It is clearly a difficult period the industry. We all know the negative news about lower sales and retail bankruptcies. The economy is in a recession — whether or not the people in the government admit it — and consumer spending has slowed as they are hit by high fuel costs, the housing crisis, and tightening credit. (See page five for details.)
But there are many positive signs for the industry that can give people faith during this difficult period. We’ll call them the “diamond lining.”
Despite the fact that more synthetic diamonds are coming into the market, mostly in fancy colors, the fancy colored diamonds are actually surging in price. That shows there is not competition among the two markets (natural and synthetic.)
While many jewelry retailers are in financial difficulty, none of the bankruptcies lately have hit diamond cutters or dealers. This is due to the fact that inventory has increased in price so much, that has covered the loss of turnover. In the long run this many not help, because it is only paper profits, but it has given the market a nice short-term boost.
In a situation where the rich are getting richer, the Wall Street Journal recently noted, luxury goods have actually held up rather well during its recession.
Tourists, and sales to overseas buyers (from the Far East, Europe, even Canada) are rising strongly — because of the weakness of the dollar, and their strong economies.
While consumer confidence seems to be low, the confidence in the value of diamonds has actually increased. Edward Jay Epstein was wrong when he wrote 25 years ago in the Atlantic and in his book “The Rise and Fall of Diamonds”: “Have you ever tired to sell a diamond?” It is not hard to sell a diamond today, and many consumers are realizing very nice profits from having done so.
This is the business that has survived numerous recessions because it is a business based on love, and love endures, and even grows stronger, through hard times. People will always fall in love, and get engaged and married — and when they do they will do it, they will mark those events with diamonds.