Feature Gems & Gemology, Fall 1988, Vol. 24, No. 3

An Economic Review of the Past Decade in Diamonds

The diamond industry was buffeted by extreme price volatility during the last decade, unlike any encountered since the Great Depression of the 1930s. Although the industry is currently enjoying a resurgence of activity worldwide, particularly in the Far East, today's market differs significantly from what it was 10 years ago. This article reviews the factors that led to the enormous demand for diamonds in the late 1970s, examines the causes of recession in the early 1980s, and provides an analysis of the comeback of diamond in 1986. Inasmuch as events during this period ushered many changes into the diamond trade, an understanding of how economic forces affect the supply, demand, and value of diamond is critical to all gemologists. Factors such as inflation, recession, interest rates, and disposable income, as well as fluctuations in worldwide exchange rates, had, and undoubtedly will continue to have, an impact on the health of the diamond market.