There’s a buying frenzy in cheap and tiny diamonds

There’s a buying frenzy in cheap and tiny diamonds

Bloomberg / New York

A surge in diamond demand that began in the early Covid lockdowns is showing no sign of easing, and now even the cheapest, smallest stones are getting caught up in a buying frenzy.

Low-end diamonds — the sort that you might find in jewellery displayed in a local WalMart — has been a tough business for most of the last decade. There’s been an oversupply of cheaper stones, which tend to be small and flawed, and anaemic demand growth kept prices depressed and profit margins thin.

But the past three months have shown a sharp reversal as demand surged among US consumers, who buy about half the world’s diamond jewellery, at the same time that the closure of one of the world’s biggest mines is putting pressure on supply.

In the rough-diamond market, the value of low-end stones has jumped dramatically. While that doesn’t automatically translate into similar increases on store shelves, prices may start ticking up for the cheapest diamond jewellery. More likely: The sparkles in that pair of bargain earrings will get a little smaller or more flawed as retailers look for ways to cut costs.

The evidence for the surge in diamond demand