The Market MGL Reports - Winter 2009

In my entire career I have never seen a market like this.The spread between bid and asked prices is wider then ever. If you need to sell a diamond today for cash the market is what someone is motivated to pay.The price has to be attractive enough to make him or her part with cash.If you need to find a stone you will probably pay near the same as you have been or slightly less.

A few things about the antique stone market. It has grown dramatically over the past 5 years and it is a very thinly traded market. There has never been enough supply to match the growing demand. Any uptick in demand drives prices up.

In stones 3 carat and bigger prices surged from last February thru September of last year.All diamond prices rose at this time and bigger stones rose dramatically. Most of this price increase was dealer to dealer demand for large stones. What I came to realize was that concentrated buying of 3-10 carat cape diamonds (M-P) by a few market dealers skewed the market. They were buying to make up specific pieces and in anticipation of future price increases. Demand for this size of cushions and old europeans drove prices up 20-30%. When the financial markets melted down in September 2008 this came to an abrupt end. Since then the prices of 3-10 carat plus sizes has reverted to pre surge prices. However, if you need to find a 2 carat plus stone- especially in matched pairs prices have only sagged a bit.

For stones under 3 carats there has been softness but no dramatic price reductions. White stones are, as always, in very tight supply and trade at prices comparable with modern cuts of similar grades. It is vey simple, there isn't enough supply to meet demand, Finding stones has not gotten easier and slow but steady demand has kept prices firm.

Demand for small goods- .01-.20 has been filled primarily with new production. We fill small orders for repairs with old stones but layouts are 99.9 % newly cut goods. Productions of these sizes have slowed in India.Rough diamond prices rose to much to be profitably cut. Consequently, prices have stayed firm and no new supply has hit the market.

1/2- 2carat sizes have been reasonably active. You can find as many 1 carat modern diamonds as you need. Finding a 1 carat G-H VS old stone to match the stone you have is a challenge. Consider how many more stores and dealers are chasing them.

For appraisers quoting prices for fair market value is ever more treacherous. My suggestion is to get quotes from a few dealers before writing an appraisal. If your client needs to liquidate this will save misunderstandings and hard feelings. If the appraisal is for replacement, prices for antique stones have remained the same. Just tell your clients the truth about the market as it is.

Rosecut prices have held firm.First, 99.8 % of rosecuts are newly manufactured.Due to the lack of new production there is very little new goods coming to market. Shortages of 6mm rounds have developed. Any uptick in demand will reveal this.

Now there is some confusion about GIA certificates on antique diamonds. We are selling diamonds which we and every knowlegable dealer wil call an old european cut. Clients will then send then to GIA for certification and get back a certificate calling it a modern brilliant. The GIA standard for old European cut, is as follows. Table diameter of 53% or less. Culet- slightly large to large. Crown angles of 40% or greater Pavilion extentions of 60% or less. 3-4 of these criterian must be met to qualify . By these criterion only newly cut stones can satisfy the GIA. We have wallets full of old diamonds that have small culets and crown angles of 40 % or less. I'm not sure of how to rectify this matter but we do want to draw your attention to this so that you can soothe client confusion. We will keep you posted of any developments.

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