Summary
- Prices remain stable amidst solid trading activity through Holiday Season
- Rough-polished market dislocation continues
Trading Notes
Diamond prices are set to rise during 2010 and return to their expected equilibrium natural growth rate of 12 to 16 percent into the medium term with the expected improved macro-economic environment and continuation of demand outstripping supply for investment diamonds. Diamond prices held up well during 2009 despite the challenging macro-economic environment. After declining approximately 25 percent during the last quarter of 2008 and the first quarter of 2009, prices for investment diamonds stabilized during the second quarter of the year and held firm during the second half of the year finishing the year only 10 percent down. Stable prices and demand continued right through the all-important Holiday Season with some shortages being seen in 1.00-2.00 carat, D-H colour, +VS2 clarity goods. US market activity was in-line with subdued expectations while Asian, European markets were mixed while Asian markets continue to show signs of healthy activity. Continued speculation on rough diamond markets and we reiterate our recommendation for caution when trading in rough diamonds at the moment.
At the upper end of the market, prices for Special and Unique Diamonds were at historical highs all year with numerous world record prices being broken on the global auction market throughout the year illustrating the considerable appetite for these diamonds and the robustness of the market.
Market News
DTC’s December sight estimated at $280 million with prices edging up slightly. Total DTC 2009 estimated at $3.1 billion down approximately 50 percent on 2008. RBC Capital Markets predicts a strong 2010 for rough diamond sales. Russian stockpile agency allocates $1 billion for diamond purchasing in 2010. Country singer Carrie Underwood received flawless 5 carat fancy yellow diamond engagement ring from ice-hockey star fiancé. Israel’s polished diamond export rise 49% to $524 million in November. Harry Winston sees reversal of negative trends in Q4 with expected rise in rough production amidst substantial improvement in retail sales. Christie’s sells 39 carat Pear shaped D color Evening Star Diamond for $5.4 million at NY auction following 5-carat pink diamond selling for world record price of $10.8 million two weeks earlier in Hong Kong.
Comparative Indices and Annual Returns
Investment Diamond Performance vs Other Investment Classes