First of all we would like to wish all of our clients, correspondents and vendors a Happy New Year!! We wish everyone health, happiness and success in 2018 and look forward to working with you in the future.
We are pleased to announce that the combined auction, retail and dealer sales in 2017 were very impressive and forecasts for 2018 look very positive.
With the US economy growing at a healthy pace and job growth strong, combined with the increasing diversification of investors into rare hard assets, we are expecting very positive results this year. As the European economy continues to recover and Asian markets see strong results, colored diamond sales at the major levels of the market have strong indications of solid activity, especially with production continuing to be under pressure in major areas of supply.
We will show retail sales activity, dealer movements and stellar auction sales results for 2017. And yet the rarer colors still look undervalued relative to their scarcity and overall activity will continue to be propelled in the future by strong supply and demand fundamentals in the rare colored diamond market.
Jewelry Sales – November 2017
Sales across all retail categories grew 6.3% year on year in November, the US Census Bureau reported Thursday. Sales in retail and food services rose 5.8% to $492.7 billion for the month, with the federal agency also revising its October result upward.
“This has been an impressive start to the holiday season, perhaps the best in the last few years,” said Jack Kleinhenz, chief economist at the National Retail Federation (NRF). “The combination of job and wage gains, modest inflation and a healthy balance sheet, along with elevated consumer confidence, has led to solid holiday spending by American households.”
The NRF maintained its forecast of a 3.6% to 4% sales increase for the November-to-December holiday season, based on how trading went during November, it said Thursday.
Similarly, Mastercard SpendingPulse reported a 3.6% rise in US retail holiday sales for November 1 to December 9, the data provider noted Friday. E-commerce sales leapt 16%, largely due to the increased popularity of shopping during Cyber Week, it said. Promotions aimed at early-bird holiday shoppers paid off, especially in electronics, home improvement and jewelry, the company explained.
“It’s easy to see that 2017 will likely be a good year for retailers,” said Sarah Quinlan, Mastercard’s senior vice president of market insights. “Unemployment is at 4.1%, wages are rising, consumers are confident. It is all playing out in the shopping picture this holiday season, as retailers and gift recipients would want it to.”
The government has not provided separate data for jewelry sales in November. Sales at specialist jewelers increased 5.8% to $24.89 billion in the first 10 months of the year, the latest government data showed.
Jewelry Sales – December 2017
Jewelry sales grew 6% this holiday season, in large part driven by last-minute purchases, according to a Mastercard Spending Pulse survey published Tuesday.
Total retail sales grew 4.9% during the holiday shopping period between November 1 and December 24, the largest year-on-year increase since 2011, the survey showed. Online shopping jumped 18% over last year, driven by a late-season push.
“Overall, this year was a big win for retail,” said Sarah Quinlan, senior vice president of market insights for Mastercard. “The strong US economy was a contributing factor, but we also have to recognize that retailers who tried new strategies to engage holiday shoppers were the beneficiaries of this sales increase.”
Jewelry Sales – Hong Kong
Retail sales for the category grew 5% year on year to $8.49 billion (HKD 66.35 billion) for the January-to-November period, Hong Kong’s Census and Statistics Department said in a statement Wednesday. November proceeds jumped 8% to $783.1 million (HKD 6.12 billion), it added.
Sales across all retail products rose 1.8% for the first 11 months, and climbed 7.5% in November, reflecting the “visible growth in visitor arrivals and the [optimistic] consumer sentiment during the period,” a spokesperson for the Hong Kong government said.
Meanwhile, the total number of tourists arriving in Hong Kong from all locations jumped 7% to 5 million in November compared with the same month last year. During the first 11 months of 2017, the figure climbed 3.1% to 52.9 million.
As a result, Hong Kong jewelry retailers saw significant improvements in their 2017 performances. Chow Tai Fook’s same-store sales jumped 9.5% in Hong Kong and Macau in the six months ending September 30, while Luk Fook recorded 13% growth in retail sales for the same region.
