Diamond Prices - Increased by $3,000 in one month?

[WallaWalla3]

I thought this warranted a seperate thread. Maybe someone can help explain it. I was working with a PS vendor and got a quote on a few diamonds at the begining of December. I didn't buy at the time because I had hoped to find something better. Nothing better came along. After looking for months, I just can't wait any longer. So I decided I would buy one of the stones. But now when I told the vendor I was ready to purchase a specific stone, he told me the price had increased by $3,000. In only a month?!? Another stone I was interested in he is now also quoting me a price that is also $2,000 higher?

The vendor claimed that prices, especially in the larger carat sizes, have increased. I read the RAPI report and see that prices in stones did go up in 2010. But was under the impression that this was primarily in the first half of the year. And I was recieving quotes during the holiday season when I was told that prices were already higher due to a smaller supply.

Why I pursued the matter, the vendor also said that the owner now thinks that he can sell the stone on the open market for more. I can understand a small increase, but by $3,000 in a month? And not just for one stone but for both stones I was interested in (which are from different owners)?

I really want to buy the stone, but this increase has really left me sour on the vendor. I would hate to think that the vendor has now just decided to increase his mark up. But maybe his markup is really the same and the prices of all stones have gone up by that much of an amount.

What is really going on here?

 

[Rhino]

The vendor is not lying. There was a notable increase in price over the past month. Manufacturers who have invested in larger diamonds are looking for the increased dividends and demand is only getting higher too.

 

[TimMD]

Sorry for our frustration but I remember back in November a vendor told me this increase was coming, mentioning something about increase in rough diamond in 2011 and so I did a google search on that and saw several articles saying the same. I was happy that the vendor clued me into what might be coming and I bought my stone then instead of waiting. I have been looking forever now it seems for small stones for earrings and haven't noticed a remarkable increase in price but that may be more pertinent towards bigger stones. Just thought I would share, good luck in your searching.

 

[tannet]

I was also told by a vendor regularly mentioned here that diamond prices were increasing. That was towards the end of December. I haven't noticed any dramatic increases in the carat range I've been eyeing (~1.2ct) so maybe it is more evident in the larger stones, as Rhino suggested.

 

[scepture]

This is a short article that I found today right before looking here on PS. Crazy! Anyway, here's the link to the Bloomberg article
http://www.bloomberg.com/news/2011-...ly-sales-advance-as-prices-rise-update2-.html

Edit:

I just found another article on this, and was AMAZED when I read (from several sources) that "...reports that De Beer’s Diamond Trading Company (DTC) raised rough diamond prices by an average of nearly 3% this week..." THREE PERCENT IN A WEEK?!? Anyone else think this worse than outrageous??!

 

[diagem]

I just found another article on this, and was AMAZED when I read (from several sources) that "...reports that De Beer’s Diamond Trading Company (DTC) raised rough diamond prices by an average of nearly 3% this week..." THREE PERCENT IN A WEEK?!? Anyone else think this worse than outrageous??!

DTC sight system is build of ten sights (allocations) per year. This 3% is on the first sight of the year out of ten.
But yes..., I too foresee a constant climb in prices and can confirm it's not only on the larger sizes. As a matter of fact I believe this 3% hike is mostly on the smaller sizes.
As long as (mainly) the Indian industry are working hard to establish a buffer stock of rough to supply their (close to) one million cutters, pressure on supply and prices will continue. The big question..., will world demand justify these steep increases and quantities???

I guess only time will tell.

 

[yssie]

Makes insuring with that super-inflated appraisal.. seem like not such an absolutely dreadful idea

 

[kenny]

This makes trade up polices less advantageous if you bought a larger rock years ago.

 

[Paul-Antwerp]

Thank you to some of the posters, who recognize that I have warned them well in advance of rising prices.

Wallawalla, the dollar-amount of these increases seems high, but it all depends on what kind of stones you were looking at. Could you clarify?

For future reference, here is an article by WWW, a company of diamond consultants, http://polishedprices.com/news/NewsDetails.aspx?NewsId=1000006733. They maintain a price-index of polished diamonds, based upon actual transactions by cutters/wholesalers, and at the beginning of each year, they send out a forecast for the coming year.

For 2011, they predict a 10% increase compared to the beginning of the year. Just for your information, in 2010, the index ended just above the high confidence-limit.

Live long,

 

[diamondseeker2006]

This is not good news for those of us who like diamonds and are not independently wealthy! What size ranges have gone up so drastically already and when would we see a price increase in smaller stones?

 

[yennyfire]

I see my diamond earring project heading down the drain...

 

[WallaWalla3]

I am looking in a 3ct size. It is unbelievably frustrating to now purchase the same stone a month later for $3k more. But what should I do, bit the bullet? It sounds like if I wait longer - prices may even go up more?!?

 

[Cozystitches]

This sucks for those of us who are saving, and saving, and saving but see no upgrade in diamonds anytime soon. I had an initial saving budget (as in I'd save to x amount) set but now w/the prices making such a drastic increase this amount may have to double to get an actual upgrade! Makes me (kind of, but not really) wish I had just bought the stone I saw on credit card...but not really...sigh. I guess I will just have to continue to live vicariously though you all w/your big sparklies!

