Diamonds are known as some of the most luxurious, exclusive, and expensive gems in the world. Their price point is sometimes so high that only a select group of people can afford to have one in their collection.
But, is that how it always was? How did the price of diamonds over the last 50 years change? Was there ever a point in which diamonds were accessible to a broader market, or were there times that they were even more unattainable?
All of these questions are valid and pretty logical. If we know that prices of all items on the market change prices according to the overall state of the market, then it’s only natural to assume that diamonds would do the same.
Well, we’re here to tell you all about how their prices changed over time and what it was that affected those changes.
That way, you’ll better understand the market value of diamonds, and how different they are compared to other, more common items.
Now, without further ado, let’s get right into it!
What Affects The Price Of Diamonds?
Before we get to the more concrete stuff, we want to briefly explain to you what the factors that affect the prices of diamonds are. It’s not just the regular factors that affect other items on the market, but rather specific ones, characteristic only of diamonds.
A diamond’s value is determined with the help of the 4C’s:
- Carat weight – how big a diamond is
- Clarity – if a diamond has any inclusions or micro faults
- Cut – how well a diamond is cut, and how popular the cut is
- Color – how colorless a white diamond is
These four criteria are used by professional jewelers to decide what price to assign to each diamond they get their hands on. Diamonds rated higher on these scales and in these categories are worth more, and thus get higher prices.
Different Diamonds – Different Prices
Another factor that affects the price of a diamond is its shape. There are loads of different cuts of diamonds, but some of the most popular and sought after are the round brilliant, pear, oval, emerald, radiant, etc.
What’s interesting is that, throughout history, there weren’t that many changes when it comes to the popularity of certain shapes. Quite the contrary, actually.
The round brilliant has been topping the popularity charts for a number of decades, and even centuries. It has not only been used in jewelry making – it’s been used as an inspiration to make perfume bottles, as well.
If you think diamond, you probably think the round brilliant.
However, when it comes to engagement rings, where diamonds are widely used, other shapes seem to be at the forefront. The oval shape has become one of the most favored shapes in that sphere, but the emerald and the Asscher cut are following suit.
As you have probably figured out by now, the most in-demand shapes also carry the biggest prices.
Price vs Value
As you can see, the word “value” and the word “price” are not used synonymously. You may already know this, but if you aren’t sure of what the difference is, we’re here to tell you.
If we’re talking in layman’s terms (which most of us are), then we can describe the price as what you pay for an item, while the price of an item is a much more abstract category and is thus more difficult to determine.
These two terms go hand in hand and cannot be determined without one another. However, sometimes, due to outside factors, the price of an item may differ significantly from its actual value.
- Raw Uncut Diamond Price List: Rough Diamond Prices Guide
- Lab-grown Diamond Price List: Natural Vs. Lab Diamonds Price
- Diamond Price List: How Much Is A 0.1 To 40 Carat Diamond Worth?
What Has Affected The Price Of Diamonds Over The Last 50 Years?
As we’ve mentioned, the price of diamonds is greatly affected by both internal and external factors. We’ve already explained the impact of internal factors on the value, and consequently the price of diamonds.
However, in this part of the article, we’re going to focus more on how external factors, such as social issues, economics, and the popularity of diamonds affect their price.
We all know this God forsaken word, and some of us have had the unfortunate opportunity to experience it personally. Even now, the newer generations will be able to get a taste of it, due to the economic issues caused by COVID-19.
This is also one of the most important external factors that can affect the price of diamonds, aside from the demand. But, how exactly has inflation affected diamonds and their appreciation?
The early 2000s were riddled with horrible inflation, especially when the stock market crashed in 2008 (the largest drop in history, until the crash in 2020). This affected many valuable items on the market, diamonds included.
The prices of diamonds skyrocketed, like the rest of the valuable items. However, the actual demand and value of diamonds didn’t suffer as badly as you might expect. The truth is that during some periods, diamonds actually experienced an increase in their value and demand.
Diamonds don’t differ much here from other valuable items either. The more sought-after they are, the more expensive. The classic law of supply and demand applies.
However, unlike a lot of regular products, diamonds cannot be mass-produced. What makes them so special is the fact that they are rare by nature. They are difficult to come by, excavate, and then process to a state that makes them marketable and sellable.
The whole process is pretty tedious and arduous for everyone involved, which justifies the price point.
In recent years, scientists and experts have thought of a way to supply those interested with a more affordable version of diamonds – their lab-grown versions. These diamonds have the same chemical makeup as natural diamonds, but they are made in a lab.
This means that they are less rare, and not as expensive to produce, making them more accessible to a broader group of people.
However, they still haven’t replaced natural diamonds, since their origin and rarity are what attract people to them the most.
Diamonds are still very much sought after and desired while remaining rare, which means that their price point remains quite high. If those circumstances were to change at some point, the prices would drop accordingly.
