Lowest Diamond Prices in Years???!!!

From early 2007 till mid-2008, the Australian dollar was riding high – at one point it nearly reached parity with the US dollar. At that time, many in the industry, including myself thought that diamond prices in Australian dollars were at their lowest point in years.

Unfortunately, around the start of 2008, diamond prices, namely round brilliants in VS clarities and above gained noticeable upward momentum. This meant that the price gap between a VS2 and an SI1 was huge.

In the second half of 2008, the Australian dollar tumbled from the high 90s down to almost 60 US cents. This caused an immediate rise in diamond prices as even though diamonds may have been bought when the dollar was high, the replacement cost had sky-rocketed. Of course, this created a perfect environment for dealers to get rid of old stock that didn’t need replacing.

So, over the last six months, diamond prices have steadily decreased and are now at prices seen earlier this decade. Not surprisingly, the diamonds that have gone down the most, are those that rose the most – that is round brilliants in VS clarities and above, whilst SI clarities have seen modest decreases in price.

However, over the past two months, the Australian dollar has risen to over 75 US cents (75.34 US cents as of the time of writing). This means that, now is one of the best times to buy a diamond, as diamonds are really at their lowest prices in years, at least in Australian dollars.

To give a couple of examples from our International Selection, in December 2007 we sold a 1.10ct round brilliant, F/VS2, GIA triple excellent for $10000 inc GST. Now, a similar stone can be bought for around $9700 inc GST. Similarly, in July 2008 (when the Australian dollar was at its highest, we sold a 2.12ct round brilliant, G/VS1, GIA triple excellent for $40,000 inc GST. Now a similar stone can be bought for a little over $36,000 inc GST.

These weak diamond prices have had the side effect in that fancy cut diamonds – that is, anything but round brilliants like princess cuts, emeralds and asscher cuts are in short supply as manufacturers and dealers both try to reduce their inventory of fancy cuts and increase their stock turnover by cutting the ever popular round brilliant cut. In fact, our supply of AGS certified princess cuts, which was once plentiful has now dried up, with only what we have in inventory left.

My prediction is that diamond prices will remain weak for at least the next year, and there will be many bargains to be had for smart dealers and consumers. However, the Australian dollar will continue its volatility, so don’t be surprised if diamond prices in Australian dollars go up or down by 10% overnight.

This entry was written by Nikhil Jogia and was posted on on Thursday, May 7th, 2009 at 12:01 pm and is filed under Diamond Industry. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.