Price predictions what is happening in the world of diamond?

[Karl_K]

In this thread [URL='https://www.pricescope.com/community/threads/why-buy-a-diamond.200234/page-2#post-3645115']https://www.pricescope.com/community/threads/why-buy-a-diamond.200234/page-2#post-3645115[/URL] I posted:
Talking of price predictions:
The rough sellers have been trying to push up prices for months but the price of polished hasn't kept pace there is a lot of resistance to the increases and unlike in the past and De Beers doesn't have the power to force them through and the alliances are showing signs of breaking up.
An investigation into collusion by the rough producers would be very interesting.
What I see is a power shift from the rough producers to the overall market and they are fighting it.
If the rough producers win expect some large price increases.

It will be interesting to see how it all plays out.

Then Wink posted:

I kind of wish I could start a new thread with your post and then post this comment from Polished Prices dot com that I just received so that we could look at the market as it currently is.

Quote:

Index sets 20-month high

A strong finish at the end of March saw the overall PolishedPrices index reach above 150 for the first time since July 2012.
The index ended the month at 148.5, up 3.8% from the end of February. The average for March was 145.6, 0.1% higher than February and 4.7% above the average for March 2013. So far this year the index has gained 5.3%

The last two weeks in March have been exceptionally strong, with the index adding 5.6%, between the 19th and the 30th March.
In our forecast given at the start of the year, we were expecting the rate of increase in prices to increase from now on, but the recent increases have taken prices outside the expected range, so it remains to be seen if they can be sustained at current levels over the short term.

By Richard Platt.

End Quote

I used Quote, End Quote to indicate the part that I quoted and included the author's name to give full attribution.

Wink

 

[Karl_K]

Re: Price predictions what is happening in the world of diam

Wink,
It will be interesting to see if the price increases can stick.
I read that as I am not the only one questioning that.

I my time looking studying the industry I have never seen what is happening how before.
Wink in your much longer experience has it happened before?

 

[WinkHPD]

Re: Price predictions what is happening in the world of diam

Thanks Karl.

Now, lets see if some of the wholesalers and cutters will chime in to talk about what they are seeing. I personally am seeing costs go up and availability go down, but I am a very small cog in this market.

I am, however, pretty sure that I am not alone. Prices are going up. I looked at a gem I could have sold for less than $50 k only a few years ago that is nearly $100k just last night.

Several of my ten most expensive diamonds I have sold in my lifetime have been sold in the past few months. Prices may be going up, but the market is full of people with enough money to buy the goods if they are what the market wants.

Wink

 

[Texas Leaguer]

Re: Price predictions what is happening in the world of diam

We have certainly seen prices strengthening significantly over the last few months. Smaller goods have been notable in the increases. The increases will be reflected in an uneven way for the consumer as not all existing goods will be priced up to current market at the same time. We are trying to hold the line, as others I'm sure are. But if the increases "stick" at the rough/production level, we will see a broadly higher market soon.

As to where it will go, I stopped trying to make predictions some time back!

 

[WinkHPD]

Re: Price predictions what is happening in the world of diam

Wink,
It will be interesting to see if the price increases can stick.
I read that as I am not the only one questioning that.

I my time looking studying the industry I have never seen what is happening how before.

Wink in your much longer experience has it happened before?

Between 1975 and 1980 I lived through the increase in the cost of a one carat D-IF at wholesale going from $4,000 per carat to $65,000 per carat. (I was told in 1975 not to waste my money at $4,000 per carat as only two years before they had been at $2,500 per carat and would surely go back down to a more reasonable price. I started buying gems in 1970 but did not start buying diamonds until 1975)

Much of the meteoric price increase came at the end of 1979 and very early 1980 before the market crashed in Feb of 1980 and the price tumbled all the way back down to $16k. Over the next few years the price drifted sideways, up and down a little, and I was offered once a D-IF for only $9,500 but it had a 65% table and I passed as it was, even then, not my cup of tea.

The important thing to note that even at $9,500 per carat IT NEVER CAME ALL THE WAY BACK TO WHERE IT WAS BEFORE THE PRICE EXPLOSION STARTED!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

I believe that in ten years, certainly in twenty, that we will look back on the days that these prices are so cheap as they are now. So long as there is a way to determine whether or not a diamond is natural or synthetic, there will always be those with the money to demand a natural diamond over a synthetic, just as there will be those who insist they are nuts when you can not see the difference. (This is of course, making the risky assumption that man has not found a way to finish putting civilization on this planet asunder. With Armageddon all pricing bets on everything become mute.)

