30-day Challenge – Day 21
If you are an affluent consumer earning more than $100,000 in annual income, then the recent report by Bain & Company on diamond prices should worry you. If you make upwards of $250,000 a year, then you shouldn’t be as perturbed because you will not be greatly affected by the forecasted jump in diamond prices.
The global consulting firm has put out a report estimating that diamond demand will grow at a 6% CAGR over the next decade. The company believes that as we approach 2020, diamond supply will not be able to keep up with demand due in part to the growing economies of China and India. Those markets alone are estimated to push diamond demand at a CAGR of 6.6% in diamond volume alone. While demand is estimated to grow, diamond supplies are only expected to grow by 3% (CAGR) in volume.
In global terms, the diamond industry today is worth more than $60 billion per annum, and provides a career and livelihood to millions of skilled individuals on all five continents
– Ari Epstein, CEO at the Antwerp World Diamond Center
The report, which is produced in collaboration with the Antwerp Word Diamond Center (AWDC), predicts that lower-end consumers are more likely to feel the brunt of future price hikes. So I guess, consumers might want to look at alternative gems to serve as jewelry gifts because that engagement ring just got more expensive.
The rise in prices could also cause many to flock to diamonds as an investment vehicle, but diamonds are not as liquid as stocks and bond, plus they do not have transparent price markets. The highly affluent who purchase 2 carats and above are not considered “affected consumers”, because those gems make up 5% of diamond production (but 50% of diamond sales).
Many have thought the prices of diamonds are controlled by large mining companies who limit the supply of the precious gems in order to drive prices up.
AWDC is an industry-established foundation whose mission is to serve and support the diamond business in Belgium. Headquartered in the heart of Antwerp’s diamond district, its Board of Directors is elected directly by those who define the Antwerp Diamond Community
– AWDC Website