While the headlines are increasingly reporting new advances in lab grow diamond production, the demand for natural diamonds is only growing. In fact, even the prices of real, natural gemstones have gone up in 2021. There are a number of different factors that have led to such positive dynamics in demand and cost.
More and more people are interested in buying diamonds
Diamonds are attracting people all over the world. The two largest diamond retailers, an American and a Chinese company, are buying so many gems that even suppliers are running out of gemstones. In particular, both De Beers and ALROSA are unable to keep up with demand, and their supplies are becoming increasingly limited.
The rise in diamond sales in Europe and Russia is likely driven by the rise in consumer economic wealth through savings that used to be spent on travel and other luxury goods. Simply put, people now have enough money to buy diamonds, and they do it. During the COVID-19 quarantine, many people re-evaluated their views on life. A diamond is an excellent investment today. It does not lose value, even the most expensive stone fits in the palm of your hand, which cannot be said about real estate, cars, and other valuable goods. Now that some restrictions have been lifted and the economy is back to normal, people are starting to buy diamonds, not just to save their money. The diamond does not deteriorate, it can be worn at home, out and on travel. It is a stable precious currency that is always with you.
Due to restrictions, people could not please their loved ones with something special in unique life moments. And often this meant a gift like diamonds. The restrictions have been lifted and the jewelry industry is experiencing a boom in demand.
The industry has become more ecological and more ethical
Perhaps another reason for the growth in demand is not only the need of people for diamonds but also changes in the gemstone mining industry itself. It has become more ecological and more ethical. Gems quarried with respect for nature and work attract a lot of press attention.
Mining companies today are doing more than ever to tackle environmental issues. They demonstrate their efforts when it comes to preserving the environment. Many of them aim to reduce their carbohydrate emissions to zero. And this positive trend has helped many buyers feel confident when buying diamonds.
For example, the Natural Diamonds Council recently launched a new advertising campaign in television, print media, and product placement. This has increased consumer interest in diamonds and has begun to attract buyers to jewelry stores, both online and offline.
Serious supply chain problems
The demand for diamonds has grown, but their supply has not. And there are many reasons for this. One of them is the bottleneck in the supply chain. Almost all diamonds go through GIA control and evaluation laboratories before they go on sale. And due to the fact that they simply could not handle the load, there were delays in the supply chain. In particular, GIA laboratories are now accepting 71% more diamonds than before, and the lead time for assessment and testing has increased to four weeks.
Due to the GIA bottleneck, the supply chain was completely interrupted. In addition, diamonds are cut and polished before being sold, which can take up to three full months. And as the economies opened and recovered, more and more buyers faced the impossibility of purchasing diamonds, the precious stones were simply lying around in the GIA warehouses or waiting for their turn to be evaluated.
As a result, the cost of polished diamonds on the wholesale market increased up to 10%, and in some cases by all 30%. The retailer also suffered. Moreover, due to the shortage of precious stones, many jewelry manufacturers are forced to buy diamonds from fellow competitors rather than from wholesale suppliers.
The demand for polished diamonds has now reached such a high, record level that some organizations, previously not seen in the diamond trade, are about to enter the market. So, for example, according to Bloomberg, the Russian Federation wants to sell a certain number of gems from its own reserves in order to recover from the economic consequences of the pandemic.
Should you buy diamonds right now?
Diamond prices are now higher than last year. However, supply and production problems have not yet been resolved. This means that diamonds will only get more expensive. Therefore, now is the best time to buy diamonds.