Karl, you often site that the Chinese economy is having issues. It is. However, the wealthy in China are WEALTHY with a capital every thing. And a small percentage of the population in China is HUGE in actual numbers and in their ability to buy what they want and to pay what they want for what they want.

These are just the thoughts of an old man in Idaho who happens to love diamonds and the market for them. Diamonds and Gems have been in my blood since I was a child buying sparkly baubles every gift opportunity for my mother. I did not know then that they were mostly foil backs, only that they sparkled. Once I arrived at the embassy in Rio de Janeiro, Brasil in late 1969, I was exposed to the real world of gems and my future was set.

About the only thing I would do differently is to have spent more money on the finest of gems, especially colored diamonds back when they were relatively affordable. Now that I look at my life in retrospect, I realize that some times when I thought prices were too high, I was right. Sadly, more often, I was wrong and I should have bought more. The times I was right were almost always the times that the public was coming on board and buying madly so as not to be left behind, such as in the days before the Feds slammed the door on the Silver Craze by upping the margin on a 5000 oz contract of silver to 100%, trapping both the Hunts and thousands of the "little people" into days of limit down trading where they could not get out of their contracts until many were bankrupted.

These are interesting times in the diamond market, and I am looking forward to being in it for at least another ten to fifteen years, by which time I will be over 80 and wondering how much longer I can keep up with the trade that I love. So far, I see no reason to step aside and let you youngsters have it. One thing for sure. As you and I look back then, we will see that both of us did not have the 100% correct outlook. I wonder which of us will be more correct than the other?

Wink

 

[diamondseeker2006]

Re: Price predictions what is happening in the world of diam

I guess that means we should buy everything we want in diamonds over the next couple of years right now, then?

I'll tell my husband y'all said so.

 

[Texas Leaguer]

Re: Price predictions what is happening in the world of diam

I guess that means we should buy everything we want in diamonds over the next couple of years right now, then?

I'll tell my husband y'all said so.

Yes DS, that is exactly the message we tradespeople are trying to convey

This also makes me think of the old joke- "If I had just had a million dollars to put into that stock, I'd be a rich man today!"

 

[WinkHPD]

Re: Price predictions what is happening in the world of diam

I guess that means we should buy everything we want in diamonds over the next couple of years right now, then?

I'll tell my husband y'all said so.

I would say ABSOLUTELY, but that might get me in trouble with the moderators.

Oh, oh, too late, I already said it...

Okay, read this next sentence really really fast like the last few seconds of a radio or tv commercial.

This is not a guarantee that I am right and I accept no liability that your husband will not take serious offence to you believing an old man who should have known better than to encourage you in this lunacy. Results of this buying pattern may vary and previous results are not a guarantee of future success.

Whew, it is hard to type that fast, let alone read it. I have new respect for those who make it sound simple to speed talk.

Wink

 

[diamondseeker2006]

Re: Price predictions what is happening in the world of diam

 

[diamondseeker2006]

Re: Price predictions what is happening in the world of diam

I tell you guys, though, 2011 was scary. I wish I could have had the foresight to buy everything I wanted in 2010!!! However, as you all might expect, that might have been a hard sell to the DH!

But live and learn...so people, you have been forewarned!

 

[WinkHPD]

Re: Price predictions what is happening in the world of diam

I tell you guys, though, 2011 was scary. I wish I could have had the foresight to buy everything I wanted in 2010!!! However, as you all might expect, that might have been a hard sell to the DH!

But live and learn...so people, you have been forewarned!

Quick, call Jonathon, he has operators standing by! You can hide the cc bills for a few months, and by then prices will be up and your DH will think you a genius.

(Repeat warning language here, I can no longer type that fast, my hands are cramping...)

 

[Dancing Fire]

Re: Price predictions what is happening in the world of diam

Wink,
It will be interesting to see if the price increases can stick.
I read that as I am not the only one questioning that.

I my time looking studying the industry I have never seen what is happening how before.

Wink in your much longer experience has it happened before?

Karl, you often site that the Chinese economy is having issues. It is. However, the wealthy in China are WEALTHY with a capital every thing. And a small percentage of the population in China is HUGE in actual numbers and in their ability to buy what they want and to pay what they want for what they want.

