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IJL 2008 – A comment on the bifurcation of the diamond market
By Tom Wildhern/September 4, 2008

LONDON - As middle incomes come under pressure in the United States and Europe, and as the commodities boom increases wealth in the emerging markets of China, India, Russia and the Gulf, a two-way diamond market has developed – big stones boom, while small, common diamonds can struggle to find a home.

Is the growing demand from the emerging markets, where the number of new

millionaires is increasing at an extraordinary rate, enough to counter the impact of the economic downturn in America and Europe? It seems that in the short term, the answer is “No”, as the United States is still by far the world’s leading market for diamond jewellery.

But as time moves on, the shift of economic power around the world towards the rapidly industrialising emerging nations will radically alter the structure of the global market-place, shifting the demand side Eastwards. Diamond jewellers attending International Jewellery London (IJL) in 2008 underscored such sentiment, noting that even wealthy buyers were in some cases preferring to hold on to their cash and stay on the sidelines until the economic horizon clears.

The jewellers foresaw steady diamond prices in the short-term, but noted risks of price falls for small common diamonds, both white and coloured.

Why should global diamond markets, which have become increasingly transparent in recent years, be somehow immune from developments in other commodity markets?

Oil and food commodity markets rallied early in 2008 and have since fallen back sharply. Diamonds risk getting caught up in the eye of the storm, especially if the U.S. dollar keeps rising. External economic events are playing an increasing role in dictating the diamond market outlook.

It is up to each business in the community to find ways to adapt by adding value in whichever way it can, whether by improving marketing, designs or services – or finding new geographical markets.