Dampened Diamond Industry Is the Result of Twin Bankruptcies
2002: Dampened Diamond Industry Encountered 2001’s Storm
Despite the fact that Christmas 2001 didn’t emerge as the world’s greatest holiday season, it ended up strong enough that sentiment in the diamond market seems to be surprisingly upbeat as we move into 2002, with most hoping the business has turned a corner.
January is as strong as has it been in previous years, which is already something of an accomplishment. Rough is very expensive, although this has not yet translated into the polished market, with the exception of Indian goods. The prices of the better goods are still firm — especially in the higher colors — but their prices have not gone up as of yet.
But is the improved sentiment backed up with the reality of the pocketbook? Some major companies — like De Beers and Argyle — remain very cautious, and are still giving the market less goods than it’s asked for. Argyle head Gordon Gilchrist said, "Despite all these remarks about Thanksgiving and Christmas, we are more likely to see an adjustment to prices downwards in the first quarter next year."
There is reason for gloom. Unemployment is still high, and it looks like it will keep getting higher. It’s become a regular occurrence to hear about friends getting laid off. On the news, they are already talking about a second-half recovery, and certain signs do seem encouraging. However, they also talked about that last year, and it never materialized. It’s likely that business will never seriously improve until the employment picture does. A lot depends on the situation in the world, but for now at least things are a lot more encouraging than they were last year at this time.
The trade also sees a mixed picture. The twin bankruptcies of K mart and Service Merchandise have already dampened the year for some jewelry manufacturers. All eyes will be watching the upcoming shows in Tucson, Orlando and New York, which will likely serve as more of a barometer than usual. Most people are hoping they will be reasonably good, since retailers still have low inventories. If those shows come through, we may finally see proof that the industry has weathered the storm of 2001.