Wink

For the past year or so the Chinese governments are cracking down on the use of corrupted money, lately it is been all over the Chinese newspapers. These corrupted officials were buying luxury goods like there was no tomorrow..i.e. expensive Cognac, watches, cars. Yes, the population in China is HUGE but the avg. citizen is still poor, and couldn't afford to purchase expensive diamonds. Most of the so called "rich people" in China are corrupted officials whom are hiding under their beds now. Plus, IMO the housing bubble in China will soon burst.

 

[WinkHPD]

Re: Price predictions what is happening in the world of diam

John Pollard has been there several times at the behest of the diamond industry there.

Perhaps he can step in here and talk about your post. I think there are a LOT more rich people there than you think, and not nearly all of them are corrupt officials. You have industrialists there who produce tremendous value and are rewarded for it. And yes, just like here, there are many crooks.

I think we have an improperly jaundiced view of China because we only read what we see in our newspapers, which tell pathetically little on the International front. I would be interested to hear the opinions of those who have been there and know much more about it than I do.

Wink

 

[Dancing Fire]

Re: Price predictions what is happening in the world of diam

John Pollard has been there several times at the behest of the diamond industry there.

Perhaps he can step in here and talk about your post. I think there are a LOT more rich people there than you think, and not nearly all of them are corrupt officials. You have industrialists there who produce tremendous value and are rewarded for it. And yes, just like here, there are many crooks.

I think we have an improperly jaundiced view of China because we only read what we see in our newspapers, which tell pathetically little on the International front. I would be interested to hear the opinions of those who have been there and know much more about it than I do.

Wink

I'd agree that there are a lot more rich people in China today than there were 20 yrs ago, but even today if we were to take the highest avg wages in China (city of Guangzhou) is about $850 USD per month, so it will take 8 months of their salary to purchase a nice 1 ct diamond. Even today there are many Chinese citizens only earn about $20 per day.

 

[Polished]

Re: Price predictions what is happening in the world of diam

I've been reading that India is opening up as a potential diamond market.

 

[Tekate]

Re: Price predictions what is happening in the world of diam

I was doing just that reading this thread, my husband said: Good thing you have all the diamonds you need!

Blasphemy

I guess that means we should buy everything we want in diamonds over the next couple of years right now, then?

I'll tell my husband y'all said so. :bigsmile:

 

[John P]

Re: Price predictions what is happening in the world of diam

I'd agree that there are a lot more rich people in China today than there were 20 yrs ago, but even today if we were to take the highest avg wages in China (city of Guangzhou) is about $850 USD per month, so it will take 8 months of their salary to purchase a nice 1 ct diamond. Even today there are many Chinese citizens only earn about $20 per day.

Haven't we done this before DF? ... Déjà vu 2011
https://www.pricescope.com/community/threads/china-on-the-rise-new-article.150596/

DF: "The avg chinese citizen probably make less than $2500 RMB per month.-"
John: "Right but 3-5% of the population can buy, which is a whopping 67,000,000 people influencing global demand.-"

As I said then, it's not about the poor/average, it's about the wealthy. That 6% (now) is 78 million people, equal to 25% of the USA population. Those folks are more than capable of buying 1ct+. Many are and it's unarguably influencing global price dynamics.

The growth has been steady. CTF just hit 2000 stores and plans 2000 more.
http://www.jewellerynewsasia.com/en...open-its-2-000th-store-in-mainland-China.html

By the way: You may know that when President Xi Jinping took power he launched a huge anti-corruption campaign. Last year when I lectured in Beijing, Shanghai and HK I asked many people (in and out of the trade) about how the crackdown affected the diamond and jewelry sector. I'm told it was primarily centered around luxury vehicles and such, so no noticeable effect on common jewelry sales, with the exception (possible) of more rare/unique heirloom pieces.

 

[Dancing Fire]

Re: Price predictions what is happening in the world of diam

[quote="John Pollard|1396545678|-

By the way: You may know that when President Xi Jinping took power he launched a huge anti-corruption campaign. Last year when I lectured in Beijing, Shanghai and HK I asked many people (in and out of the trade) about how the crackdown affected the diamond and jewelry sector. I'm told it was primarily centered around luxury vehicles and such, so no noticeable effect on common jewelry sales, with the exception (possible) of more rare/unique heirloom pieces.[/quote]


yes, it is on the front page of every Chinese newspaper.