2013: What to Expect: Price Predictions

Prices of gold, silver and platinum, up, up and up. But on the other hand, the prices of polished diamonds have been on a somewhat downward spiral these past few months. What does this all mean?

Prices of gold, silver and platinum, up, up and up. But on the other hand, the prices of polished diamonds have been on a somewhat downward spiral these past few months. What does this all mean?

Diamonds – The Ups and Downs

Since mid-2012, polished diamond prices haven’t been faring well. The prices in most categories have either remained stagnant or showed just a slight upwards price adjustment – most but not all. According to IDEX online “over the past year, 1 carat rounds dropped 10.5 percent, while 1 carat Princess cuts soared 14.7 percent”. For diamond houses, this isn’t good news considering the ubiquitous one-carat rounds accounted for 15.6% of the market in 2012 and the same weight princess cuts just 1.9% percent. For retailers, this means diamond engagement rings, and by this we mean traditional rounds, are set to be a lucrative segment of their market in 2013. When it comes to designs featuring princess cuts, not such a financially attractive proposition. The price of a one carat princess cut has jumped 14.7% over the past year. So what does this mean? Designs are going to be squarely in the round for 2013.

Gold, Silver and Platinum

In the wake of the recent election, we saw the price of gold begin to rise again and silver prices, according to most analysts were set to start the upwards journey once again. If prices are set to increase, which is no surprise to anyone, the innovative ways to reduce the percentage of precious metals used in designs continues to dominate. Brass and silver, copper and silver, gold alloys, even leather and alternative metals are ways designers are bringing down the cost of pieces. Platinum prices, while slipping recently are expected to increase as new production decreases and labor costs rise, forcing upwards price pressure on the precious metal.

Gemstones

In the 1940s, the precious gem market was about equal in size with the diamond market. Then came De Beers with its iconic marketing strategy and deep pockets resulting in a revolution. Diamonds equaled forever and no ‘Will you do me the honor?’ meant anything unless it was accompanied by a diamond ring. But in recent years, with the shifting structure of the diamond industry and De Beers pulling back from its generic marketing campaign, diamond advertising has dropped significantly, a situation major gemstone miners are looking to capitalize on. Gemfields, one of the largest emerald miners is planning a campaign fronted by a global ‘to do for emeralds what Marilyn Monroe and Audrey Hepburn did for diamonds’.

According to the IDMA (International Diamond Manufacturers Association), at current growth rates, emeralds may take more than 20% of diamonds global market share within two decades. The prices of top-quality emeralds have increased more than tenfold in the past three years. What does this all mean? Currently the majority of high-end gemstone purchases are bought by consumers that have already purchased significant diamond pieces, but with a backing of a major campaign emeralds may soon be a girl’s (second) best friend

Next week we look at consumers’ shifting purchasing habits and just how, why and where a consumer plans to buy jewelry in 2013.

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