What to Buy in a Pandemic: Diamonds and More Diamonds
The recent turmoil the world has been through in the face of a global pandemic caused by the COVID-19 virus has left the world and its people in grave troubles. Along with the loss of life, multiple economies have collapsed, the people and different corporations are struggling to navigate through these perilous times.
Similar to different industries the diamond market And Diamond Ring have also gone through something similar. Like all the other retailers out there, many of the diamond retailers have been left with no choice but to close many of their branches temporarily or permanently. However, the damage cause may not be entirely irrevocable.
Despite the numerous disruptions caused in the industry, certain aspects of it have begun to restore themselves, and it may be seeing somewhat of a new dawn. Hence it brings us to the most important question, is it a good idea to buy a diamond during these circumstances?
Are diamonds a good investment during the pandemic?
To be as straightforward as possible, this might be the best time to purchase or invest in a diamond. Although it is never recommended to enter a debt in order to purchase a diamond or a diamond engagement ring. Especially when you are at a time of your life where you may be spending more than you are earning. However, if you have a great credit card limit or enormous savings then it should not be a problem at all.
A year into the pandemic and we all are well aware that it has slowed down the fast-paced life of most people, but it most certainly has not put a stop to anything. Life seems to be going on anyway, with people planning their weddings and engagement ceremonies.
Although it might not be possible for them to go all out while planning the classic proposal or a dream destination wedding, the couples surely are not shying away from trying to make the best out of the situation. Some of them have even tapped into their dormant creative sides, thinking out of the box for the most special proposals possible.
Since people of various industries have been easing back into their work habits, reopening, and modifying their business strategies in coherence with the pandemic and the government regulations imposed because of it. There is no reason as to why diamond retailers would hold themselves back. Even with the social distancing and a shift of preference to online shopping the retailers have gone back to business. Naturally purchasing diamonds online has become easier in the wake of the recent demands and is deemed as a much better option for the consumer.
Diamonds are forever hence they also have a great resale value although not the same as gold, it is still good enough. The saying that ‘gold is a safe bet even during the shakiest of economies’ may be old but holds some truth to it. Even though these are dire situations. Perhaps it is why the purchase rate of finer jewelry, especially that of diamonds has seen a dramatic rise this year.
Although according to statistics and research, the sales and incrementally decreased in the former months of the pandemic, they seem to have bounced back over the summer and gained a solid momentum once people had eased into the pandemic and were not as afraid and uncertain of it as they were in the beginning.
People in the United States alone have spent an estimated $5.25billion on jewelry in the month of August alone, which is still more compared to other luxury industries that have roughly sailed through the pandemic with occasional moments of respite.
This new and increased momentum in the industry is not limited to its retail services. There has been an improvement in the sale of auction houses. As a matter of fact, they have been constantly flushed with great deals of their own. And judging by their accommodating operations it does not seem as if they are going to quiet down any time soon.
Some of the major players of the diamond industry are looking forward to showcasing their best sales during the upcoming spring, as they estimate that it is when most buyers would truly be interested and enthusiastic. However, this by no means signifies that they are not supportive of more digital mediums and private showcasing. As a matter of fact, they have been quite considerate of the buyer’s preference and safety. Hence regardless of the medium of the bidding it sure is expected to bring great results.
The diamond auction market has seen many changes since the pandemic, some of these might even become a part of the system considering the recent success. In the previous last six months alone during the lockdown, the sales of diamond jewelry remained pretty strong at some of the leading auction houses worldwide. As more and more people have become confident regarding buying expensive items without inspecting them first. Until the pandemic, most of the online auctions organized only sold jewels and diamonds that were moderately priced while the highly-priced diamonds were reserved only for the live auctions.
Buying diamonds instead of traveling
This recent resurgence in the diamond market is not without any explanation. Jewelry sellers and retailers do have an explanation for such behavior. Most experts believe we may have human nature to thank for.
They believe that for those with higher incomes and money to spare, purchasing diamonds and other luxuries are a sort of trade-in for their inability to travel due to the various travel bans imposed all across the world.
In almost every part of the world, the biggest competition to the diamond industry is imposed by the travel industry.
