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Diamond Prices Soften to Sustainable Levels – Moussaieff
 By George Appleshaw

 


Bond Street, London

LONDON, October 18, 2008 – Prices of rare diamonds have softened to sustainable levels as fears of a global recession intensify, and the world’s wealthiest buyers could cut spending on top-tier fine jewels this Christmas, said Bond Street jeweller Alisa Moussaieff.

“The market has come down to a sensible level,” Mrs Moussaieff told JewelleryOutlook in an interview at her boutique in the London Hilton on Park Lane. In London, Moussaieff also have a boutique on Bond Street.

Mrs Moussaieff was referring to an easing in prices of investment-grade diamonds after a speculative surge to all-time highs per carat earlier in 2008.
 

“It has to do with the world recession (fears) and with the fact that prices got out of all proportion.”

Asked to comment on the outlook for the international market for supreme quality diamond jewellery before Christmas, she said, “People may cut down on the size of their purchases.”

Mrs Moussaieff bought two magnificent diamonds at Christie’s October 15 auction in New York – a pear-shaped fancy intense purplish pink diamond ring of 5.6 carats for $2.7 million, against a pre-sale estimate of $2.6-3.0 million, and a rectangular-cut “D” colour, potentially flawless diamond of 16.05 carats, for $2.1 million, well above a $1.0-1.5 million pre-sale estimate.

Speaking of the first of these diamonds, Mrs Moussaieff said, “I bought this diamond for $485,000 per carat. A few months ago, I would have paid $700,000.”

She added, “The market has come down to sustainable levels.”

Investment-grade diamond jewels that were priced too high were not selling in the current depressed climate, although exceptional goods did achieve strong prices, Mrs Moussaieff said.

“Decent goods sold for decent prices,” she said in a reference to the New York auction.

“Diamonds are still a hedge against inflation.”

Mrs Moussaieff believes that the top ultra-wealthy Russian buyers, some of whom have been hard hit by the recent slide in equities, could remain on the sidelines of the international market for investment-grade diamonds for now due to the recessionary climate, although a second tier of rich Russians are still buying.

She also said that many Middle Eastern buyers had returned to London since Ramadan and were watching the market carefully.

“Middle Eastern buyers are very shrewd investors. They did not buy at the height of the market,” she said.

Many investors and collectors are observing very carefully what will happen to the banks in the global financial turmoil and are keeping a close watch on the diamonds market to ensure it remains stable, Mrs Moussaieff said.

The U.S. market for top quality diamonds remains quiet, she added.

The U.S. market for diamonds and diamond jewellery has been particularly hard hit by the economic slowdown.

Moussaieff and other top fine jewellers are now stepping up their marketing drive to respond to the more challenging economic conditions.

One key focus will be the potentially huge Chinese market.

 
 
In the meantime, Mrs Moussaieff is determined not to miss any opportunities to buy magnificent diamonds that come onto the international market.

She said supply was not tightening, because sellers were responding to the softening tone in prices.

“We’ve had a lot of offers of polished diamonds,” Mrs Moussaieff said.

At the Christie’s New York auction on October 15, the Ponahalo Diamonds, two magnificent diamonds weighing 102.11 and 70.87 carats, sold for $4.1 million and $2.15 million to Amer Radwan of Radwan Diamond and Jewelry Trading in Dubai.

The Ponahalo diamonds highlighted Christie’s “Jewels: The New York Sale” and “Superb 20th Century Jewels from an American Collection”, which totalled $29.4 million.

Royal Arcade, Old Bond Street, London
 

Rahul Kadakia, Christie's Head of Jewellery, said: "In a volatile market when the Dow lost 700 points in a day, nearly $30 million of jewellery and precious stones changed hands at Christie's in less than five hours, thus demonstrating the relative stability of the jewellery market and the long dependability of gems as a store of portable value."

The Ponahalo Diamonds were cut from a rough diamond of 316.15 carats, discovered in 2005, the largest ever to emerge from the De Beers Venetia mine.