Diamond revival apparently caught up in frenzy
Following up on Bloomberg's diamond report from yesterday, it appears something is definitely abreast in the diamond industry. Markups are occurring immediately after diamond sales which is highly unusual.
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"News of the unusually sharp increases spread swiftly through the community of 80-odd handpicked De Beers customers, according to people familiar with the discussions. But what followed was even more remarkable: within hours, some of those same stones were trading hands at a further 10% markup, as buyers who have access to De Beers flipped them to traders and manufacturers that don’t."
We have been harping on the trend of lab created diamonds being the only growth sector of the jewelry market but now the dynamics appear to be changing. Mined diamonds, whose value traditionally is based upon rarity, are finally roaring back into favor. Furthermore, cryptocurrencies have filled the gap of traditional safe havens such as metals and gemstones since last summer and perhaps we are finally witnessing a further turnaround.
“The rough market is hot. There’s enthusiastic buying across all rough categories,” said Anish Aggarwal, a partner at specialist diamond advisory firm Gemdax. “There are supply shortages at the moment. That’s creating a sense of scarcity at every stage of the pipeline.”
For some in the industry, there are worries the market could be running too hot. It takes about three months to cut, polish and sell a diamond, so stones bought cheaply at the start of the year are now being sold for a big profit. That also means those buying at today’s prices are betting that polished stones will continue to appreciate in value."
Again, let's take into consideration that diamond supply is not that limited when you factor in lab created stones. Hopefully the jewelry industry can build on this momentum for mined diamonds and help revive the jewelry "as a store of value" trade.