Polished diamond imports into the US have declined once again. In 2017, the US imported $21.7 billion worth of loose polished diamonds, a 3% decline compared to imports in 2016. The sad part is that this marks the third consecutive year of declines in the import of polished diamonds. In 2014, imports stood at $24 billion. In 2015, they fell 4.6% to $22.9 billion, and in 2016, they declined yet again, this time by 2.5% to $22.3 billion. Cumulatively, imports declined by 10% during the four-year period.
Polished diamond prices have finally turned upwards, after an extended period of declining prices. In January, prices rose across the board with few exceptions, according to the Mercury Diamond Global Tracker™ (MDGT™), an index of polished diamond transaction prices. The steady prices, following an extended period of price declines, are a welcome sign of stability for the global diamond industry.
In a recent article we discussed price correlation – and the lack thereof – between various investment channels and diamonds. In it, we looked at diamonds in general – from very small to very large, in a full range of colors and clarities. To date, there is no way to invest in a wide group of diamonds in the same way as investing in biotech firms or a NASDAQ tracking fund. An investor is more likely to invest in a very narrow collection of diamonds or just a single diamond and, therefore, it is worth looking at the differences in performance of specific diamond categories
After the strong showing at the conclusion of the 2017 holiday season, the realization that it was not in keeping with the entire mediocre year that preceded it is dawning on many, but not all, traders. There is a rush for rough diamonds and price increases are expected – either by miners or just by the force of demand from the secondary market.
Let’s be frank. Polished diamonds do not hold their price. They haven’t in years. Not only that they don’t hold their price, they don’t even beat inflation, the most basic requirement of any investment tool. By definition an investment must at least serve the purpose of wealth preservation. This state of affairs is not good for the diamond industry.
Polished diamond prices have largely declined during 2017, although the rate of decline has slowed compared to 2016. The year was marked by an extended period of dropping prices across the board and with a sudden small improvement at the very end, according to the Mercury Diamond Global Tracker™ (MDGT™) , an index of polished diamond transaction prices. The steady prices, following an extended period of price declines, are a welcome sign of stability for the global diamond industry.
The diamond market finally improved towards the end of the year, thanks to the holiday season. Unfortunately, that only happened late in December. Traders reported good demand, and inventories have finally decreased meaningfully.
Consider the following graph of three diamond indexes: RAPI 1 Carat by Rapaport, IDEX Diamond Index, and Mercury Diamond’s Mercury Diamond Global Tracker™ (MDGT™). The three track diamond prices and generally move in the same directions. The variations are due to differences in methodology and what is being tracked. They differ mainly on a micro level. On a macro level, the general trends are virtually identical: prices rose until mid-2011, dropped sharply and then moderated through mid-2012, before falling again and then climbing a little until late 2015. From that point, we saw an ongoing, yet mild downward slope that continues today.
Prices of the most popular polished diamonds declined once again in November, contrary to what should be a period of stable, if not rising prices. Overall, polished diamond prices remained flat in November for the fourth consecutive month, according to the Mercury Diamond Global Tracker™ (MDGT™), an index of polished diamond transaction prices. The steady prices, following an extended period of price declines, are a welcome sign of stability for the global diamond industry.
Slowly but surely, the tide is turning. For decades, the diamond industry feared the idea of diamonds serving as an investment. Some will say that such attempts in the 80s led to major loss of value and erosion in the perception of diamonds, but most simply wanted to see diamonds as a symbol of love and no more. Diamonds as a component in jewelry sold for a good margin. However, a series of recent initiatives shows how the market, the investment world, and even the industry are starting to accept the idea that diamonds are much more than just something pretty. They have financial power.