“The near-term outlook for retail sales remains positive, as consumer sentiment is buttressed by the favorable employment and income situation, and as inbound tourism continues to recover,” the government spokesperson noted.
The upturn in 2017 also affected the diamond trade, with imports of polished stones into Hong Kong growing 7% to $14.07 billion in the first nine months.
Jewelry Sales – Europe
Sales at Richemont’s jewelry maisons grew 5% year on year to $2.18 billion (EUR 1.83 billion) in the fiscal third quarter of 2017, which included the holiday season.
The jewelry maisons, which include Cartier and Van Cleef & Arpels, were the company’s strongest performers for the three months that ended December 31. Overall group sales advanced 1% to $3.72 billion (EUR 3.12 billion), with sales at its specialist watchmakers increasing by the same margin to $933 million (EUR 781 million), the company reported Thursday.
Other Richemont businesses showed consistent sales, with Montblanc, Chloé and Lancel recording the highest growth, the company said.
Retail sales rose 7%, with a double-digit increase in Asia-Pacific and a strong performance in the Americas compensating for weakness in Europe. Revenue from the company’s wholesale division declined 8%.
2017 Auction Results
Christie’s and Sotheby’s saw combined jewelry sales of more than $1 billion this year as major pieces smashed auction records.
While neither company released a year-on-year comparison, Christie’s described 2017 as a “stellar year” for its jewelry department. Christie’s reported worldwide jewelry sales of $556.7 million for the year, while Sotheby’s garnered $551.3 million, it said.
Both auction houses recorded significant milestones this year, with Sotheby’s selling the CTF Pink Star diamond (pictured) for a world-record $71.2 million. It also achieved the highest price for earrings in auction history, selling the Memory of Autumn Leaves and the Dream of Autumn Leaves for a combined $57.4 million.
Meanwhile, Christie’s sale of the 14.93-carat Pink Promise for $32.2 million in Hong Kong earned the highest average price per carat for a pink diamond.
While the bulk of Christie’s sales were at live auctions, the company has seen “immense growth” in online auction sales to $8.9 million this year. Sotheby’s said buyers bought 23% of lots online.
Some 32% of Sotheby’s jewelry buyers this year were bidding at the auction house for the first time, the company added.
Diamond Production In Russia Expected to Decline
Alrosa expects its rough-diamond production will decline about 7% next year, with the Russian miner selling off inventory to maintain supply, it said last week.
Production outlook over the next five to seven years will partly be “driven by the absence of the Mir volumes,” chief financial officer Alexey Philippovskiy said in an investor call last month, referring to the temporary closure of the Mir underground mine caused by a major flood at the operation in August. That deposit yielded 3.2 million carats in 2016, or about 8.5% of the company’s total production.
Alrosa plans to support its 2018 sales with diamonds from its accumulated stockpiles, it said. It also expects an improved sales mix, meaning a higher average price for gem-quality diamonds than in 2017.
Rio Tinto Diamond Production Looks to Go Down
Rio Tinto expects diamond production of between 17 million and 20 million carats in 2018, representing a decrease in output compared to last year. The company did not explain the expected drop.
Indian Diamond Trade
India’s polished-diamond exports increased 2.1% to $23.09 billion in 2017 as the nation shipped out a higher volume of goods.
Rough imports grew 11% to $18.46 billion, while exports increased 7% to $1.52 billion. Net rough imports — imports minus exports — rose 11% to $16.94 billion.
In December, India’s polished exports increased 8% to $1.59 billion, while rough imports leapt 56% to $2.18 billion.
Education Corner – Diamond Inclusions
Inclusions are a natural diamond’s signature. Alethea Inns, director of gemology and education at the American Gem Society (AGS), explains the fascinating facts of this phenomenon.
What are inclusions?
In the world of gemology, inclusions are defined as internal visible features in either a rough crystal or faceted gemstone. Inclusions are important in gemology because they can tell trained gemologists whether the gemstone is natural, synthetic, or treated, or even where it came from.
