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Diamond prices are in free fall in one key corner of the market

bloomberg.com

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Re: Diamond prices are in free fall in one key corner of the market

#11

Post by adolph »

What an interesting story of pricing in a cultural market with encumbant and new tech, and a cartel attempting to retain its market power but slowly losing ground.

In June 2022, De Beers was charging about $1,400 a carat for the select makeable diamonds. By July this year, that had dropped to about $850 a carat. And there may be more room to fall: the diamonds are still 10% more expensive than in the “secondary” market, where traders and manufacturers sell among themselves.

. . .

. . . India, where about 90% of global supply is cut and polished. Lab grown accounted for about 9% of diamond exports from the country in June, compared with about 1% five years ago. Given the steep discount that they sell for, that means about 25% to 35% of volume is now lab grown, according to Liberum Capital Markets.

. . .

About five years ago, lab grown gems sold at about a 20% discount to natural diamonds, but that has now blown out to around 80% as the retailers push them at increasingly lower prices and the cost of making them falls. The price of polished stones in the wholesale market has fallen by more than half this year alone.

Re: Diamond prices are in free fall in one key corner of the market

#12

Post by skywhopper »

Makes total sense. Lab-created diamonds have been indistinguishable (for the typical consumer) from natural ones for years. DeBeers kept jewelry retailers in line in pushing "real" diamonds, but it was just a matter of time until something happened to shake that hold lose. Given the rapid switch away from gold for wedding bands etc after the 2008 crisis led to a major price spike, it is not surprising to me that jewelry consumers are willing to question whether "real" diamonds are worth the premium cost as well.

Re: Diamond prices are in free fall in one key corner of the market

#13

Post by kalupa »

slashdev wrote: post #8
OJFord wrote: post #5

It's crazy to prefer a natural diamond for anything other than a collectors' item. It's not about being 'cheap' - whatever your budget is, if you're picking an engagement ring say, why not get a technically superior (or larger) stone for the same price tag?

I pitched this to my wife a few years back. She insisted she’d rather have a smaller natural diamond. It makes no sense to me. Shiny carbon is shiny carbon to me. There’s no real logic in it. But given it’s a status symbol that derives its value from its rareness, I suppose it’s no different than a Luis Vutton or a Rolex. It’s not about the function, it’s about the fact that you can afford one. I hate that mentality,…

guess she prefers them to be forged by blood instead of a high pressure container

Re: Diamond prices are in free fall in one key corner of the market

#14

Post by scotty79 »

slashdev wrote: post #8
OJFord wrote: post #5

It's crazy to prefer a natural diamond for anything other than a collectors' item. It's not about being 'cheap' - whatever your budget is, if you're picking an engagement ring say, why not get a technically superior (or larger) stone for the same price tag?

I pitched this to my wife a few years back. She insisted she’d rather have a smaller natural diamond. It makes no sense to me. Shiny carbon is shiny carbon to me. There’s no real logic in it. But given it’s a status symbol that derives its value from its rareness, I suppose it’s no different than a Luis Vutton or a Rolex. It’s not about the function, it’s about the fact that you can afford one. I hate that mentality,…

It's all made up, through and through so it doesn't need to make any sense.

Re: Diamond prices are in free fall in one key corner of the market

#15

Post by paxys »

slashdev wrote: post #8
OJFord wrote: post #5

It's crazy to prefer a natural diamond for anything other than a collectors' item. It's not about being 'cheap' - whatever your budget is, if you're picking an engagement ring say, why not get a technically superior (or larger) stone for the same price tag?

I pitched this to my wife a few years back. She insisted she’d rather have a smaller natural diamond. It makes no sense to me. Shiny carbon is shiny carbon to me. There’s no real logic in it. But given it’s a status symbol that derives its value from its rareness, I suppose it’s no different than a Luis Vutton or a Rolex. It’s not about the function, it’s about the fact that you can afford one. I hate that mentality,…

A good Rolex at least has a thriving resale market, and can actually increase in value over time. Same for a lot of other luxury goods as well as other stores of value (like gold or Bitcoin). Diamonds on the other hand are effectively worthless the moment they leave the store. Their high prices are a product of marketing and social pressure, nothing more.

Re: Diamond prices are in free fall in one key corner of the market

#16

Post by throw3747874747 »

OJFord wrote: post #5

It's crazy to prefer a natural diamond for anything other than a collectors' item. It's not about being 'cheap' - whatever your budget is, if you're picking an engagement ring say, why not get a technically superior (or larger) stone for the same price tag?

If future wife requires diamond, another stone is not going to fix root problem you have. Go with someone less materialistic.

Re: Diamond prices are in free fall in one key corner of the market

#17

Post by brianwawok »

slashdev wrote: post #8
OJFord wrote: post #5

It's crazy to prefer a natural diamond for anything other than a collectors' item. It's not about being 'cheap' - whatever your budget is, if you're picking an engagement ring say, why not get a technically superior (or larger) stone for the same price tag?

I pitched this to my wife a few years back. She insisted she’d rather have a smaller natural diamond. It makes no sense to me. Shiny carbon is shiny carbon to me. There’s no real logic in it. But given it’s a status symbol that derives its value from its rareness, I suppose it’s no different than a Luis Vutton or a Rolex. It’s not about the function, it’s about the fact that you can afford one. I hate that mentality,…

The difference between a $200 and a $2000 bottle of wine is mostly how expensive the thing you are drinking is. Tons of industries and products work like this. Why would it surprise you that gems are any different?

Re: Diamond prices are in free fall in one key corner of the market

#18

Post by arcticbull »

brianwawok wrote: post #17
slashdev wrote: post #8

Earlier quoted context omitted.

I pitched this to my wife a few years back. She insisted she’d rather have a smaller natural diamond. It makes no sense to me. Shiny carbon is shiny carbon to me. There’s no real logic in it. But given it’s a status symbol that derives its value from its rareness, I suppose it’s no different than a Luis Vutton or a Rolex. It’s not about the function, it’s about the fact that you can afford one. I hate that mentality,…

The difference between a $200 and a $2000 bottle of wine is mostly how expensive the thing you are drinking is. Tons of industries and products work like this. Why would it surprise you that gems are any different?

Unless I'm wrong those are considered Veblen goods. [1]

[1] https://www.investopedia.com/terms/v/veblen-good.asp

Re: Diamond prices are in free fall in one key corner of the market

#19

Post by xnx »

OJFord wrote: post #5

It's crazy to prefer a natural diamond for anything other than a collectors' item. It's not about being 'cheap' - whatever your budget is, if you're picking an engagement ring say, why not get a technically superior (or larger) stone for the same price tag?

Welcome to the world of Veblen goods: https://en.wikipedia.org/wiki/Veblen_good

Re: Diamond prices are in free fall in one key corner of the market

#20

Post by organsnyder »

throw3747874747 wrote: post #16
OJFord wrote: post #5

It's crazy to prefer a natural diamond for anything other than a collectors' item. It's not about being 'cheap' - whatever your budget is, if you're picking an engagement ring say, why not get a technically superior (or larger) stone for the same price tag?

If future wife requires diamond, another stone is not going to fix root problem you have. Go with someone less materialistic.

Plenty of people have been socialized to expect certain material things as part of the marriage process. Does it make sense? Probably not. Is it a character flaw? Absolutely not.
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