While most people do not know whom Martin Rapaport is, those in the diamond industry do. He is a man of very high influence. He also produces what is the Rapaport Index. This tool is perhaps one of the most important tools of the diamond market because it helps with diamond pricing for the global industry. He delivered his report earlier this week at the JCK Jewelry Show in Las Vegas.
So, what does he have to say about the diamond industry and diamond market at its current situation? For one, he makes note of the current situation, which is alarming to most. Within the industry, there is a lot of concern about the luxury market. When economic times get tough in large countries, like that of the United States and much of Europe, the diamond industry tends to suffer along with it. In his report, Mr. Rapaport addressed this worry. According to him, there is both an opportunity here and some pitfalls that could cost many some key profits.
The problems with the diamond market are complex. On one hand, you have the demand for higher quality stones and larger stones coming in from countries like China, Dubai, India and Russia. Diamonds and diamond jewelry in particular seems to be in quite large demand. Yet, at the same token, the worrisome investment market in the United States and Europe is putting a large cool down on the spending of individuals there. Here have been numerous reports about stores filing bankruptcy because the sale of their diamonds is not happening. Some are even selling those diamonds at below market value in order to get out of the industry.
There are many concerns brought up about this and other events around the globe. For example, the global economy is really in hold. Now, the United States merchant is not just competing with others in his local area but they are now competing with a global marketplace, which has limited their resources and cut into profits considerably. Add to this the reasoning that there are now more millionaires and billionaires in the world than ever before. This growing number of wealthy people, coupled with their penchant for luxury goods has caused the value of diamonds to continuously rise over the last few years to significant levels. The prices of larger stores are going up at an incredible rate, especially when compared to the price of smaller stones under a carat in size.
In addition, there is worry about the new De Beers Forevermark. This is one of the many ways that branding is affecting the industry. The idea is that the branding will take place in which there is heavy marketing that will encourage the sale of specific brands, like the Forevermark. Then, as people become more interested in that particular brand, they buy it up and the company raises its prices.
What is Rapaport’s take on the market for diamonds? In most situations, he is bullish on the future of the diamonds. He presented key information during his meeting that shows that over time, the global demand for diamonds will continue to grow at paces that will outpace supply. This increase will continue to grow for some time. To help clarify his concern here, he compared the diamond market’s supply and demand happenings to that of a forest fire. A forest fire is a necessary part of the ecosystem because, although it puts pressure on the current system, in the long term, it is clearing its way for larger growth. He sees the same thing in the works for the diamond industry. The current economic situation will become a good thing for the diamond market down the road and for the whole market. He believes that the process will benefit even the smaller jewelers.
Prices are a hot point with any diamond talk. In this situation, Rapaport raised his pricing index by 25 percent. This was complete just before the show, which did not help those there who wanted to do significant amount of business during the show. Why did he raise his numbers? He said it was a simple correction with a basis on the steady supplier price raising.
In addition to these comments, Rapaport did address the many retailers at the convention. He remarked that there is much behind the emotional power of the diamond. The fact is that the retailers need to realize the connection that the diamond offers. This is not just on the angle of romance, but also on the angel of the global industry that the diamond is. For those in the industry, he says that they have a responsibility to make sure the industry does well to benefit all of those who are digging for diamonds in places like Sierra Leone.
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