For 24 months all we have heard is that rough is more and more and more expensive. Every day one self elected guru or the other would inform me that rough diamond prices and polished prices have not been historically linked. This is like saying that gold coin has nothing to do with gold bullion. I believe the correct word is speculation.
In fact, polished prices have everything to do with rough prices. In times of tight supply, polished prices follow rough prices, albeit with a heavy lag. In times of limited demand, rough prices follow polished prices. (As we have seen recently.)
The difference it seems is that polished speculation is much weaker than rough speculation because of the difference in the players in the market – buying power has a lot more to do with price fluctuations in a speculative market, than does rationale. Rough prices went to far more astronomical highs and have and will continue to come down to far deeper lows.
The first question will of course be whether the big players will sit on their diamond cellars, and wait for the possibility that they will be better use mixed with concrete or whether some reason will enter the market, and everyone will realize that diamonds are not really scarce, and that new mine openings have been happening very aggressively. It’s tough out there and it isn’t coming to an end soon.
The second question is whether the auction model for dispensing of rough tenders will be grown as it seemed 6 months ago or whether this new reality will diminish it’s future potential.
The third question is whether the largest market in the world – older American women, are becoming less interested in Jewelry. We’ve all seen the reports but we also saw the Fox News polls that said McCain was going to pull through. Polling is as much about who is calling as it is about who is answering the phone.
Either way – this roller coaster will be quite interesting. It has the potential to set patterns in macro economics, and in our sector that can determine the speculation of the future. (Or we’ll just forget all about this 5 years from now, run up ridiculous debt again, and enjoy the same punishment.)
And now for the shameless plug: When you buy from diamond closeouts or closeout diamond jewelry from Simplex you are buying at either the lowest prices from 6 months ago or the lowest prices of 6 months from now. We predict market trends and discount accordingly. Our wholesale diamond jewelry is the most aggressively priced anywhere.