Market report on precious stones: No. 1 Diamonds
As experts in goldsmithing and watchmaking and certified gemstone specialists, we deal with the trade in gemstones on a daily basis. Being so close to the action, it is easy for us to assess the market, recognise changes and even make predictions. In this newsletter series, we would like to share our latest experiences in the field of gemstone trading with you.
Nowadays, transparency is very important to customers. More and more people are informing themselves in advance about a desired product and the trade associated with it. In today’s enlightened society, this trade should be ethical and as fair as possible. In the gemstone sector, such trade is characterised, among other things, by the fact that no children work in the mines or cutting workshops and that miners work in safe, healthy and humane conditions. In order to guarantee these conditions on site, we have taken various measures with our local partners since Kobler Zug was founded. As you have read in previous newsletters, we do this by actively participating in various local projects, which we are even able to help shape personally as a result.
Provenance Proof for greater transparency
Transparency and the knowledge that we are making the world a little better through our hard work and social commitment have become matters close to our hearts.
Kobler Zug recently joined forces with a neutral, independent company: Provenance Proof. This company offers an additional certificate to the scientific appraisal of gemstones, which attests to the responsible business practices of jewellers. This includes the verifiable origin of the jewellery, its traceability and ethical authenticity.
We would like to emphasise that creating greater trust and transparency in the gemstone and jewellery industry is an absolute necessity in our society. Even for our gemstones, whose journey we can trace and follow from the mine to our studio and back, it is important to us to underpin this with professional certification.
In our next news article, we will go into more detail on the topic of transparency and our recent merger with the certification company ‘Provenance Proof’. You will learn what this topic has to do with blockchain and why it represents a revolution.
To support and guide you with our expertise, we provide you with a market report on this topic two to three times a year. It is our pleasure to bring you, our valued customers, closer to this impressive world of gemstones from an emotional and economic perspective.
King of Gemstones – The Diamond
Diamonds are an almost inexhaustible resource on our planet. On the one hand, this is due to the very costly and complicated mining methods. On the other hand, because of the entire processing, cutting and polishing process. This creates a level of added value that is unparalleled. What is exciting for us is that the diamond forms its ‘own brand’ and has an incomparable uniqueness. This gemstone is a product that is directly and easily accessible to every jeweller and every customer alike.
There is one thing to bear in mind, however – diamonds are not inexhaustible.
According to scientific calculations, the earth’s reserves of diamonds and crystals will be exhausted in 30-60 years.
Fortunately, diamonds as such are considered indestructible.
Due to seemingly perpetual demand, obtaining information about the mining of rough diamonds or the sale of cut material is relatively easy and readily accessible. This is both the most established and one of the most heavily regulated trades in the gemstone sector.
The trade in rough diamonds remains very stable. It is noticeable that prices for larger rough material have fallen. Small rough crystals, on the other hand, have been subject to price increases for some time. It is assumed that this is due to the initial effects of the embargo against Russia as a specialised supplier of the finest quality micro-diamonds.
Currency differences play a greater role in the case of cut diamonds, but above all, these are clearly noticeable both directly by Kobler Zug and for our customers.
There is consensus in the wholesale trade that, despite lower prices for stones over 1ct, there has been no increase in demand so far. However, this is the case for stones under 1.0ct, which are becoming increasingly expensive.
What is striking in the international diamond trade is that sales remain well below expectations. This clearly shows how important sales markets such as China and Russia are in influencing such a statement. There are no official analyses as yet on whether the high demand for synthetic diamonds in the USA is also having an impact. However, direct discussions with jewellers in New York, Boston and on the West Coast indicate that this is a serious trend. Our colleagues there have added synthetic diamonds to their product range and are in some cases recording higher sales than for natural diamonds. It remains to be seen how customer behaviour will develop, especially if prices for synthetic material continue to fall. As a reminder, natural diamonds have enjoyed guaranteed value retention for decades.
We are currently seeing an increase in large Asian and, in particular, Indian jewellery manufacturers investing in 14-carat gold (585/1000) and stocking up on synthetic diamonds. In India’s domestic market in particular, end customers are primarily interested in the gold, which also determines the actual price of the jewellery.
Synthetic diamonds in free fall
In economically stable markets such as Switzerland, the opposite is true. Demand for natural diamonds is rising and prices remain stable. This has been the case in our domestic market for the last six months, and we are currently enjoying this trend.
Nevertheless, synthetic diamonds are finding large buyers worldwide, especially in Switzerland, mainly in the watch industry and almost exclusively in the small diamond sector. The reasons for this lie primarily in the ever-increasing demand for products and the fact that large cutting centres such as India currently prefer synthetic diamonds.
We cannot shake the suspicion that the profit motive of the respective suppliers also plays a role here. The interesting thing is that the end products are not becoming cheaper, even though synthetic diamonds are clearly cheaper.
Our tip: always evaluate the offer of a piece of jewellery made of synthetic diamonds with this in mind.
Think globally, act locally
When it comes to diamonds in particular, it is advisable to consider currency influences. Major changes in the supply of goods that are available in large quantities are viewed negatively. Yes, the diamond is the king of gemstones, but it is by no means rare. It is a well-structured and regulated commodity, almost inexhaustible in supply. Diamonds can offer a safe haven in times of currency collapse, precisely because the trade is so well controlled. However, diamonds have never experienced major investment surges. They are definitely the gemstone that always retains a certain value and is, at the same time, virtually indestructible. A diamond is not only incredibly beautiful and, depending on the perfection of its cut, displays its unique fire. It is also extremely durable and can therefore be worn without hesitation in everyday life.
Where else can a million Swiss francs be compressed into a diameter of one centimetre and still be worn so stylishly?
In summary, we believe that investing part of your assets in diamonds/precious stones makes sense in terms of preserving value, as they are considered to be very stable in the long term. Particularly in countries whose currencies have depreciated significantly in recent years due to inflation (e.g. GBP, EUR), at least part of the loss in purchasing power could be mitigated by investing in precious stones. However, it is regrettable when unique pieces of jewellery or beautiful gemstones have to be sold.
In the gemstone sector, we recommend an investment of CHF 500,000 or more, exclusively in very valuable individual stones such as rubies, emeralds, sapphires and, of course, diamonds.
We hope that this newsletter has given you a deeper understanding of the gemstone sector and at the same time opened your heart to our ‘work behind the scenes’.
So wear your gemstones and diamonds, enjoy their unique brilliance, knowing that you own something valuable. Both in terms of monetary value – but above all in honour of the love of the person who gave you this stone as a gift!
