Martin Rapaport is one of the foremost diamond authorities in the world. This reputation is due to his extensive diamond knowledge and study of the diamond market. In a recent interview, he has stated that the rare diamond market is currently in the middle of experiencing a strong surge. As Mr. Rapaport carries such enormous weight in the diamond world, this news is regarded by most in the diamond industry with tremendous interest.Mr. Rapaport states that the reason for the current rise of the rare diamond market is due to the rising cost of rare diamonds. This rising rare diamond per-carat cost is in turn due to the fact that diamonds are priced per-carat in dollars. As the dollar has weakened over the past number of years, more and more of the world’s wealthy have begun to invest in diamonds in order to protect against further weakening of the dollar. In other words, a diamond bought one day for $20,000 a carat, could be worth $22,000 a carat or more within a few months as the dollar continues to weaken.
As more and more wealthy investors hedge their finances through buying rare, large diamonds, the price per-carat of rare diamonds is forced up. This is simply a matter of supply and demand, according to Rapaport. The lower the dollar goes, the less expensive it is for foreign, wealthy investors, especially those investors from oil producing regions that are flush with Euros, to purchase rare, large-carat diamonds. For example, in May of this year, a new record for per-carat price was set at a Sotheby’s auction when a 3.73 carat, blue diamond went for $4.93 million to a London billionaire.
Rapaport explained again that with the dollar’s decline, the American middle class does not currently possess the means to purchase diamonds with the economic strength that had been the case in recent years. This means that the small to mid-carat size diamond market is slowing down, even as the rare diamond market booms. This boom is further strengthened by the ever increasing demand for large carat diamonds for status appeal, rather than simply for investment purposes.
Again, according to Rapaport, the rising demand and subsequent rise in price of large, rare diamonds due to investors also serves to make such diamonds more desirable to the wives and girlfriends of billionaires. As the price per-carat of such diamonds goes up, it indicates that such diamonds are becoming increasingly rare. With such an understanding, the status of rare, large-carat diamonds grows with the price of said diamonds. As such being the case, it can lead one to wonder how long it will be before the carat size considered rare begins to grow ever smaller, as larger stones are snatched up quicker and quicker by the uber-wealthy.
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