Polished diamond prices are likely to be volatile this year due to a squeeze on the US, but demand for larger, rare diamonds is booming as the number of diamantaires grows.
Martin Rapaport, one of the world's leading diamond consultants whose price list is used as a benchmark for wholesale trade in polished diamonds, told Reuters that a fall in the value of the dollar, in which diamonds are priced, has increased investment in gem diamonds as a hedge against inflation.The increase in diamond billionaires and a growing list of multi-millionaires, some of whom have interests in Botswana through the 16 DTC Botswana-licensed sightholders, has also increased the demand.
Diamantaire Laurence Graff, who is a sightholder to DTC Botswana through Safdico, also has a store on Bond Street in London and in many other chic spots around the world. He is known to appear regularly at magnificent jewellery auctions and snaps up diamonds at ever more dazzling prices.
At a Sotheby's auction in Geneva in May, he bought a pear-shaped 3.73-carat blue diamond for 5.2 million Swiss francs ($4.93 million, approximately P32.2 million), setting a record per carat for any gemstone.
Graff's net worth is estimated at 2.5 billion dollars (approximately P16.4 billion) and has been dubbed the "king of diamonds," and the "king of bling" by Forbes magazine, selling to the rich and famous from Elizabeth Taylor to Donald Trump.
The wholesale diamonds market has seen sharp increases, of up to 25 percent in extremely rare gemstones and Rapaport has adjusted his price list to catch up with big premiums that dealers were paying above his price list.
The price of an extremely rare, almost colourless "D", a high clarity VVS1 round diamond weighing 10 carats, has soared to $170,600 per carat (approximately P1.1 million), according to the latest Rapaport data,
But Rapaport said the buoyancy of rare diamond prices may not be sustainable due to volatile economic conditions such as the risk of rising US inflation combined with the credit storm and squeezed incomes in the American middle classes.However, at the top end of the market, demand for the rarest diamonds is surging as the number of multi-millionaires rises, especially in commodity-rich emerging markets such as the Gulf, oil-producing South American countries, Russia and east Europe.
"Demand for big stones is going up consistently," Rapaport said. "These prices are no longer speculative; they have been accepted by the market. The weakness of the dollar created a situation where the cost of diamonds in Euros went down."But Rapaport doesn't see the rally in prices of top tier diamonds running out of steam soon."The bubble is years away from bursting," he said. "Diamond prices are getting very high. Diamond prices can go down, like gold."
Gold prices have slipped from recent record highs as the dollar has strengthened. Gold typically benefits from a softer dollar because it is bought as a hedge against currency weakness.
While prices of wholesale polished diamonds traded among dealers have soared, the auction house market has achieved record prices per carat, as the super-rich appear to have an insatiable appetite for the rarest gemstones as a status symbol.The wives and girlfriends of the world's wealthiest people are piling on the pressure.
"The higher the price, the more she wants the diamonds," Rapaport said. "The fact that they are very hard to get makes them more desirable."
(Additional reporting by Reuters)