Can Diamonds Emulate Gold?
I confess I’m in a bit of a data mood. I know, it happens to the best of us closet nerds... just kidding, my nerdiness is fully out in the open. So scratch your eyes and brace yourselves for some numbers.
Before we get there though, I don’t know about you, but my eyes keep squinting toward gold as the metal continues to tease the $3,000 per ounce mark.
It’s somewhat reminiscent of my Instagram account, gaining two followers today, losing one tomorrow, but ever edging upward. It would be nice if it (my account) would rally safely beyond that 1,300 follower mark, so I can finally pursue that influencer dream of mine – posting consistently is the key, they tell me. Or, just show off those nerdy dance moves of yours on Tik Tok, Avi (literally no one tells me!).
Anyway, I digress. Where was I? Right, gold!
It is quite the phenomenon if you think about it. The higher gold goes, the more investors are drawn to it.
Gold tends to cycle upward. It typically rallies amid uncertainty, with all the Trump tariff talk being the latest stimulant. But historically gold has its peaks, at which point buyers shy away, enabling a pullback, before the next rally sets in toward a new, higher summit.
Jewelers in China capitalized on last week’s surge, as consumers bought gold bars, coins and jewelry ahead of Valentine’s Day. Meanwhile, Indian consumers held off from buying at these prices, despite the ongoing wedding season, which is a popular period for gold purchases.
See How a Valentine’s Day fad sparked a ‘gold rush’ in China and Gold’s lightning run rains on India’s wedding season, China offers discounts.
The current contrast is interesting between China and India, the two biggest markets where gold enjoys an almost mythical investor appeal.
For Chinese consumers, gold hasn’t peaked yet as they expect the current cycle will lift the price above $3,000. Indian consumers are waiting for a lower buying opportunity suggesting they anticipate the milestone level will be breached in a future cycle.
Either way, there is a swagger about the gold market and an underlying expectation of growth we don’t see in too many other jewelry products.
It feels a little naïve to write with such confidence about price predictability. But that’s the story the gold chart has told historically, with some prolonged peaks and troughs along the way. The opposite has been true of diamonds in the last decade or two.
The difference, of course, is the diverse demand that gold enjoys, given its use in jewelry, industry, and as an investment asset. In contrast, diamonds are heavily reliant on jewelry demand.
That leaves just two options for the diamond trade to stimulate growth: boost demand and / or create new avenues of investor interest. While that’s the big challenge facing the industry, I’m confident both are possible. We simply have to figure out the means to those ends.
From the blog
Catch up with the latest from The Diamond Press:
This week in the diamond world (news roundup)
Big Diamond Sales (video)
Sluggish Diamond Trading (video)
More pressing matters (here's where you scratch your eyes)
>>> Hong Kong’s diamond trade data for 2024 was published by the Diamond Federation of Hong Kong, China, serving another reminder of the prevailing weakness in the Chinese market.
Why it matters:
Hong Kong remains the primary gateway for the industry to the Far East. That said, the city is a net importer (or consumer) of polished diamonds, meaning its imports typically exceed its exports. That’s likely due to a portion of those imports being used to satisfy local demand and to supply jewelry manufacturers operating in the city.
Telling trends:
The data revealed some interesting developments in the market there. Overall polished imports in 2024 fell 26% to $10.77 billion, considerably below levels seen in the 2010s (see graph). Exports dropped 21% to $10.72 billion.
Hong Kong is the major supplier of polished diamonds to mainland China, traditionally its largest market. However, in 2024, the US ranked as the most important destination for Hong Kong’s polished. That was due to the slump in China rather than a meaningful increase in exports to the US.
The 36% drop in shipments to China to $1.98 billion in 2024 followed a significant rise in exports there in 2021 and 2022. It seems there was some expectation for a strong recovery when China came out of its Covid-19 lockdowns, similar to the market surge experienced in the US at slightly earlier. As we now know, that didn’t materialize, and exports to China last year slumped to their lowest level in over a decade.
Sluggish Chinese demand remains a key factor influencing the slowdown in the global diamond trade. Expectations are therefore muted for the upcoming Hong Kong shows (March 2 to 8).
Rough side note:
Hong Kong’s rough imports grew 38% to $1.27 billion in 2024, with volumes up 113% to 14.01 million carats. That was due to a spike in rough imports from Russia, up 74% to $789 million. As Russian goods have been sanctioned by the Group of Seven (G7) nations, and no longer go through Antwerp, new routes have emerged for Alrosa’s (Russia’s) rough production – Hong Kong and Dubai being the main ports of entry.
>>> Luxury house Kering had a tough time in 2024, bucking the positive vibes we got from Richemont and LVMH.
Kering is best known for its fashion brands Gucci, Saint lauren, Balenciaga, and Alexander McQueen, among others. Its jewelry maisons are Boucheron, Pomellato, Qeelin and DoDo.
Group sales fell 12% to EUR 17.19 billion ($18.02 billion) for the year. Jewelry was one of the best-performing categories in 2024, buoyed by the high jewelry segment, Kering noted in its annual report.
On that point, I stumbled across this insightful analysis of Kering’s performance by luxury market specialist Yemi Lawal. He notes that previous growth came from the affordable / aspirational luxury customer, but that customer is in decline in the current economic environment. Today, it’s the VIP customer which is driving growth.
>>> Petra Diamonds showed a net loss of $69 million in the six months ending December 31, after revenue slumped 30% to $115 million. The results did not present too many surprises as the company had already provided a sales update for the period. The losses were “set against the prolonged period of weakness in the diamond market,” Petra said.
What may have surprised was the resignation of Richard Duffy as CEO “by mutual agreement and with immediate effect.” Duffy served in the position for six years and has been replaced by joint interim CEOs Vivek Gadodia and Juan Kemp. Until now, Gadodia served as Petra’s chief restructuring officer, while Kemp was operations executive at the Cullinan mine.
Petra has been restructuring to reduce costs and improve cash flow. As part of the program, it sold its stakes in the Koffiefontein and Williamson mines. That leaves just the Cullinan and Finsch mines in its portfolio, with major expansion projects underway at both sites.
The Petra announcements are indicative of the pressures facing the mining sector – and mining executives.
Coming up
International Watch & Jewelry Guild: February 17-18
Rio Tinto annual results: February 19
Anglo American / De Beers annual earnings: February 20
Inhorgenta Munich Show: Feb 21 to 24
Lucara Diamond Corp. 2024 results: February 24
Pic of the week
The Tibbitt to Contwoyto Winter Road, more commonly known as The Ice Road, opened in early February to limited traffic. The road enables supplies to reach the Diavik, Gahcho Kué and Ekati mines in Canada’s northwestern Territories.
PS, this road trip has long been on my diamond-industry bucket list. If you’re reading this and can make it happen, do indulge me in 2026!!
Comments