On January 28, gold closed at $5,589 an ounce, the highest price ever recorded. By mid-October, it was trading around $4,168. That’s a fall of about a quarter in nine months, and it has still left the metal at roughly double where it sat through 2023.
If you sell polished diamonds rather than metal, you may have filed that under somebody else’s problem. But it is already affecting your order book.
Jewelry retail consultant Helen Gibb gave me the clearest statement on this dynamic when I interviewed her this year: “Profit per piece is no longer the relevant number. It is profit per gram.” Her example: A UK curb chain that cost around $535 when gold was at $2,000 is closer to $1,340 with gold at $5,000. Same design, same craft. Two-and-a-half times the capital sitting in one product.
Now follow that through to the diamond supplier’s side of the invoice, which it impacts in three ways.
The first is the stone specs. A jewelry manufacturer builds to a price point and works back to a landed cost. When the metal in the mounting doubles in price, the money has to come out of something else, and the stone is a flexible option. So the jeweler that ordered an H-color, VS1-clarity diamond from you last year may now request an I SI1, or a smaller center, or nothing at all because the piece has been redesigned around melee.
The second is capital. A manufacturer with twice as much cash tied up in metal has less of it for stones. Goods you used to sell outright are now being requested on memo. You have not lost the business; you are financing it.
The third is structural, and it will not reverse when gold prices do. Retail is selling fewer pieces at higher values, and the obvious read is that the market is moving up. Part of that is real. Part of it is only the metal, because that $1,340 chain is still selling to the same consumers who would have bought it at $535, without any conscious choice to scale up their spending. Beneath all this, Bain & Company’s Claudia D’Arpizio counts 70 million people who stopped buying personal luxury goods between 2022 and 2025. Fewer buyers, each spending more, is not a market moving up; it is a market losing its middle.
Gibb’s answer is to restructure the weight. In her words, if you sell one piece every two years, do you want 40 grams sitting in that piece, or 40 products at 1 gram? Both ends of that survive. The mid-weight mount with a mid-quality center, at a price gold has pushed out of reach, does not. Ask how much of your book is sitting in that middle.
Her test for slow stock is equally blunt. If you have not sold something for a year, ask how much weight is in it and whether it needs to be melted.
That is the hard part for diamond sellers to hear, because you can’t do that with a parcel. A jeweler who cannot sell a piece can melt it down and get paid for the gold – minus labor and the refiner’s cut, but gold is worth twice what it was in 2023, so the money comes back. An unsold parcel of diamonds gives you nothing. It is worth what someone will pay for it, and nothing until they do.
None of this needed a forecast. Mitigating moves could have been made in January, in April, or in any month since, at any gold price. That is the point. We keep waiting for conditions to settle so we can act, and conditions are not going to settle.
Move sooner, on smaller decisions, more often.
Elle Hill is founder and CEO of management consulting firm Hill & Co., which specializes in the diamond, gem and jewelry trade.
Main image: Elle Hill. (Hill & Co.)
