A drastic diamond price collapse started in the last few months of 2014. Experts agree this price drop is actually the most dramatic in the past few years. With the worldwide economic situation is in a shaky posture, banks started to restrict crediting opportunities towards this industry specifically. In fact, in October 2014, diamond prices dropped by almost 7% and by July 2015 one can observe a drop by even 12% in the price of rough diamonds.
Economic experts released a theory according to which the price of diamonds dropped because there has been noted a falling tendency in demand for diamonds in China. In metropolises such as Macau or Hong Kong, experts noticed people started to spend less and less o luxury items, especially diamond jewelry. This fact seems to have started a chain reaction in the industry, where prices for diamonds just keep falling.
Industry leading miner companies basically sell their rough stones to specialized companies that will polish the stones and cut them so that these can be sold to consumers. However, the jewelers need money in order to pay for the rough stones, and since they need money quickly and easily they will rather reduce the asking price of the jewelry they have in inventory. Investors and interested people buy jewelry a bit cheaper, and the cutters/polishers/jewelers can access the cash they need to pay for their supply of rough stones.
Yet another reason for this quite drastic collapse in price for the diamonds is that the major lender Antwerp Diamond Bank actually closed last year. The bank was a very important channel in the diamond trading industry, supporting greatly this industry through lending solutions. All these factors basically contribute to a mass discounting period offered by jewelers worldwide. There is an extremely tight competition going on in the market, and those smaller jewelers that want to ‘survive’ in this ultra competitive market need to come up with special deals and discounts to attract new clientele and maintain their customer base.
Price collapses in the industry can also be blamed to shifts in jewelry trends. People just became more and more interested in investing in colored stones, rather than buying only diamonds. For the price of a 2 carat diamond they can purchase varied types of rare gemstones and other type of precious jewelry. Also, the general awareness of conflict diamonds drew away some people from investing in this precious stone, and they will rather look at other gemstone options.
As it can be easily noted, the reasons for the diamond industry price collapse are multiple. Nevertheless, diamonds were and will remain the most cherished and valuable pieces of jewelry meant to be passed on for generations, and meant to secure a very safe investment opportunity for the buyer.