The ultra rich and their retail spending power return to UK capital

A no deal Brexit may be a cause for concern for the UK retail industry with the decreasing value of the pound, and many UK based jewellers facing trade restrictions on diamonds which will slow processes within businesses.

Leading up to Brexit, swathes of the ultra wealthy had previously fled London in the wake of several government finance and property regulation changes - particularly the Unexplained Wealth Orders introduced in January 2018 and the 3% Second Homes Stamp Duty Surcharge introduced in 2016 (affecting properties over £1 million.) Further recent amendments to capital gains and inheritance tax also meant that many HNWI were driven out of the UK capital.

However, the fortunes of London retailers in the jewellery sector may see some incongruous returns; with the global elite having interpreted the decline in the value of sterling as an investment opportunity, buying three times as many luxury homes over the £10million valuation mark as before the referendum vote. 300 homes valued at over £10million each were sold in the tax year to April 2017, increasing from the 100 sold during the preceding 12 months, according to figures released by HM Revenue and Customs following a freedom of information request.

With Bond Street holding the mantle of the most expensive luxury retail destination in Europe, while internationally renowned independent jewellers such as Fernando Jorge and global brands like Tasaki continue to open London boutiques - the purchasing power of the city's newest residents should see a windfall in jewellery retail spending.

Without clear demarcation, do consumers understand their jewellery’s longevity?

Many buyers may not realise the delineation between the lifespan of the materials in demi-fine jewellery and fashion jewellery.

In late February the Diamond Producers Association announced the third wave of the Real is Rare, Real is a Diamond campaign: ‘For Me, From Me’ - citing the natural diamond industry’s strongest revenue opportunity as women’s self-purchases.The DPA concluded that the self-purchase price point is between £350 and £1,500, with a median of £950.

This compelling evidence into evolving consumer habits can be extrapolated globally, helping the industry recognise the enormous demand for demi-fine jewellery. The consequences of this shift in buying behavior need to be considered by retailers - and especially e-tailers. Prior to the advent of online jewellery purchasing and the rise in popularity of self-gifting jewellery, part of the in-person retail experience was to hear sales representatives’ advice on after-sales care. This would often extend to the differentiation between jewellery materials: such as suggesting that a ruby, sapphire or emerald would be a more hardwearing feature gemstone for an engagement ring than an opal.

One of the most prolific jewellery trends of the moment is pearl components being included in designs; meaning many are purchasing lower or mid-range price-point jewellery without the knowledge of how to care for this organic material, which was traditionally reserved for fine jewellery. The presumed forewarning and educative experience that comes with buying from an established jeweller is often not present during the online sales experience.

This removal of personal interactions with jewellery experts and representatives - as well as the ever more blurred lines between demi-fine and higher end fashion jewellery - can lead to consumers misunderstanding terms such as ‘gold plated,’ being unaware that this translates in practical terms to 'tarnishing likely to become visible in under a year.'

The onus to inform consumers falls on the larger brands who have diverged into the demi-fine jewellery arena, making certain that the distinctions in the quality of their materials and their longevity are both apparent to buyers.

Rising Argyle pink diamond prices spark rush for authentication

As the price of Argyle pink diamonds continues to increase in anticipation of the mine’s closure estimated for early 2021, the GIA is flooded with requests for certification.

Full certificates were only provided for Argyle pink diamonds purchased after 2008, whereas each diamond sold before this date was given a lot number for authentication and reference purposes. While many earliest investors look to cash in their Argyle pink diamonds, a rush has ensued to have the GIA certify that their stones are from the Argyle source. The rising value of Argyle pink diamonds has given further rise to attempts in passing off other - less valuable - pink diamonds from different mines as Argyle pink diamonds.

The unique optical properties which Argyle pink diamonds possess mean that it is possible for gemstone laboratories to identify a stone’s true source of origin, but even highly qualified experts and knowledgeable consumers could be fooled when examining pink diamonds by sight alone.

why Green became the biggest jewellery trend

The luxury market is one which continues to flourish, unrelenting in the face of global upheaval and political uncertainty that has translated to instability in most financial markets. However, gold, silver, precious metals and natural products such as gemstones and diamonds are being heavily invested in a they have revealed themselves to be a comparatively stable commodity, with certain, reliable returns.

Traditionally considered the domain of the ultra wealthy, more people are considering investment in these precious materials, as trust in conventional holdings reduces. This, coupled with a new generation of enlightened middle class consumers, who are turned off by brand names and are intrigued by craftsmanship, ethical practices and value for money, has seen the beginning of a buying revolution. Alongside this an opportunity for sellers of antique jewellery has been created to maximise their clientele and consumer reach by appealing to these new priorities in buying.