 

[diagem]

This makes trade up polices less advantageous if you bought a larger rock years ago.

Or advantageous..., depending on the stone you wish to trade..., or actually sell.
Please remember that a Diamond purchased years ago might be valued more today

 

[denverappraiser]

This makes trade up polices less advantageous if you bought a larger rock years ago.

Or advantageous..., depending on the stone you wish to trade..., or actually sell.
Please remember that a Diamond purchased years ago might be valued more today

I'm with Kenny. In most cases, the tradein contract is an agreement by the jeweler to buy the stone from you for a pre-agreed price, usually the original purchase price. The new stone will be priced based on whatever the new market conditions are for that particular stone so the one you're trading in will stay the same a the one you're buying will probably go up. You can, of course, sell the old one yourself through whatever channel you have access to since the resale value will probably also go up but this is simply avoiding the whole trade in program entirely. That is to say, the 'advantage' of it is zero already and it can't drop below that.

 

[diagem]

This makes trade up polices less advantageous if you bought a larger rock years ago.

Or advantageous..., depending on the stone you wish to trade..., or actually sell.
Please remember that a Diamond purchased years ago might be valued more today

I'm with Kenny. In most cases, the tradein contract is an agreement by the jeweler to buy the stone from you for a pre-agreed price, usually the original purchase price. The new stone will be priced based on whatever the new market conditions are for that particular stone so the one you're trading in will stay the same a the one you're buying will probably go up. You can, of course, sell the old one yourself through whatever channel you have access to since the resale value will probably also go up but this is simply avoiding the whole trade in program entirely. That is to say, the 'advantage' of it is zero already and it can't drop below that.

Could be you & Kenny are correct..., I am not familiar with trade-in's...
But it could be worth your while to do some homework as "some segments" might not be worthwhile to trade-in..., but rather sell & buy new..., even with some known vendors.

 

[diva rose]

I am looking in a 3ct size. It is unbelievably frustrating to now purchase the same stone a month later for $3k more. But what should I do, bit the bullet? It sounds like if I wait longer - prices may even go up more?!?

How about something 2-2.5C? You can go higher in colour also.
Do you have to get 3C?
Personally I'd prefer to go smaller and higher in colour.

 

[WallaWalla3]

It's interesting that you mention the trade in policy. I have a friend who also purchased a stone from a vendor about a year ago. She never had it set and is now looking to upgrade to a larger stone. She tells me that the vendor appears to be less willing to work with her stating that the vendor has told her he will be forced to outlay money to buy back the stone and then resell it.

This is even the case now that prices have gone up so the vendor would potentially be making a greater profit on the diamond? I asked her about reselling the stone herself on the market, but I'm not even sure where she could resell and get the original purchase price back? On sites like eBay or with consingments it appears that you get significantly less than what she paid for the stone with the vendor. Even though now if she were to buy the stone with the same vendor it would cost her more? I was under the impression that the online vendor markups weren't that high?

So now she is even more at a loss. She has a stone that she is unhappy with. If she wants to use the vendor's trade in policy not only will she be losing out on the price increase because the vendor will only give the original purchase price - but she also has to pay a higher cost. And, to top it all off the vendor seems less willing to work with her because he will have to resell the stone. But she can ONLY use that vendor or take a greater loss on the open market.

Any suggestions?

 

[swigertj]

I purchased a 2c round right before christmas and I am having a setting custom made right now. I heard the same thing from my vendor that I was very lucky to have purchased my diamond when I did because prices have moved 15-20%. I guess there is a huge demand increase from the asian markets and as the US economy improves its going to place a pretty heavy strain on diamond prices.

Even after spending all this money I still dont get the novelty of these things. I dont think its fair that my FF gets to wear my Porsche 911 downpayment on her finger

 

[diamondseeker2006]

Haha, swigertj! My hubby probably feels the same way!

Walla, I am not understanding the vendors reluctance to taking the stone back. If prices are stable or higher, he can resell it for what she paid or more. Plus, he makes some profit off of the new stone sale. Who is the vendor? I honestly have not heard of a vendor not readily honoring the trade-in policy.

In your case, yes, I'd buy before prices go any higher!

 

[John P]

Paul Slegers posted a thread alerting Pricescopers about this in September of last year. Dialogue forecasting current and future hikes, and how globalization is influencing them, can be found here:

https://www.pricescope.com/community/threads/price-increases-in-the-diamond-market.144407/

 

[John P]

Walla, I am not understanding the vendors reluctance to taking the stone back. If prices are stable or higher, he can resell it for what she paid or more.

DiamondSeeker I agree with your sentiments; if that's the policy it should be honored. But whether the seller can resell it for gain could possibly depend on the diamond's size, shape, cut-quality, class & category.

