pretty much all the 1/4ct LGDs on the market, and the price of that specific size goes up- but other sizes ( even larger stones) not affected

 

[Garry H (Cut Nut)]

LGD are still trading off natural so price rises are natura. They are not yet being market competition against themselves.
Mines get closed for covid making shortages other that miners use to push up prices. We don't see that with coloured gems as they are 90% artisanal and that has not allowed down. Gems are getting cheaper. No trade fairs. No Avenue to sell them like diamonds traded with certs.
Diamond Nat or lgd are cut in big factories and they have been disrupted many times by covid.

 

[Rockdiamond]

LGD are still trading off natural so price rises are natural

Yes and no.
When it comes to 4mm diamonds, rap is rather irrelevant- the cost of time/labor in relation to rough is much different....prices can only go so low. 3.7mm were/are trading 25% below 4mm. Supply and demand. Covid, and Signet. Boom. Price increase- but this, I predict, is temporary.

In terms of larger, "certified" LG's in relation to Rap.....bigger players- dealing with regular clients are, in my experience, simply increasing the discount off Rap.
If a dealer had a Natural Diamond of worth out on memo, he's most likely going to call the memo back or advise the customer that the price went up.
With LGs....not so much. The higher Rap goes- the harder it will be to maintain this connection....
Interesting times......

 

[Garry H (Cut Nut)]

Yes and no.
When it comes to 4mm diamonds, rap is rather irrelevant- the cost of time/labor in relation to rough is much different....prices can only go so low. 3.7mm were/are trading 25% below 4mm. Supply and demand. Covid, and Signet. Boom. Price increase- but this, I predict, is temporary.

In terms of larger, "certified" LG's in relation to Rap.....bigger players- dealing with regular clients are, in my experience, simply increasing the discount off Rap.
If a dealer had a Natural Diamond of worth out on memo, he's most likely going to call the memo back or advise the customer that the price went up.
With LGs....not so much. The higher Rap goes- the harder it will be to maintain this connection....
Interesting times......

Naturally. The cost of rough decreases related to the increase in polished carat weight.
2ct should cost less per carat than 1ct by a big factor. It will happen eventually when competition hots up.