Christie's auction house is arranging New York Spring Jewelry Sale on 22 April. The top lot of this sale is to be a D Flawless diamond weighing 30.02 carats, which is estimated at $2.5M. Last year the diamond weighing 22 carats was sold at Christie's for $3M.
"Connoisseurs will definitely jump at their chance while sellers are apprehensive about the future wondering how to invest funds and in which currency to make investments," Le Monde reported citing Christie's Europe President François Curiel.
While Christie's admit the fact of a certain decrease in prices throughout their business caused by the global financial and economic recession, jewelers, for their part, understate the scale of its consequences, according to Le Monde. Meanwhile, the crisis is battering the industry immortalized by Marilyn Monroe with the ode "Diamonds are a girl's best friend." Despite the fact that there is no unified selling rate for diamonds due to many differences between them, some indicators do exist and testify that prices have fallen by 50% since the summer 2008 level. Furthermore, the debts of companies specializing in rough and polished diamond trade have grown. This is the result of shutting down the "credit tap" by the banks operating within the industry.
Diamond mining mastodons have also reeled. The world's largest miner De Beers, which accounts for 40% of global diamond output, is now keeping on a short leash its privileged clients furnishing cutting centers with rough. In order to withstand the economic situation the South African giant had to derive $500M from its shareholders.
The main De Beers subsidiaries - Namibia-based Namdeb and Botswana-based Debswana - were also forced to fall back on such measures as technical unemployment and significant production cutbacks at mines located in South Africa.
Sales of British-Australian miners BHP Billiton and Rio Tinto, in their turn, slumped due to market overstocking with small-sized gems.
ALROSA also suspended its supplies, while the Angolan government is considering options to provide financial warranties in order to support industrial mining activities.
According to some experts, anemia in demand for polished diamonds lies at the bottom of the crisis. Analysts expect further decline in diamond sales to reach 60% in 2009. Amid the recession in the USA, the largest retail markets and jewelry companies such as JC Penney, Harry Winston and Signet forgo polished diamonds purchase. Whereas their income is on the decrease, market overstocking has reached a record scale.
Economic difficulties in China and India led to a slump in gemstones sold by local nouveau riches. European markets are overtaken by anemia. Only Middle East manages succeed in crisis conditions which is proved by an increase in sales of gems containing higher-grade stones being purchased by large fortune owners from the Gulf states. Therewith the stake is placed on quality now more than ever.
And only some large market profiteers are going to take advantage of current environment to buy out gems at lowest price and subsequently store them until some better time comes.
Producers' objective is to maintain their processing level and reduce supply. However, after the elimination of De Beers' monopoly at the market by the Americans and Europeans, the corporation is no longer able to suppress the landslide of prices by means of keeping gems in stocks.
Meantime the governments being concerned with the growth of unemployment intend to prevent mining output reduction. This is particularly true in South African countries where the diamond industry plays a vital role.
Finally, professionals are apprehensive about diamond inflow to the market sold by private individuals who end up in financial difficulties as a result of the global financial crisis.
Alex Shishlo, Editor of the Rough&Polished European Bureau in Brussels
