We’re coming upon Thanksgiving and yes, there is a lot to be thankful for. There is some good news.
The Season has started.
When I joined the diamond business in the late ‘70s, “the season” started right after Labor Day. By November jewelers wouldn’t talk to suppliers, as they were totally focused on moving the inventory they purchased for the July – September timeframe.
Now, the buying season starts in November and can go as late as early December. Jewelers are currently focused on “just-in-time” inventory and now the time to buy has been compressed into (barely) two months. I totally get it. The past eight years, diamond prices have fallen, and retailers are reluctant to hold extra inventory, and not a day before it’s needed. Buying diamond inventory in September may be good planning, but if prices fall, your margin is gone.
The good news is that prices have stabilized, and I think we’re safe through the end of the year. If the holidays are decent, prices will remain where they are. There isn’t as much excess inventory as in the past, and prices won’t fall unless the season really doesn’t meet expectations at all.
If there is any strength in the market through the year-end, we may well see price increases in many popular areas this coming January.
Sales of larger (3 – 4 – 5 carats) are finally happening. The story is almost as important as the stone.
The weakest area of 2019 was in larger stones. And from my perspective, I see them finally selling. This is happening primarily in the brands and specialty rounds, and the larger stones I sold all have provenance and a story behind the sourcing and manufacturing.
The record-breaking stock market and high corporate earnings all spell good news for larger diamonds. If you have a significant diamond with a great story, your odds of selling are pretty good.
LGDs are proving to be a greater threat than I thought.
Earlier this year, I dismissed Lab Grown Diamonds as a passing fad that will quickly go away. I was a bit wrong. It’s actually a passing fad that will slowly go away. More retailers are jumping on this bandwagon because of the attractive margins – compared to natural diamonds. However, once the resales and trade-ins start, it will spell the end of LGDs. The myth will be busted and all will see that the LGDs had no clothes, and no value either. I give them maximum another year or two, and they will fade away into the fashion jewelry bin, like so many other diamond simulants over the generations.
As I finished writing this, DTC just put out a definitive pamphlet responding to the most pertinent questions that come up in the Real Diamond vs. LGD debate. If you are in the diamond business, you MUST read this. Please click here to get the pamphlet. I guarantee you that it is worth your time.
Happy Thanksgiving. And, may your holiday season be successful!
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