With ‘ethical’ brands becoming increasingly in vogue, appealing to a new type of buyer through promises of fair trade precious metals and gemstones, it is clear that the demand for ‘green’, ecologically conscious jewellery is higher than ever before. The opportunity for smaller and mid size companies to appeal to the large mid market - those who make a few large jewellery purchases in their lifetimes but buy consistently and avidly share consumer experiences with others.

Ecologically speaking, antiques in general are a superior purchase to any new item, no matter how ethically sourced the materials and the company’s practices may be. Antique and vintage jewellery purchases are proven to be high quality by their longevity and the timelessness of their style, and are therefore a sound investment for anyone seeking to make a large jewellery purchase.

When purchasing diamond and gemstone jewellery, an important consideration should be made for the mining process, and the astonishing toll this takes on the planet every year. Not only in the land which is stripped and uprooted or create the mine – which damages fragile ecosystems irreparably- but also in the emissions from the machinery and the daily mining process.

In spite of international operations such as the Kimberley Process - created with the intention of ensuring a safer and less corrupt diamond mining, trading and purchasing experience - in many ways these schemes are perceived to have failed, or have been disregarded as fruitless, and this has left buyers and consumers alike wary of luxury brands and the promises of ethical practices to which they lay claim.

Removing the possibility of a fluctuation in fashion affecting the worth of your jewellery is clearly advantageous, and even if you are buying jewellery which is to be worn for life- rather than with the intention of being sold on- this is still a desirable facet of antique and vintage jewellery.

The history and provenance of the place and time that these pieces were created in is written into the jewellery, whereas in the present day, trends are worldwide, and materials are easily sourced from anywhere deemed desirable. This means that the style and craft of the pieces is no longer informed by geography, culture or history, but simply by what is already globally popular.

Antique jewellery and antique silverware tell a story, and those who are well acquainted with the history of these items can often determine origin to a fairly certain degree, simply by looking at the piece. These items tell a story and form part of a universal history of mankind and creativity.

Often, large pieces of silverware literally use figural characters to depict a familiar tableau or a significant moment in time. The best and most skilled craftsmen created pieces so unique that they can be identified immediately, without even having to glance at any hallmarks or makers marks.

This hardiness is also demonstrative of quality, and most antique jewellery and silverware was crafted by hand by an artisan who had dedicated his or her life to the discipline. Now, not only are most pieces produced or finished by machines with a thousand more identical items, and even with handcrafted pieces, it is rare to buy from someone who has had the rigorous training that was expected and necessary for makers a century ago.

Enlightened buyers are aware of the perils of ‘fast fashion’ – the shortening of the production line which is made possible by cheap labour and mass production- however this does not only apply to clothing. Jewellery which is produced by mass production and who's materials are sourced purely based on price, as well as being created to meet current fashionable standards, has a short shelf life in many ways. Quality and craftsmanship will suffer, along with any semblance of individuality.

Not only is this fast fashion often synonymous with poor working, low pay, and therefore responsible for poor living conditions of thousands of people, sourcing the cheapest diamonds, gemstones and precious metals will always have an unethical, human cost which is hidden from the consumer.

The term ‘investment piece’ is used flagrantly within the fashion world to mean an item that was created in a more skilled and considered manner, but usually can be reduced to a higher price tag, and an item which has a timeless style and therefore can be worn for a longer time. Antiques and antique jewellery are the ultimate ‘investment piece’ if bought and treat with consideration and care, they should increase in value, rather than simply lasting for longer than other, cheaper pieces of a similar nature.

Another idea which is important to this new type of consumer is individuality, and the story behind a piece which they wear or own. With personally crafted antique jewellery, it is possible to own a completely individual piece which no one else in the world will have, and to choose a piece which has a rich history to it.

Personalisation and made to order modern jewellery is incredibly popular, mainly because buyers can see the saturation of popular styles and materials used more easily via social media. Creating or choosing a piece of jewellery which has timeless style is important, whether it is a diamond engagement ring that you wish to wear everyday for life, or an item you are investing in to sell on later.

Another, major benefit of choosing to buy antiques is the value for money, especially in antique diamond jewellery. In realistic terms, although antique diamond cuts were not created to algorithms and cut with lasers to achieve perfect brilliance, they are in fact a limited item, with only so many existing in the world that were cut by hand, by artisan bruters a century ago.