Since diamonds are mostly purchased on a joyous or a momentous occasion such as a wedding, engagement, anniversaries, or even something simple such as graduating or getting a promotion.
However, with the recent adventurous trait in almost all millennials traveling seems to be the more romantic option in most cases. Everyone wants to give a proposal by the Eiffel Tower or go to the Maldives to celebrate an anniversary or a honeymoon.
Hence, they would spend less on expensive jewelry and diamonds in order to accommodate their budget. However, due to the recent travel bans imposed everywhere, it seems that everyone has accepted that they would make the most by purchasing the bigger and better diamonds since they have pretty much compromised in the other aspects.
Another reason why most of them gravitate towards purchasing diamonds as a means of compensating for their lack of travel plans is partly that these retain their value over time.
As far as engagements and weddings are concerned, people can no longer go for destination weddings and engagements, they are compensating for it by going for a larger, more brilliant diamond ring. And the rest who were already engaged or married are hoping to upgrade their existing rings since they have more money to spare.
The pandemic is seeing just as many marriages as the number of divorce cases it has seen if not more. For most people, the realization as to how short one life can be has pushed them to hasten their proposals and marriage plans.
Although a wedding during a pandemic comes with its own sets of pros and cons, for the diamond industry it is surely a benefit. Since people now no longer have to spend hundreds of dollars on food, guests, flowers, wedding décor, party favors they are bound to spend it all in one place. They tend to be the least compromising when it comes to their wedding rings or a wedding gown or the bride’s jewelry. People would be spending more on the diamond carats they buy as well as buying entirely new jewelry. Everyone loves a little bling.
If a pandemic can lead people with the means to buy diamonds as an expression of love and affection, then it has inspired people with even greater means to view it from a different angle, as a tangible form of wealth.
According to most of the small retailers even though the sales of diamonds and diamond jewelry have increased compared to the formative months of the pandemic it is nowhere close to what it used to be as a precedent to the pandemic. Nonetheless, the sales are only expected to increase in the holiday season.
How low can the diamond price go?
Although this may be a question that would increase many purchasers, it is one without a definitive answer. Moreover, one that no one in the diamond industry would wish to be asked. The impending decline of the diamond industry has just been magnified due to the pandemic.
The coronavirus has forced the closure of many jewelry shops and entirely trashed the share prices of the diamond mining companies. Hence it is obvious that at an industrial level the prices of said diamond have considerably dropped due to the pandemic. So, what does this mean for the consumers?
It seems like a pretty great opportunity to buy diamonds or invest in them if you have the means to. It also depends on where you purchase these diamonds. Along with a decrease in nearly everything, it is believed that there has been a decline in the manufacturing costs of these diamonds, consequently affecting their retails price, however, that again depends on what kind of retailer are you purchasing from?
If you visit a physical store, they will already have an inventory of their diamond jewelry for quite some time. Hence the entire situation of the wholesale market is insignificant to them. Their best effort would be to avoid incurring any kind of loss and to do so they would try their level best to maintain those prices until the market redeems itself and the retail prices are synchronous with the wholesale price. It would however take time for them to move their current inventory at a higher price.
The disparity in the manufacturing cost and the retail cost may not be a problem at all for companies that do an online business. In fact, their online business allows them to be more flexible on their prices since they are not the ones who set the price of the diamonds. Strictly speaking, they only set a percentage markup and the prices of the diamonds are adjusted according to any adjustment made in the manufacturer or the wholesaler’s price.
Hence, generally speaking, online diamond retailers can afford to sell their diamonds at a lower price compared to physical stores. With their extinguished business model, they are in a far more advantageous position to capitalize on the recent decline in the manufacturing costs of diamonds and diamond jewelry, making online retailers a more attractive choice for the public.
Even in the face of the pandemic and recent turmoil, there have been extended opportunities to purchase luxury goods such as diamonds and high-value rare diamonds. The recent plummet in prices makes a great deal for investors seeking to invest in high-priced diamonds and rare fancy natural diamonds. They may be of a lesser cost now, but the rarity of natural and fancy diamonds is sure to increase their value in the coming years. Simply speaking, buying a diamond may have never been easier than this!