2005

Market Report: Prices Go Up, So Consumers Trade Down

April 2005

The market in general is quiet, but you wouldn’t know it from the direction of prices. In the last few months, all the price increases in rough from De Beers and other producers have begun to be felt in polished.

Unfortunately, these increases are only reflective of supply, not demand. So while the price of polished is going up, consumer demand and people’s budgets are not. So if a consumer has it set in his mind to spend $18,000 for a two-carat stone, he cannot get the same H VS-color stone he would a few years ago. Instead, he must trade down.

This means they are going down in both color and clarity, and we are seeing greater demand for SI1s and SI2s and I-J stones. Even some fancy shapes that were not so popular in the last few years — like marquises and pear-shapes — are becoming popular as consumers see them as a way to get a deal, versus popular shapes like rounds and princesses.