This immediate lack of supply means that although antique diamonds are often not as high quality as modern diamonds (owing largely to improvements in mining and cutting techniques) their value is to measured by the same GIA delineated standards. The individuality and rarity of the diamond determines its value. But it also means that you can purchase antique diamonds, gemstones and jewellery for a fraction of the price as you would paying for a modern equivalent with identical amounts of raw materials.

Antiques have had a lifetime (or, many lifetimes) before us and, if properly cared for, will have many after the individual that currently owns it. With antique items, we are merely guardians of these pieces. Investing in an item which will outlast your lifetime is an act which will create pleasure by giving beauty to others, and even if it is sold on rather than kept on display- if you have invested in the correct type of piece- could provide financial benefit to you or your loved ones later in life.

Antique and Vintage jewellery could be one of the largest benefactors of this enlightened purchasing revolution, and if marketed correctly this sector has the potential to appeal to those with ecological, ethical and humanitarian concerns. Although up to this point many companies who focus their marketing on green and moral issues are often at odds with the old guard antiques jewellers with established family history. This need not be the case, and by branding vintage and antique jewellery as the most ethically sound jewellery available, Hatton Garden et al may be able to conquer the new era of the conscientious consumer.

THE great diamond debate

The significance of the recent proliferation in lab grown diamonds is not to be underestimated, and over the last 5 years those who are creating diamonds - rather than mining them - have faced the complex and difficult task of marketing a new product in one of the most famously monopolised markets in the modern world.

The challenge that is presented by both the consumer and retailers within the diamond market is not that lab grown diamonds need to prove the level of quality and physical beauty in comparison to mined diamonds – rather that there is a far more deeply embedded yet intangible notion; that mined diamonds are ‘real’ and lab grown diamonds polemically are in some way ‘fake’ because they are not naturally occurring without intervention of man. However it can be argued that an extraordinary amount of unnatural - that is to say, human - intervention also occurs in the process of diamond mining.

Man made diamonds are now of high enough quality (containing 99.999% pure carbon and possessing the exact same composition, elemental structure and formation as mined diamonds) that they are now assessed by the GIA using the same standards which mined diamonds are evaluated with. This, in itself, is one of the most important recent developments within the diamond market, particularly for consumers. The GIA’s decision to see no distinction between lab grown and mined diamonds is one which signifies that the foremost experts on diamond quality in the world recognise the lack of distinction- in all quantifiable terms- between lab grown and mined diamonds.

Only the most expert eyes in the world would be able to suggest that there is any possible difference between a man made diamond and a mined diamond, and this would be at best an educated guess, even using the most sophisticated technology available to examine the diamond. In fact, the likelihood is that if the diamond was deemed to be too flawless or impeccably free of inclusions or imperfections, then this may lead an expert diamond appraiser to be able to surmise that this may be a lab grown diamond.

With the quality of lab grown diamonds having been proven to the highest possible standards, it would be fair to assume that the diamond market would be unable to resist the direct comparisons in terms of price and value. Here, we reach the most intrinsic internal flaw of the lab grown diamond; how do we market the lab grown diamond?

The language that we use when discussing these types of diamond is crucial; both categories use unfavourable terms when comparing their products, although this is a basic premise of adverse marketing when describing a competitor’s products. ‘Lab Grown’- although completely accurate – is a term which reiterates the man made creation of these diamonds, much in the same way that ‘mined’ is a term that draws attention to the darkest side of the diamond industry, and draws the product closer to its often unethical and ecologically dubious origins.

‘Synthetic’ is often confused as being a term which refers to lab grown diamonds, however this actually describes diamond substitutes, such as cubic zirconia. Some companies offering lab grown diamonds also produce synthesised diamonds, however many are keen to distance themselves from these gemstones and create only diamonds, hoping to maintain an image of prestige that could be affected by producing less expensive and illustrious gemstones.

Another preferred description of man-made diamonds is ‘Engineered diamonds’, which is an intelligent use of the connotations between the sophistication and evolution of technologically created products and those which are naturally occurring. ‘Engineered’ in particular is potent for conveying the excellence of clarity, cut, colour and general quality which can be achieved with lab grown diamonds.

‘Pure grown’ diamonds is one way which they are marketed, undoubtedly in an attempt to distance the lab grown diamonds from the concept of synthetic, man made growth. However ‘pure grown’ diamonds is a little more convoluted, with the possibility of confusion arising- ‘grown’ and ‘pure’ both being associated with mined diamonds as a product of nature.

The ecological and ethical implications of mined diamonds are well documented, and the process by which mines are mined means logging and removing 1750 tonnes of earth to mine a 1.0ct diamond, on average, and with Bain & Company estimating around 133 million carats of rough diamonds are produced each year, this leads us to an approximation of 232,750 tonnes of earth affected per annum by diamond mining.  These diamond mines are also monopolised by De Beers, who control 85% of the world’s diamond supply, and currently own 35% of the world’s diamond mines and production.

