According to diamond industry analyst Paul Zimnisky, we can expect the prices of diamonds to increase this year. The prices for rough diamonds in 2017 went up 2.7%, while polished diamonds went down 3.5%, according to Paul Zimnisky Diamond Analytics.
“Mining companies tend to have leverage on diamond prices, so if their cost to produce the diamond stays the same, but the actual price they’re selling their diamond goes up, that increases their operating margin and it’s good for their business,” says Zimnisky. “If prices are higher it should help all of the mines, assuming they don’t have specific operational setbacks, so that should lead to higher revenue, higher profits and an increase in tax revenue;” this is good new for the mines in the Northwest Territories.
The Gahcho Kue Diamond Mine, located on the Canadian tundra in the Northwest Territories, is one that he expects to see increased revenue because it will be able to access higher quality diamonds deeper into the ground. He says, although they have fewer diamonds, they have a higher quality, which will be worth more.
The reason diamond prices are on the rise is due to the expected global economic growth in 2018; diamond growth is highly correlated to economic growth. The U.S. and China, being the biggest consumers for diamonds in the world, with half the demand coming from the U.S. and 20% from China, is what really will impact the diamond industry.
Average diamond selling price
With the diamond industry being so competitive because of specific brands, Zimnisky says the best thing companies can do to market diamonds and create a general interest is to through generic marketing campaigns. “Branding and marketing is very important with luxury items.”
According to Statista.com, in 1960, the average price for such a diamond stood at some 2,700 U.S. dollars. Since then, the diamond price has increased more than tenfold, to 29,650 U.S. dollars in 2015, about 14% each year.