We have many clients who want to buy a big diamond but have been waiting until the price bottom out due to the recession. For months, I have been telling them this is the bottom and they can expect to see polished diamond prices moving up shortly.
I am not the only one with this belief. Yesterday, Robert Gannicott, CEO of Harry Winston Diamonds noted that rough diamond prices have improved by at least 61% from the prices at the lowest part of the market, during the first quarter of this year. Harry Winston owns part of the Diavik diamond mine in Canada’s Northwest Territories in addition to its high-end jewelry stores. Even with the dramatic increase from the low, rough diamond prices in the quarter ended October 31 were about 9% lower than the same period in 2008 and 13% below the highs in the summer of 2008.
What is remarkable about the increase in rough diamond prices is that polish diamond prices have been flat for most of the year. Most diamond mines closed for months at the start of 2009 and this allowed the excess rough and polished diamonds in the pipeline to be sold until demand was more aligned with supply.
The mines have been producing for months and the cutters are back in operation. The demand for polished diamonds for the Far East and India is on the upswing and the US holiday season is in full swing. In the months ahead, demand is expected to match and exceed supply, implying rough and polish prices will be moving up in the near term.