Mixed Picture on Luxury Goods

This 5.16 ct Fancy Vivid blue diamond, formerly part of the De Beers Millennium Jewels Collection, recently sold for $6.4 million. Image courtesy of Sotheby’s Hong Kong.

The following article is published courtesy of Gems & Gemology G&G eBrief, the electronic newsletter by Gems & Gemology

Author: Russell Shor, Senior Industry Analyst, GIA Carlsbad

All rights reserved. Intellectual Property: Gemological Institute of America

Reports from the luxury sector offer good news . . . and bad. The good news is that sales of luxury goods, including 2+ ct diamonds and top colored stones, are rebounding sharply from the lows of last year. The bad news is that they still have a long way to go — perhaps as long as two years — before they return to 2007 levels.
 
Illustrating this trend are the Swiss watch manufacturers, who report that demand for their watches (generally priced higher than $1,500) increased 13% through the first quarter of 2010. Since first-quarter 2009 was a disaster, a double-digit increase was an easy goal. Manufacturers say they have another 13% to go before equaling 2007 results, and that won’t happen before 2012.
 
Top-quality gems have done surprisingly well at auction, with a number of well-publicized triumphs such as the 5.16 ct De Beers Millennium Blue diamond, a GIA-graded Fancy Vivid blue IF that sold for $6.4 million at Sotheby’s April 7 Hong Kong sale. A 28.28 ct heart-shaped D-Fl diamond sold for nearly $3.8 million ($133,000 per carat) at the Christie’s April 22 New York auction, and the Catherine the Great Emerald brooch went for $1.65 million at the same sale. Yet the market remains selective, and a number of significant gems have gone unsold at recent auctions — including a 0.82 ct Fancy purplish red diamond.
 
Granted, some dealers and consignors were probably asking “tomorrow’s prices” for some of these stones — the reserve on the purplish red diamond was reportedly near $1 million per carat — but it does demonstrate that today’s luxury buyer is extremely discerning and will be for quite some time.
 
Russell Shor
Senior Industry Analyst, GIA Carlsbad

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