Diamonds have been perceived as powerful items to own and display throughout the history of civilization, initially being believed to be mythical, magical and spiritual, gradually diamonds shifted from being the property of only royalty and religious leaders, to being the privilege  of the aristocracy and nobility, to belonging to every other Christian in the western world as part of the Christian wedding tradition. De Beers’ campaign at the beginning of the twentieth century to suggest that a diamond ring should always be given to signify marriage engagement is widely acknowledged as being the most successful advertisement of all time, as it has become so deeply entrenched in the global perception of the traditions surrounding marriage.

Of all diamonds mined, only 2% are of high enough quality to be used in jewellery and presented as cut and finished diamonds. The remaining 98% are used for cutting processes, and although this is not technically a wasteful system, making such  a large ecological impact on the world in the name of only 2% of diamonds excavated seems, even to the layman, to be an inefficient method of procurement.

Truthfully, some will never accept lab grown diamonds as being in any way superior,  or even equal to those which have been mined. The prestige of the diamond is partially in the majesty of natural creation, and in spite of the fact that diamonds are manipulated so far from their natural state by humans, using algorithms and lasers to achieve the perfect cut, that it could be argued all diamonds are truly man made.

A facet of the production of the lab grown diamond which has appealed to many consumers is the ability create a diamond incorporating anything – such as a loved one’s ashes or a lock of hair- making the diamond all the more unique. While this novelty may not appeal to all, the ability to tailor make your diamond to the specifications you require is highly desirable, rather than painstakingly searching for the right type of diamond, or even having to pay a middleman to search for it.

With blue, pink, yellow and other fancy coloured diamonds being in high demand with a low yield of discovery in natural mining, lab grown diamonds could fill the discrepancy between consumer demand and supply. However- fancy coloured diamonds appeal lies within the rarity and exclusivity- therefore the lab grown version may be perceived as merely simulating and replicating, rather than being a more accessible version of the same stone. In spite of the similarities in composition, the difficulty is in marketing these lab grown diamonds to those who are in the market for buying diamonds.

The scale and costs of facilities needed for lab grown diamonds means that there is no possibility of lab grown diamonds flooding market and making price of diamonds decrease, which is often an argument put forward by those who stand to lose from the rise of lab grown diamonds.

However, much in the same way that many buyers prefer antique diamonds - which were cut by hand by skilled craftsmen who dedicated their life to their artistry – some feel that these more modern diamonds are less authentic of a product. It is usually those who are looking for diamonds to be worn in jewellery who prefer these antique, rough cut diamonds that predate the mechanised bruting process, and when investing, people tend to turn to the more easily quantifiable contemporary diamonds.

The market still demands antique diamonds and vintage diamonds because they are somehow perceived by some as more of a natural and genuine diamond, because of the raw process and craftsmanship which goes into creating the finished diamond which ends up in the jewellery. Many types of mechanism and technological process go into the mining and cutting of raw diamonds, however they are still perceived as being superior, a more luxurious product.

The antique diamond market is often treat as a separate entity to the modern diamond market, and there is a possibility that this will be the fate of the lab grown diamond, to simply be viewed as the next step in the evolution of the diamond. With all major mines around the world reporting a decrease in the number of mined diamonds discovered over the last 5 years, we are set to see prices of mined diamonds rise dramatically, with demand outstripping supply.

It has been suggested that the key demographic for lab grown diamonds is the millennial market, who have far more concern with the ecological implications of their buying than previous generations have had. If the marketing of lab grown diamonds is done correctly to directly appeal to this new era of moral and ethical purchasing, then - especially within the mid range market (most engagement rings bought are still under £1,500) of diamond rings - lab grown diamonds could potentially overtake mined diamonds as the most commonly bought new diamonds.

This new generation of diamond and diamond jewellery buyers also appreciate the melding of technology with tradition, and can spot value for money.The average lab grown diamond costs 20% less than an equivalent mined diamond of the same size and quality. This, alone, may prove to ultimately be the trump card for lab grown diamonds.

The biggest winners of this new diamond technology will not necessarily be the ones who provide the best quality, most affordable and most beautiful diamonds, but those who navigate the complex minefield of marketing and are able to appeal to the average consumer, purchasing as large of a diamond as possible for their engagement.

