Jewelers Cope With Rising Diamond Prices

If the amped-up prices of gold and ­silver weren’t giving jewelers big-enough headaches, now they must contend with more-expensive diamonds.

De Beers on Feb. 11 reported its rough prices rose 27 percent throughout 2010, mostly due to strong polished sales in China and India, where gem demand has soared more than 20 percent. In February, India’s Gem & Jewellery Export Promotion Council estimated that rough prices in January were 27.2 percent higher than the previous year.

And it looks like diamonds will only get pricier: Louise Prior, spokeswoman for the DTC, De Beers’ sales and ­marketing arm, says the company “had mid to high single-digit increases on a number of our [sight] boxes” in February. She declined to say which rough diamonds would be increasing in value.

According to dealers, the jumps have been felt across the board.

“Basically, everything is going up,” says Jeff Fischer, owner of New York City’s Fischer Diamonds. “The market is overheated. VSs and SIs have gone up tremendously. D colors, in all qualities, are rising. The oversizes are impossible. Trying to find a 2.05 carat or 2.55 carat stone is very difficult. For a 2.85, it becomes a joke. Prices are just ­amazingly strong in light of what I would call satisfactory but lackluster demand in the United States.”

He says the higher prices have made retailers reluctant to buy for inventory—but when they do, they accept the increases. “When the jewelers have to buy, resistance is breaking down,” Fischer says. “I have customers, who, a year ago, when I would offer them a 20 percent discount [off the Rapaport list], would say, ‘I want 30.’ Today, they are okay with 2 percent.” 

Stuart Samuels, a principal of DTC sightholder Premier Gem Corp. in New York City, says that most retailers haven’t realized “the extent of the increases,” adding that he’s paying 15 percent more for diamonds than he did just a few months ago. “A sample category of rough that was selling for $1,250 in August 2009 is now selling for $1,730,” he says. “This isn’t ­American-driven, but retailers here are going to have to accept it.”

Many jewelers have already noticed the bump. David Nygaard, owner of David Nygaard Fine Jewelers in Chesapeake, Va., says he’s paid over 10 percent more for diamonds lately. “Some of the increases we absorb, some we can’t. We try to find the balance.” In the end, he says, some customers have had to settle for smaller stones.

Marc Levin, owner of Malloves Jewelers in Middletown, Conn., was recently told by dealers to brace for 10 percent increases. But he takes comfort in his “healthy” inventory. “If it’s already in my case and the price increases, I don’t mark it up,” he says. “I tell my customers if I have to reorder, it will go up. They appreciate that.”

While Michael Greene, an owner of Wick & Greene Jewelers in Asheville, N.C., foresees challenges—“We’re [no longer] the drivers of demand in this country, so we’re going to see our supply go away and prices go up”—others view the changes as an immutable fact of life. “The thing about diamonds is they go up and rarely go back down,” says Lawrence Hug, president of Hug Jewelers in Cincinnati.

(Additional reporting by Lindsey Wojcik)