Note from the Publisher: Natural Trade

At some stage, synthetic diamonds will go the way of other synthetic gems and get so cheap that they will be less competitive against natural diamonds.
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There is concern about what will happen to the natural-diamond trade. De Beers sales, Indian polished exports and US polished imports are all down about 50% since 2022. People are afraid. They don’t know if and when the natural-diamond market will turn around. See my article on the natural-diamond market on Page 8 of this issue. 

Three primary factors are reducing natural-diamond demand: the collapse of the Chinese market; synthetics replacing natural diamonds; and sanctions and global economic warfare.

These changes are fundamental and long-term. Business will not return to “normal.” China’s move toward communism and against conspicuous consumption is not short-term. Hong Kong is out, Dubai is in.

Over the short to medium term, Synthetics will replace about 50% of natural-diamond demand. Middle-class, budget-minded consumers will continue to buy synthetic-diamond jewelry, while wealthy-class consumers will buy natural diamonds. At some stage, synthetic diamonds will go the way of other synthetic gems and get so cheap that they will be less competitive against natural diamonds.

However, the damage done by retailers convincing young couples to spend less on their engagement rings and then selling them soon-to-be-worthless synthetic diamonds may never mend. Synthetic jewelers will have a lot of explaining to do when their customers see their $5,000 to $10,000 synthetic diamonds for sale at hundreds or tens of dollars.

The good news is that we are at the start of the greatest transfer of wealth in human history. From 2021 through 2045, elderly Americans will be transferring $72 trillion to their offspring. For the next 20 years, Gen X, millennials and Gen Z will be getting trillions of dollars that they never worked for. Free money to spend on jewelry.

Serious members of the jewelry trade need to follow the money and focus on demographics. There will be unprecedented opportunities to buy and resell recycled estate diamonds, gems and jewelry. Another great opportunity will be to focus on selling jewelry to the wealthy younger generations and instill in them the desire for natural-diamond luxury. Natural diamonds are not for everybody. Real diamonds are for real people with real money.

This article is from the October-November 2024 issue of Rapaport Magazine. View other articles here.

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Note from the Publisher: Natural Trade

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