Dear Friends,
We have officially entered the summer season, and the annual vacation period is about to begin. Summer has always been a slow time for the diamond industry and this year more than ever. The world economy is undergoing an upheaval, with rising inflation and higher interest rates. There is no doubt that the economic situation has impacted diamond demand, but there are some signs for optimism. In the US, the stock market has been unstable, but it has shown a considerable increase over the last six months. In addition, we see that inflation is being curbed, and that is very good news.
On the geopolitical front, there is no doubt that there are significant pockets of instability. The war in Ukraine and the weakening of Russia, the growing tension between China and Taiwan, and the Iranian nuclear issue – all these threaten world stability. In a globalized economy political instability impacts the markets, especially for the luxury goods industry.
At the last Congress, the Federation decided to act to strengthen natural diamonds by partnering with the Natural Diamond Council. Not only have we made a financial contribution to the NDC, but we are also planning to work together to promote the advantages of natural diamonds. We need to remember that thanks to the mining of natural diamonds in Africa there are jobs for tens of thousands of workers and a steady income for the producing countries. Mining companies are also investing in healthcare and education in these countries. The NDC is educating consumers about the benefits of the natural diamonds industry. There is a great deal of information on their website which is easily accessible.
A word about LGDs. They are enjoying a wave of popularity today, and it’s clear that for some consumers they are a less expensive alternative that still offers the bling of diamonds. In a challenging economy price certainly matters.
However, the prices of LGDs are constantly declining and they do not maintain any investment value. Moreover, huge amounts of energy are needed to create lab-growns, so they are not an eco-friendly product.
Experts say that the peak of the economic crisis will likely be in Q3 2023, and that we can hope to see the beginnings of a recovery during Q4. That means that we will need to struggle through the downturn in diamond demand for a certain amount of time. But I believe that in the longer term the diamond market will rebound, and we can look forward to a better future.
Have a wonderful summer,
Yoram Dvash,
President
