Industry News

Diamonds Still Sparkle In 2009

With the improved macro-economic environment and continuation of demand outstripping supply for investment diamonds into the medium term, diamond prices are set to rise during 2010 and return to their expected equilibrium natural growth rate of 12 to 16 percent into the medium term.

Diamond prices held up well during 2009 despite the challenging macro-economic environment. After declining approximately 25 percent during the last quarter of 2008 and the first quarter of 2009, prices for investment diamonds stabilized during the second quarter of the year and held firm throughout the second half of the year finishing the year only 10 percent down.

The stabilization in diamond prices during 2009 despite the difficult trading environment is largely attributed to the major diamond producers limiting the quantity of goods coming into the diamond pipeline. With approximately 80 percent of global diamond production being controlled by five diamond mining companies, the quantity of supply can be closely attuned to current and expected demand levels. This stabilization mechanism that is inherent in the structure of the diamond industry was supported by steady demand from emerging diamond consuming markets such as China, India, the Gulf and Turkey as well as continued growth in internet sales.

At the upper end of the market, prices for Special and Unique Diamonds were at historical highs throughout the year with numerous world record prices being broken on the global auction market illustrating the considerable appetite for these diamonds and the robustness of the market. The year was capped off with the sale of a 5 carat, vivid pink colored and potentially flawless diamond which fetched $10.8 million at the Christie’s Magnificent Jewels Sale in Hong Kong in December. This sale smashed the records for both the most expensive diamond and the most expensive price per carat paid for any diamond at auction.