Rare diamond price rally seen slowing

The rapid rate of increase in wholesale prices of rare polished diamonds is unsustainable, but for now the growing number of super-rich are paying rising prices for top-tier diamond jewellery.

Charles Wyndham, founder of PolishedPrices, a leading index of wholesale diamond prices, said on Friday prices of larger, rare, near-flawless gemstones had shot up by roughly 200 percent over the past 18 months.

The surge has been driven by increased interest from a growing number of multi-millionaires in emerging markets, a shortage of rough diamonds, and the dollar’s slide, he said.

Diamond jewellery prices have risen in tune with wholesale diamond prices, but fine jewellers like Graff and Cartier say demand is holding up well for top-tier diamond jewellery in upscale retail outlets on Bond Street in London and in New York.

“Sales are doing well — Cartier is a high-end business and, therefore, better protected,” Frederic de Narp, president and CEO, Cartier North America, told Reuters in June. He gave no figures. Cartier is a subsidiary of Swiss luxury goods maker Richemont.

High-end jewellers in London and New York are reporting increased traffic from foreign visitors, especially from commodity-rich countries in the Middle East, South America and eastern Europe.

The wholesale price of internally flawless 3-carat round polished diamonds has jumped to $100,000 per carat as of June 1, from $55,000 last December, according to PolishedPrices.com.

The world’s rarest polished gemstones have experienced staggering price rises in recent months. Wyndham estimated 13-carat perfect diamonds now to be worth in excess of $200,000 per carat wholesale, an all-time peak.

“If you have a perfect stone, you will get unbelievable prices,” Wyndham said.

The main PolishedPrices index, which incorporates a range of diamond categories, stood at 136.3 points this week, 6 percent above the level this time last year.

“There are signs that the high prices being paid for fine qualities are beginning to trickle down into the commercial categories, with commercial one carat diamonds also setting an all-time high,” PolishedPrices said in its latest market report.

Both the fine and commercial indices are now showing double digit growth since the start of the year.

The rapid upward momentum in diamond prices cannot carry on at the present rate.

“It is impossible for this rate of increase to be maintained,” said Wyndham, who has been in the diamond industry for over 30 years.

He was a director of the CSO, De Beers’ selling arm, before setting up his own diamond businesses in 1995.

While high net-worth individuals want to possess the most exquisite gemstones, the picture is far less buoyant for low-tier gem-quality diamonds, Wyndham said.

The sharp slowdown of the U.S. economy, the world’s leading market for diamond jewellery, has hit demand for low-end diamonds and bolstered inventories.

“As long as you’re talking about good quality diamonds, the scene has been pretty positive. However, commercial, lower end (gem-quality) diamonds have had a very rough time,” he said.

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