As an example (aside from WallaWalla3's situation) take the case of a jeweler "investing" in a half-dozen GIA 3ct D IF RBs in the early 2000s. He holds them for ten years and now, with the economy down but diamond prices up, decides to sell them to realize the gains. Of course he will need updated reports... But with GIA's new cut grade applied (it did not exist until 2006) it's revealed that all of the stones have severely digged girdles and are 'Good' in cut. This makes his collection worth 25% less than projected, and that is at the industry level. Recut/repair would take them below 3cts, which doesn't help him much since ppc of a 2.9x GIA EX is essentially the same as a 3.0x GIA G.

While that example is extreme, millions of diamonds were sold prior to the existence of current cut assessment systems (GIA, AGSL, HRD) which might receive a value-downgrade with an updated report. Furthermore, the "final frontier" of cut assessment will continue to evolve. Ten years from now I wager we will see cut-criteria on major lab reports in the USA which do not appear today. Sellers who offer trade-in/trade-up policies are best encouraged to focus on top cut-quality - not just what the labs judge today, but beyond it - so that diamonds they are selling to clients now don't lose value when tomorrow's standards are applied.

 

[hoofbeats95]

I just committed to an upgrade. My vendor (a well respected PS vendor) just returned from a trip to Europe. I was told that prices definitely increased and I'm very lucky to have gotten what I got when I got it. Makes me wish I had splurged for that slightly larger stone I was eyeing up! LOL. I traded in a diamond I bought in Nov of 2008. I don't think the vendor will make a lot of money on it, but there will be/should be some made. I can't find a similar stone for the same price. It makes me hope I love the stone I upgraded to, because it will likely have to last for some time.

 

[diamondseeker2006]

Great post, John! One thing is for certain, I have learned through the years (of mistakes) that one should buy the best quality possible within budget. Then you have no room for regrets down the road. It wouldn't be very wise for vendors to offer that trade-in policy on anything but top quality stones.

 

[newbie12345]

One jeweler i went to 2 months ago said that China and other countries near them are buying up all the diamonds from .3/4 ct range to 3 ct and that when he restocks in the spring, he will have to increase his prices. I thought he was BSing so he could sell me an expensive diamond. Turns out, he was not.

 

[Cachette]

This sucks for those of us who are saving, and saving, and saving but see no upgrade in diamonds anytime soon. I had an initial saving budget (as in I'd save to x amount) set but now w/the prices making such a drastic increase this amount may have to double to get an actual upgrade! Makes me (kind of, but not really) wish I had just bought the stone I saw on credit card...but not really...sigh. I guess I will just have to continue to live vicariously though you all w/your big sparklies!

Yeah. So depressing.... Will the prices only go up or is there hope that they'll come down?

Cachette

 

[Dancing Fire]

One jeweler i went to 2 months ago said that China and other countries near them are buying up all the diamonds from .3/4 ct range to 3 ct and that when he restocks in the spring, he will have to increase his prices. I thought he was BSing so he could sell me an expensive diamond. Turns out, he was not.

methink the avg Ering in China is more like .30 ct nowhere near .75 ct

 

[Dancing Fire]

This makes trade up polices less advantageous if you bought a larger rock years ago.

Or advantageous..., depending on the stone you wish to trade..., or actually sell.
Please remember that a Diamond purchased years ago might be valued more today

I'm with Kenny. In most cases, the tradein contract is an agreement by the jeweler to buy the stone from you for a pre-agreed price, usually the original purchase price. The new stone will be priced based on whatever the new market conditions are for that particular stone so the one you're trading in will stay the same a the one you're buying will probably go up. You can, of course, sell the old one yourself through whatever channel you have access to since the resale value will probably also go up but this is simply avoiding the whole trade in program entirely. That is to say, the 'advantage' of it is zero already and it can't drop below that.

that's reason why i can't upgrade.my stone is stuck at 2004 price...

 

[John P]

One jeweler i went to 2 months ago said that China and other countries near them are buying up all the diamonds from .3/4 ct range to 3 ct and that when he restocks in the spring, he will have to increase his prices. I thought he was BSing so he could sell me an expensive diamond. Turns out, he was not.

methink the avg engagement ring in China is more like .30 ct nowhere near .75 ct

"Average" is irrelevant. This is about sheer numbers. Say China's "average" widget demand is in size 30. It's meaningless. They can still have so many people there demanding size 100 that it affects supply here.

With populations of 1.3b in China and 1.1b in India (v 0.3b in the USA) "average" becomes irrelevant. Instead, consider the sheer number of households arriving at-or-above the standard luxury income level. In the USA that was 25% of households in 2005 (US Census figure). In China it was 3% last year, but you must multiply that by at least 4x for a comparison since China has over 4x the US population. Now add India. And now consider that economic growth in both places has huge overhead in which to grow. Given how fast industry and commerce are evolving there the number of households influencing commerce at the "luxury" level in China and India will soon exceed the US, and possibly the West.

We had a similar conversation last year DF:
https://www.pricescope.com/community/threads/china-on-the-rise-new-article.150596/

 

[Dancing Fire]

delete