Diamond Price increase related to population/wealth growth?

[Rockdiamond]

HI all,
Anyone shopping for diamonds will notice a large increase in prices over even 3 months back- is this sustainable?

One part of this increase is related to currency- diamonds are traded in dollars- and the dollar has weakened versus Asian and Indian currencies.

Another aspect continually mentioned is the burgeoning middle class in developing counties.

My question is, do you believe the increase in middle class populations will spur diamond demand on it's own?

I point to Europe where a very solid middle class buys only a fraction of the stones sold in the US.
So- is it middle class, or cultural development?

Just an academic discourse as clearly, this is out of our hands.....but I do feel that the upcoming Hong Kong trade show will impact US prices based on prices paid and activity there

 

[Lula]

Re: Diamond Price increase related to population/wealth grow

HI all,
Anyone shopping for diamonds will notice a large increase in prices over even 3 months back- is this sustainable?

One part of this increase is related to currency- diamonds are traded in dollars- and the dollar has weakened versus Asian and Indian currencies.

Another aspect continually mentioned is the burgeoning middle class in developing counties.

My question is, do you believe the increase in middle class populations will spur diamond demand on it's own?

I point to Europe where a very solid middle class buys only a fraction of the stones sold in the US.
So- is it middle class, or cultural development?

Just an academic discourse as clearly, this is out of our hands.....but I do feel that the upcoming Hong Kong trade show will impact US prices based on prices paid and activity there

Interesting topic for a thread, David. I'd like to know more about the part of your post I bolded. How do you think the show will impact US prices?

In reply to your other questions, I've seen plenty of beautiful and expensive jewelry on my trips to Europe, but not many of the traditional solitaire-and-wedding-band sets you see in the US.

 

[ame]

Re: Diamond Price increase related to population/wealth grow

My personal thought on US prices is really that they'll increase because demand is up as a whole globally, especially for high quality stones, and therefore "supply" of quality stones isn't as plentiful. And that show is in a part of the world where demand is soaring and income to spend is also up, lots of new rich and middle class folks wanting nice diamonds. So those folks are going to see what's available and new and offer up more competition to the US for the same goods. The US retailers are going to have to pay more for the same goods because a competitor from around the world is going to be wanting the same item. Price will go up because of that.

Am I making any sense. It's too early and I don't have enough Diet Coke in me yet

 

[Karl_K]

Re: Diamond Price increase related to population/wealth grow

My opinion is that the demand from other countries is overblown and the projections are a bunch of fairy tails.
When the banks start wanting their money back from all the rough that was horded by cutters in India it is not going to be pretty.
Then eventually the Russian government is going to want the money out of all the diamonds they stockpiled.

on the other hand the US dollar is down accounting for some of the increase.
However a lower dollar does not help create the fairy tail of increased spending in exporting countries.
Eventually the US people are going to demand that something be done about China leeching off the US with unfair trade practices and money manipulation.
Any export economy is doomed to failure, no one seems to remember the lesson of Japan as well as many other countries.

 

[Circe]

Re: Diamond Price increase related to population/wealth grow

HI all,
Anyone shopping for diamonds will notice a large increase in prices over even 3 months back- is this sustainable?

One part of this increase is related to currency- diamonds are traded in dollars- and the dollar has weakened versus Asian and Indian currencies.

Another aspect continually mentioned is the burgeoning middle class in developing counties.

My question is, do you believe the increase in middle class populations will spur diamond demand on it's own?

I point to Europe where a very solid middle class buys only a fraction of the stones sold in the US.
So- is it middle class, or cultural development?

Just an academic discourse as clearly, this is out of our hands.....but I do feel that the upcoming Hong Kong trade show will impact US prices based on prices paid and activity there

I think the big difference between the two markets is that the European middle class is somewhat less aspirational than the American middle class.

In the US, we all want to be upwardly mobile, in perpetuity: this may be one of the only nations in the world where you'll seriously see people earning over half a million dollars a year arguing that they're not rich-rich, and their taxes should be cut. Maybe it's the enormous wealth gap - what, 90% of the wealth in the hands of 10% of the population? - but the remaining 90% of the population is constantly scraping, by hook or by crook, to either include themselves in that category mentally (studies have been done showing that both the aformentioned bi-annual millionaires and people who are just above the poverty line would both like to consider themselves "middle class"), or materially, with goods that demonstrate their status. From SUVs to logo-purses to, yes, diamonds, it's a constant game of show-and-tell.

