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Diamond demand outlook sparkles as the rich aspire to own rarest gems
By George Appleshaw/August 9, 2008

LONDON -The credit crunch and global economic slowdown will not dull the appetite of the world’s ultra-rich for spectacular rare diamonds. Indeed, as the number of millionaires rises, notably in the rapidly industrialising emerging economies, the world’s most exclusive gemstones will become increasingly desirable, and drive prices even higher than the current all-time peaks per carat. Competition will intensify at the closely-watched Christie’s and Sotheby’s auctions as the world’s spectacularly rich outbid each other to lay claim to the world’s rarest and most magnificent gemstones.

However, for those at the lower end of the income spectrum, diamond choices for many consumers will be much tougher as high inflation bites into disposable incomes and household debts grow. And yet, even when times are hardest, people will continue to seek diamonds and diamond jewellery to mark the special occasions in their lives, like marriages and anniversaries. Top luxury retail jewellery brands -- from Van Cleef & Arpels to De Beers -- will see their strongest sales at the upper end of their product lines. Even as the global economy sours, many customers will turn to the brands that they know best.

As Frederic de Narp, President and CEO of Cartier North America, said at the height of the credit crunch and downturn in the United States, the world’s top market for diamond jewellery:

“In times like this, it’s even more important for people to buy something meaningful with value and lasting power that will reassure.”

The barons of the hard commodity industries – from oil to industrial metals – will continue to thrive as increasing demand from the emerging economies will sustain high prices for their products and generate further wealth that will ultimately trickle down to exquisite diamond jewellery for sale on Bond Street and Madison Avenue. The living standards of the fast-growing middle classes will improve in the longer term despite the present squeeze due to the credit storm, and consumers will develop more globalised tastes in diamond jewellery design.

In India, a vital market as it is home to more than one billion of the world’s people and is set to overtake China as the most populous country, diamonds will feature more prominently and lavishly in middle-class weddings. And in the Indian diaspora around the world -- from London to Dubai -- South Asians will increasingly aspire to diamonds for weddings and parties.

Chinese tastes for exclusive diamonds will also be a major and growing force in the global market, as the living standards of urban people improve.

Rare coloured as well as white diamonds will be increasingly popular. Extraordinarily rare red, blue and pink diamonds are the most valued prizes sought by the ultra-wealthy. Yellow diamonds, now very popular among Russian women, will appeal to an expanding international market. Consumers struggling with tougher economic times, who aspire to the sparkle and intensity of a diamond, will also turn to cheaper alternatives, such as synthetic diamonds and artificially coloured diamonds, and these will become more generally accepted in the global market-place.

TIGHT SUPPLIES

The supply of natural diamonds is getting scarcer as there are not enough new commercial diamond mines to keep up with the growing demand.

Mining companies will find it harder and more expensive to reach new kimberlite, but the surge in the prices of the rarest gems will give a strong incentive to miners to continue their quest from Canada to Australia -- and across Africa, the origin of most of the world’s diamonds. Africans will rightly demand – and receive -- an increasing share of the wealth generated by diamonds exploited in their territory. And one day they will emerge as important consumers of diamond jewellery.