Diamond Prices Are Falling, but Don’t Rush to Buy an Engagement Ring

Diamond Prices Are Falling, but Don’t Rush to Buy an Engagement Ring

The Sun-Drop diamond of South Africa has been graded "fancy vivid yellow," the highest color grading for a yellow diamond. The 110.03 carats diamond sold for more than $10.9 million dollars at Sotheby's last November.
REUTERS/Michael Buholzer
By Millie Dent

Diamond prices are getting slashed, but that doesn’t mean you should run out to the jewelry store right now.

De Beers, the world’s largest producer and distributor of diamonds by value, is cutting diamond prices by as much as 9 percent, according to Bloomberg.

Diamond prices have already slumped over the past year as demand has fallen, partly as a result of the economic slowdown in China, the second-biggest market for the precious stones.

Related: Can Gold Regain Its Shine?

De Beers, which is a unit of mining giant Anglo American and controls one-third of the global diamond market, initially tried to stabilize prices by ramping down its production. It had started the year with a production goal of 34 million carats, but has twice slashed the goal to a current 29 million to 31 million carats.

That hasn’t been enough to counterbalance sagging demand, so De Beers says it will invest in a holiday marketing campaign in an attempt to boost consumer interest. The campaign will be focused in the U.S. and China, the world’s two leading diamond markets, and will primarily target men buying diamond jewelry gifts for their partners.                                                                             

In other words, you can expect to see a whole lot of diamond commercials soon — and in an interview with The Fiscal Times, one diamond industry expert predicted that the industry’s struggles will lead at least some retailers to cut prices this holiday season.

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The De Beers price cuts probably won’t have much effect on prices at high-end jewelry retailers such as Tiffany’s, though. These stores only purchase gems from a limited number of producers and since the diamonds they use are higher in value, their prices aren’t as vulnerable to market pressures as less valuable stones.

But it never hurts to look, right?

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Read the full congressional report here.

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