Where Are Colored Diamond Prices Heading in 2016?

January 24th, 2016 by Noam Flint

With 2015 now behind us, the news about record prices at auction is slowly trickling in. Another rare fancy vivid pink was sold, another one-of-a-kind fancy vivid blue was acquired for a record price becoming world’s most expensive diamond, another unique yellow diamond will hit the market….but what about the majority of fancy color diamonds? Where are they going? How have they performed so well despite the fact that the media kept hammering the diamond industry during 2015?

It is no secret that the colorless diamond industry has taken a huge hit in 2015, a fact which the media has been referencing for many months. In the same vein of the downward trend of colorless diamond sales that has been occurring for the last few years, 2015 continued in the same manner and the overall worldwide sales for colorless diamonds decreased once again. This is not to say that no one is buying colorless diamonds, but rather that they are being bought less than they were in earlier decades.

However, it is interesting to note that this is not reflected in the world of fancy color diamonds. In fact, although fancy color diamonds are obviously intrinsically related to colorless diamonds, their market trends and industry behavior couldn’t be any more different. This discrepancy is a completely unique element of the diamond sector and there is no other commodities space where two products that are so closely related behave so differently!

Colored Diamonds are Moving Front and Center

After touring major jewelry stores in the USA and Hong Kong during 2015, we have seen many more store front windows than in years past increase their fancy color diamonds displays, as well as displays of precious gems such as sapphires, rubies and emeralds. Diamonds will always remain a staple for jewelry stores, but it seems that they have been forced to the backseat to make way for their more lively counterparts! Now, it is the trend in jewelry for more unique items like fancy color diamonds and precious gems to be dressed up with colorless diamonds, and the colorless diamonds are not the stars of jewelry pieces as often anymore.

The reality of the steady demand and distribution of fancy color diamonds has meant that their prices have held steady in 2015 in comparison to 2014. That is to say that colorless diamond demand and distribution have both decreased since 2014, making the reality of fancy color diamonds a minor miracle. From our observations, we see that fancy color diamonds’ safe position in the market is due to the simple fact of their rarity and the strong demand for something new and potentially profitable by the retail segment.

This does not mean that all colors, tones, and sizes of fancy color diamonds have stayed flat, but on average they most certainly remain strong. Some weakened slightly (3-5% price reduction), but the reduction in prices was actually only caused by the desire of retailers to move inventory and for turnover in order to create trade. The diamond industry, like many others, relies on inventory turnover to keep going. By reducing the prices of goods slightly (in this case, a mere 3-5%), it can cause its inventory to move fast enough that the next turnover will gain back the slight loss from the previous turnover, a typical business strategy.

Pink & Yellow Diamonds Shine Stronger

One of the most interesting trends to emerge in 2015 is the increase in yellow diamonds and rings. Long the most popular color of diamonds in the world of fancy color diamonds due to their relative affordability, this color has continued to increase its demand.

This can be attributed in part to major brand houses like Tiffany’s who have been increasing the appearance of yellow diamonds in their storefronts. Acts like these help move the overall market sentiment toward certain products, causing consumers to desire them and at a variety of price ranges.

Brown diamonds are also a very popular color due to their trendiness and affordability, and in recent years have skyrocketed in popularity due to some rebranding as ‘chocolate diamonds’ and ‘cognac diamonds’. However, the most desirable colors still remain pink and blue.

Natural pink diamonds and blue diamonds are both so rare and in such high demand that their prices are generally higher, depending on the intensity of the color in the diamond. They are both considered incredibly special and elicit a strong desire for ownership, although generally many customers are often looking for guidance on buying pink diamonds and blue diamonds to make sure they are making the best choice.

In 2016, we will likely continue to see major hunger and desire for all fancy color diamonds across the color spectrum, and retailers just like consumers are continuing to educate themselves and appreciate fancy color diamonds in ever increasing numbers. As the popularity of fancy color diamonds grows, in conjunction with the decreased worldwide demand for colorless diamonds, we are sure to see an upswing in demand for these diamonds and even for precious gems.

Got your own predictions for the diamond market in 2016? Feel free to share them!