Next on the horizon

All eyes are on the Gemological Institute of America (GIA) and its progress getting through the backlog of goods lined up for grading at its India labs.

As of press time on June 24, there was a four-week turnaround time in Mumbai and a five-week wait in Surat, according to the GIA website. The institute attributes the delays to a significant rise in demand for laboratory services.

“The increased sales in the US and China are driving much of this demand for GIA reports,” it told Rapaport Magazine in a recent email. “Online sales are up significantly and are dependent on trusted, independent grading reports.”

Indeed, the GIA says it’s grading more diamonds in India than before the pandemic. The number of stones it has graded in Mumbai and Surat this year, based on a weekly average, is up 37% from 2019 and 31% from 2020. However, the labs’ average weekly intake is 71% higher than in 2019, the institute says, and this makes it hard to catch up.

“In all locations, we are working six days a week in multiple shifts at the maximum allowable capacity to meet demand for our services as best we can,” the GIA states.

Uncertainty remains as to whether there will be a sudden influx of goods when the GIA backlog diminishes, a scenario that could push prices down. However, Elliot Krischer, president of the New York Diamond Dealers Club (DDC), believes manufacturers will still maintain their polished prices if such an influx occurs, as they want to protect their margins against the current high cost of rough.

The release of the GIA goods will also likely coincide with an uptick in demand as jewelers prepare for the holiday season, but even with that recovery, the trade can expect rough supply to stabilize below pre-pandemic levels. The mining companies are leading a drive toward a more efficient supply chain, which means offering their clients fewer but more targeted goods.

The US recovery owes much to the government stimulus checks that have boosted consumer sentiment. Add those to the money the average mid- to high-income household was able to save during the pandemic, plus the wealth that resulted from the stock market’s rebound, and Americans eager to get back to shopping now have money to spend on discretionary items.

Still, this boom will not last. The threat of the pandemic will dissipate — along with the savings — and normality will return to the market. There are growing concerns about inflation and an already weakening dollar. To combat this, the Federal Reserve is slated to raise interest rates in 2023 — a move that typically reduces the amount of money circulating, since loans become more expensive to take out. Higher interest rates also tend to boost investor demand for dollar-based assets, as they can get a higher yield with their money in the bank.

For now, the weaker dollar benefits foreign dealers and manufacturers who buy and sell with the greenback, as it leaves them with more of their domestic currency to cover local expenses.

Sustainability has become a central theme for the diamond and jewelry market. Consumers are demonstrating a growing preference for products and companies that care about the planet. Guided by the United Nations’ Sustainable Development Goals (SDGs), the industry has made a concerted effort to ensure it contributes positively to society. It has developed various traceability programs to assure consumers that their diamonds have done no harm on their journey through the supply chain.

In the past, these efforts would most often come in response to claims about conflict diamonds or human-rights abuses. Thankfully, the sector is now taking a broader and more proactive approach. Environmental issues have surfaced as a core talking point in public relations. Mining companies are showcasing their contributions to conservation projects, and more entities have set goals to achieve net-zero carbon emissions over the next decade.

Negative claims about the environmental impact of mining have also sparked a wider acceptance of lab-grown diamonds — though whether they’re actually greener than natural ones remains a bone of contention. Still, the industry is increasingly investing in these issues not simply to refute claims, but because it is the right thing to do.

After over a decade of little to no investment in diamond category marketing, the industry launched the Natural Diamond Council (NDC) in June 2020 to replace the Diamond Producers Association (DPA). With former watch-branding expert David Kellie at the helm, the organization changed tracks to focus on content, driving traffic to its Only Natural Diamonds website and upping its engagement on social media channels.

Funded by seven leading miners, the NDC is also partnering with retailers to help them attract customers to their stores and increase consumer interest in diamonds. At the same time, it’s continuing to release ads via traditional channels like print and TV. The council has already filmed its holiday advertising campaign, which will feature actress Ana de Armas (pictured) as the NDC ambassador for the second consecutive year. The campaign is set to launch in mid-September, coinciding with the October release of the new James Bond movie, No Time to Die, in which de Armas stars.