Rush Demand vs. Inflation
This topic ties in with the previous two since it’s a combination of both factors that work in conjunction.
Inflation hasn’t negatively affected the prices of diamonds, but it certainly has affected the mining companies that mine them. The aftermath is best seen in the closing of many mining companies, resulting in a plummet in the supply of rough diamonds.
On the other hand, on the other end of the spectrum, we’re experiencing a state of rush demand. This means that there is a significant disbalance in the supply and demand chain, which leads to the rough diamonds that are available being worth more.
The Prices Of Diamonds Over The Last 50 Years
Now that we know what can affect the prices of diamonds, we can get to the actual changes in diamond prices over the last 50 years.
It should be noted that that period is marked by lots of social and economic changes, partly reflected in the cold war which lasted up until the early 90s.
All of those factors, as well as the ones that we’ve mentioned, have impacted the changes in the price of polished diamonds.
What is characteristic of the movement of diamond prices over the years is that it has been on a steady incline. Since the 1960s, diamonds have only increased in prices, only experiencing periods of stagnation or slower incline.
What’s interesting is that during the period between the years 2000 and 2010 the price of diamonds had a very sharp incline. The rest of the changes were slight and steady.
Fifty years ago, the price per carat averaged around $6,900, which is more than half of what their price was in the 1960s.
It may seem pretty high when looked at as an isolated price point, but when you take into consideration the item we’re discussing, as well as the prices now, you’ll see that it’s actually a pretty good price.
However, we cannot ignore the fact the value of a dollar was much different from what it is now, meaning that they didn’t consider it as affordable then, as we do now. In fact, the proportion is mostly the same as it is with today’s prices.
Between the 1970s and 1980s, the price of diamonds nearly doubled. The price of a carat was about $10,500, which was a significant change.
The next period didn’t note that high of an incline of prices as the prior did. This may be attributed to social issues at the time. The price of a diamond per carat was now at $13,900.
Now we get to the notorious period of inflation. In 2000, the price of diamonds per carat marked the smallest incline thus far. It only grew by $1200, leaving it at $15,100.
Diamonds skyrocketed in the period between 2000 and 2010, leaving the price of diamonds per carat higher by almost $10,000. This means that the price was $24,500. That change and increase is the biggest one we’ve seen so far.
The Year 2013
The next marking point is in 2013, by which the price of diamonds per carat had increased by a bit over $4000, meaning that the price was now at $28,400.
The Year 2015
In this period, the price of diamonds per carat had experienced a very slight incline of only $1250, resulting in the price being $29,650.
The Year 2016
Between 2015 and 2016, the increase was also very slight – about $1300. That left diamonds at around $31,000 per carat.
If you’re interested in seeing how the prices of diamonds have moved throughout the years expressed in percentages, we’ve got you covered.
Seeing them expressed this way can be a good way to get an overall perspective of the way diamond prices can move through time and how steady that change is.
Between 1960 and 2019, the yearly increase in prices and value of diamonds is +14.47%, which amounts to a yearly compound interest of 4.3%.
Does Past Indicate The Future?
Looking at the information about the past changes in the value of diamonds, can we make confident predictions about their modifications in the future?
The truth is that the information that we have about the prices of diamonds in the past and their tendencies can certainly be helpful, but they simply cannot predict the future.
The graphs that we have available to us can tell us that diamonds are a steady investment and that even through the bigger crashes and crises in the economy, they have managed to maintain their value.
However, that cannot definitely indicate that that’s how it’s going to remain in the future. The best way to assess the future alterations in prices is by taking into account those previous changes, the current social and economic circumstances, as well as the diamonds themselves.
Only then can we make informed predictions.
But remember, predictions, no matter how well informed, don’t have to come true. There is always a slight risk factor when investing in something, but that’s what makes it exciting. Just as long as you’re aware of it.
We’ve reached the end of this article and we can only hope that we were able to give you some clarity about the way diamond prices have moved in the last 50 years.
We know that this topic can get a bit confusing and overwhelming, but we tried our best to simplify it as much as possible. Just to make sure we’ve got everything covered, we’ll briefly recount the salient information on this topic.
There are many factors that can affect a diamond’s price, but they can all be grouped into two categories: internal and external. However, what impacts the actual overall price shifts over time are usually the external factors, such as inflation and the chain of supply and demand.
As far as the actual price changes throughout history, or at least over the last 50 years, they were pretty steady, with only one significant spike in 2010.
When it comes to the predictions about the way prices will change in the future, we can only make informed predictions with the help of these charts, but we cannot rely on them for certainty. What happened in the past cannot determine future modifications with confidence.
This means that a certain degree of risk exists, but that’s what’s fun about it. And that’s it. You’re now more informed about the change in the price of diamonds over the last 50 years.
Use this information wisely and have fun!