In Europe, from what I've seen, there's much less focus on communicating that same message. So the big question that remains ... will the emerging markets be a closer reflection of US values, or European values? The focus on high-quality stones over large stones hints that there will be at least some differences ....

On another note, I'm really disturbed by some of the insular nationalist attitudes I've seen on similar threads, evincing actual anger against China and Asia for ... what, succeeding economically? It's not at our expense. If we need to compete, well, let us clean house, slap our bankers upside the head, stop outsourcing the bulk of our business to keep benefiting the aforementioned rich 10% at the expense of the rest of the nation, and damn well compete. We're Americans, right? So where's that can-do spirit?

 

[yssie]

Re: Diamond Price increase related to population/wealth grow

Circe - that is a fascinating, if bemusing, appraisal. And a good question:

will the emerging markets be a closer reflection of US values, or European values? The focus on high-quality stones over large stones hints that there will be at least some differences

I will be watching this thread - I don't have much to add, but I'm looking forward to some (non-inflammatory) discussion...

 

[Rockdiamond]

Re: Diamond Price increase related to population/wealth grow

Lula- With regards to jewelry in Europe- I'm basing it more on what I've seen in stores on trips to the continent.
A few years back in Amsterdam, my wife and I walked into a jewelry store- they actually had a Royal Asscher- so we knew it was a shop focusing on diamonds.
When we asked where all the larger stones were, the salesperson replied that larger stones were not seen as "classy"- or something along those lines.
DW and I were laughing as we left- because the salesperson clearly did not care about insulting us ( DW was wearing a larger stone....)

I had similar experiences in Paris, and even in Antwerp.

Re: Hong Kong Show: My feeling is that the following factors Are at play: currency weakness in the dollar, combined with a little more interest in diamonds in Asia - combined with a weaker US market.
These factors meant that dealers who traditionally sell most in the US have a tougher time selling in the USA in 2011, and all of a sudden were able to sell stones for higher prices in Hong Kong.
When they came back to the US, they had been "spoiled" to some extent. They now feel that the prices paid in Hong Kong are now the prices.
Take the example of Fancy Light Yellow.
For years ( actually, forever till now) this grade was "cheap"
Traditionally, far east markets were buying Intense Yellow, Vivid Yellow- but weak interest in Fancy Light Yellow.
In one felt swoop- after the last HK show ( June I believe) where many FLY stones were sold- at record prices- NY cutters increased prices on larger sized Fancy Light Yellows by as much as double.
Will that demand continue?
That's part of my point.

Circe's post highlights part of what it is I see.
I have a slightly different view of diamonds in this equation- as a large component of the desire for a diamond is personal- that is to say the desire to own diamonds is not only "to impress the neighbors"- but that does play a part.

I don't think anyone would condone unfair trade practices, but I also agree that blaming other counties for problems in the US is shortsighted.
The aspects that make the US an amazing country are exactly the ones that will allow us to stay competitive in this world.
One of these ( from our limited perspective) is the fact that I believe the US market will continue to dominate the diamond market for the foreseeable future....

 

[smitcompton]

Re: Diamond Price increase related to population/wealth grow

Hi,

Pretty well all luxury brands, from handbags to Tiffinys, are setting up shop in China. Advertising is its own form of brainwashing.
Those with new money will try to buy that which is considered very desireable.)Sp) There is a jewelry tradition in Asia, perfect small is better than imperfect large. Diamonds have never been a big part of European culture as they used colored stones for engagement purposes. It wasn'st until DeBeers came along to associate diamonds with love that many woman now have to have a diamond.

I think what has reversed itself in this ountry is that before you worked hard(our immigrants) for a better life. Now those that have been here think they are entitled to all without either saving or working to get these things. This irresponsible generation does not even see what they have done.

Business seems to always think it needs to grow. In order to grow it needs new markets or cheaper labor. We see what that does.
Some older markets get left behind, sometimes it occurs quickly and sometimes slowly. We have not paid for the standard of living we have. So, as a country declines, it can purchase less, So will diamond prices continue to go up. Sure. Our dollar is declining, our stature in the world is also declining(much like Britain). our public education has already declined. Any of you watch HDTV and are shocked at the housing prices in these counties. My god, I can't afford to live in a third world country.

Diamonds are going up.



Annette