For those who are wealthy enough to be considering diamonds for investment purposes, it is likely that the less accessible mined diamonds become, the more desirable they will be. However, that isn't to say that investing within one of the best diamond growing companies wouldn't be worth its weight in gold. The increased visibility of lab grown diamonds, the value for money that they offer, the ethical implications of mined diamonds and the novelty of customisation is certain to result in a greater market share for these engineered gems.

How were Diamond prices stunted by India's demonetisation?

At the end of 2016, on the 8th of November, India’s Prime Minister Narenda Modi announced a sudden removal of all 500 and 1000 rupee notes from circulation, to be replaced with new 500 notes and 2000 notes. Despite numerous leaks of this information earlier in 2016, and with evidence of many high powered individuals having early access to large quantities of the new denominations with no proof as to the source, for the most part the public and the economy was incredibly underprepared for this dramatic change.

Banks and ATMs ran out of cash for weeks on end, and deaths were caused by waiting in the ensuing queues to exchange old currency to new. However, the reported reasoning behind the decision was deemed as vital for the long term success and legitimacy of India’s economy; to remove counterfeit notes and the swathes of ‘black money’ that was on the Indian market, targeting large scale terrorist and criminal organisations.

This move against the supposedly rampant corruption in the world’s fastest growing economy serves to stabilise faith in the intentions of the Indian government at a time of strained international discourse, as the US government relies heavily on the promise of limiting outsourcing labour to countries such as India.

The reality of the consequences for the Indian market however, have been dramatic in the financial sectors that rely heavily on high value cash, such as the jewellery and real estate industries. With 95% of transactions being carried out in cash in India- in part due to many of the citizens eschewing credit cards and a low limit on ATM transactions- removing these two denominations (which were reported to account for 85% of all cash in circulation in India) the large-scale upheaval is not only bureaucratically enormous, but also was sure to have ramifications within India’s largest industries which would be felt globally, one of which is famously diamond polishing, cutting and trading.
One benefit of the country’s demonetisation is the lower interest rates which have been introduced by Indian banks, due to the large sums of cash which have been deposited as a direct consequence of this change in currency. An offset of this has been increased availability of lending to diamond traders, who have taken advantage of low rough cut diamond prices, in spite of the already reportedly flooded market in lower quality rough cut diamonds.

The larger diamond manufacturing companies based in India remain relatively unaffected as they trade in dollars and have an easily traceable and accountable , yet the vast number of smaller and mid size factories often trade in cash, and therefore suffered greatly, with many grinding to a complete halt due to lack of liquidity with which to pay traders and workers. This negative effect on the country's GDP and industrial production will be felt worldwide, with around 90% of the world’s rough diamonds passing through India to be cut, polished and traded.

It has been suggested that the Indian economy relies so heavily on high value cash transactions to avoid the notoriously complex administrative procedures within India’s bureaucratic system, but this has lead to a vulnerability to tax evasion and fraud.
A move that encourages more electronic card transactions is one that will benefit the government and banks of India in a multitude of ways, predominantly by creating a reason for more citizens to hold their money within the banks, stabilising them immeasurably. This demonetisation will also help to develop a more thoroughly regulated and controlled economy, although the advantages
are weighed heavily on the side of the banks and the government, rather than the Indian people.

Bain & Co. Have predicted that by 2020 India will have grown into the third largest diamond market after China and the US, and surpassing Europe and Japan. De Beers displayed clear concern for the Indian buying market during their final sale of 2016, where they made concessions such as allowing buyers to refuse pre packaged assortments of diamonds which contained low quality diamonds to encourage spending.

In India many mid size factories have polishers and cutters now in the process of finishing the diamonds which they already had in stock - due to the over supply in lower end diamonds (those weighing under 1 carat) before the demonetisation in 2016 - rather than buyers purchasing new, high quality diamonds. This abundance of cheap finished stones has decreased the price at wholesales and consumer level. Those diamonds which are lower quality and had not previously been priority stones are now being sold, and the abundance of these mid to low quality stones flooding the market simultaneously has created a significant price drop in diamonds globally.

While the volume of rough diamond imports increased, the value of these imports decreased over the last quarter of 2016, meaning that the market has been flooded with lower quality diamonds, I spite of the fact that this type of diamond was the low quality style which was the greatest affected by the monetary crisis. However, Gold exports from India rose 10% in the last fiscal year, suggesting that investors are buying into the more stable economy of gold, rather than the unpredictable diamond market.

Alongside all of these extraneous price influencing factors, demand for these lower quality diamonds within India’s internal market fell, likely - in part - due to the cash crisis which will have interfered with buying power for traders. With a much larger global decrease in demand for diamonds globally since 2011, the future of India's steadily bolstering diamond trading market may have been truly curtailed.