Inclusions are often referred to as “flaws,” or “imperfections,” but in reality, they are part of the natural geological process and an essential and fascinating part of gemology. Inclusions make each diamond unique, as no two diamonds are identical, and are even used by gemological laboratories to verify a diamond’s identity. A diamond with natural inclusions is like a snowflake.
Inclusions can consist of other mineral crystals that look like what they are called — for example, a break in the crystal lattice is called a feather because it can resemble the texture of a feather. A pinpoint inclusion is just that — it looks like a pinpoint — while thin, elongated inclusions are called needles.
How do a diamond’s imperfections enhance it as something unique and authentic?
Inclusions are often used to determine the relative value of a diamond, based on their size, nature, number, position in the diamond, and relief — or visibility — but they are also so much more. Inclusions tell us the story of the diamond — how it formed, what it went through in the earth, and how it got to the surface of the earth. In fact, for geologists and researchers, the most prized diamonds are those specimens with large, visible inclusions. Some geologists spend their entire careers studying one type of diamond inclusion and its implications. This is because diamonds act as vessels that can capture minerals from the mantle of the earth and can give us information about the growth environment, and even the age of our planet. The oldest diamonds have been dated at up to 3.5 billion years old.
How are they formed? What conditions in the earth need to be present?
Conditions have to be just right not only to form diamonds, but to form the inclusions that occur within them. Diamonds are generally theorized to have formed at depths greater than 150 kilometers, at pressures of around 5 GPa (gigapascals) and at 1,000 degrees Celsius, and need a specific chemistry in order to grow. This is why they are geologically rare. Diamonds are carried to the earth’s surface by magma — molten and semi-molten rock found beneath the earth’s surface — younger than the host rocks in which they were formed. These two rock types in which diamonds grow in the mantle are eclogite and peridotite, and occur at different depths in the earth.
Diamonds are carried to the earth’s surface in one of only three rare types of magma. The most important type of magma is known as kimberlite, such as the Diavik mine in Canada. The Argyle mine in Australia, famous for its pink diamonds, is derived from a rarer type of magma, called lamproite, with an entirely different geochemistry. Pink diamonds from Argyle often have coesite inclusions, which are high-relief transparent crystals.
How do inclusions manifest themselves in diamonds?
Most diamond inclusions are classified as syngenetic, which means the inclusion forms at the same time as its host. Pyrope garnet is an example of a syngenetic inclusion you may find in a diamond, and is usually a dark-reddish included crystal.
Furthermore, diamonds are classified into different types based on the amount of nitrogen that aggregates in the crystal lattice. Some diamond types can be categorized by inclusion types, such as Ib diamonds with clusters of dark “Ib needles.” Large cape diamonds with N2 and N3 aggregates often have high-relief transparent garnet crystals and fine, transparent linear growth, known as “transparent graining.”
While there are still many unanswered questions about how exactly diamonds form, their inclusions are a window into the history of the earth, and their journey to the surface. They are an opportunity to carry a piece of that history with you, so you can admire diamonds from the inside out.
Historic 910ct. Diamond Unearthed at Letšeng
Gem Diamonds has recovered a 910-carat diamond from its Letšeng mine in Lesotho, claiming it’s the fifth-largest rough ever found.
“This is a landmark recovery for all of Gem Diamonds’ stakeholders, including our employees, shareholders and the government of Lesotho, our partner in the Letšeng mine,” said Gem Diamonds CEO Clifford Elphick.
The D-color, type IIa diamond is the largest to be unearthed at Letšeng, outranking the 603-carat Lesotho Promise the mining company recovered in 2006. That stone was sold for $12.4 million, or $20,498 per carat, to Graff Diamonds, which owns a 15% stake in Gem Diamonds. Last year, Graff bought the 1,109-carat Lesedi la Rona, the second largest rough diamond in history, for $53 million, or $47,790 per carat.
The discovery follows a recent revival of big-stone recoveries at Letšeng, which is known for its high-value production. Earlier this month, Gem Diamonds extracted two D-color stones from the mine, weighing 117 and 110 carats. Last year the company recovered seven diamonds weighing 100 carats or more.