- How is the diamond market evolving?
- What influence do the BRIC countries have on the diamond price?
- What predictions can we make about the price evolution?
Diamonds are very rare and special products. The journey from the mine to the consumer is extremely expensive, the mines are exhausted, and it can take decades before other mines are operational. But at the same time the demand from the large growth markets is increasing, which puts the price of the product under constant pressure. But what effect does the increasing demand and dwindling supply have on the diamond price?
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How is the diamond market evolving?
The increasing gap between supply and demand is exactly what attracts the investor's attention away from traditional investments. As the world wide equity markets are highly volatile and many governments are still struggling with the aftermath of the crisis, alternative investments are gaining popularity. Purchasing items such as gold bars and diamond jewellery offers intrinsic value which shares and similar investments cannot. Although diamond prices are much more heterogeneous than those of other raw materials, they attract many investors because the market is constantly growing.
Analysts believe that investors' interest in diamonds will continue to grow, mainly due to the increasing scarcity of the product.
What influence do the BRIC-countries have on the diamond price?
The financial volatility since September-October 2008 makes investing in raw materials a popular alternative. With diamonds, the influence of the BRIC countries has increased demand considerably, whilst the supply stagnates. Brazil, Russia, India and China have exponentially growing economies with rich middle classes. For the new and rapidly increasing middle classes, buying diamond jewellery appears to be an important status symbol.
Of all the BRIC-countries, the most exceptional increase in demand comes from Asia. Buying diamonds there is not just a status symbol, but a new way of life.
What predictions can we make about the price evolution?
Rapaport stated that demand will exceed supply in 2025. Producers will compete for the increasingly scarce mining deposits of rough diamonds, while demand will continue to steadily grow. It is however difficult to make concrete predictions as there are so many grades in diamond quality. Despite the difficulty to predict increase in value, the relationship between supply and demand ensures that buying diamonds is an exceptionally good investment.
How can I invest wisely in diamonds? What fits best in my portfolio: buying loose diamonds or diamond jewellery? Ask the BAUNAT diamond experts for the solution that suits you.
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CHLOÉ POUPON-DUMONTET
- Diamond Jewellery Advisor
- My Linkedin profile - Contact me
