This content was first published on IGR – Italian Gemological Review no. 15 in 2022. The information provided here is therefore current as of the original publication date.
The positive figure lies in the long term optimism confirmed by the data. The global diamond market size, valued at $89.18 billion in 2019, is expected to expand at a compound annual growth rate (CAGR) of 3.0 percent over the next decade.
Hence, though the diamond industry is expected to keep growing in the long term, globally the market cannot escape the weakness of the economic seasons. The effects of the pandemic have slowed the consumption engine in China. The winds of war have restricted the supply of a major producer such as Alrosa.
The rising cost of raw materials is also weighing on mining costs. Many Diamond mining sites have been downsized and diamond inventories reduced. With this background, the diamond industry is producing a major effort to stabilize prices and extinguish the speculative pressure.
However, the search for a balance between supply and demand and the enthusiasm of the restart are now subject to an unexpected threat, inflation.
What will happen to diamonds and jewelry? Some historical data allow us not to dramatize.
History abounds with examples where a rise in inflation resulted in a positive effect on the jewelry market. In a sharp rising inflation cycle in the United States in the early 70s and in Europe a decade later, an increase in jewelry sales has been recorded.
Consumers turn to so-called safe-haven assets during periods of wide-spread price instability. Diamonds, especially 2 carats and up, are a desirable commodity for those disappointed by the decline in returns generated by traditional financial investments as well by the decentralized economy (cryptocurrencies, NFT etc.) not to mention the not very encouraging surge in gold prices.
By Sergio Sorrentino, published on IGR – Italian Gemological Review #15, Autumn 2022.
