Diamond Prices to Be Hiked

By SiliconIndia   |   Thursday, 29 December 2011, 13:38 Hrs
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Bangalore: The Diamond prices are said to rise in the forthcoming years which will even surpass the gold prices. Experts says as in China, India and Middle East people expenses more on extravagance and lavishness, the demand for diamonds have increased and this will lead to the price hike.

It is predicted by Bain & Co., that this demand would grow at a double pace by 2020, because of this high requirement of luxury in the increasing number of middle class peoples in China and India. Along with Middle East, these two countries alone will acquire the 40 percent demand by 2015 which was only 8 percent in 2005, according to a report from Anglo American (AAL). According to BMO Capital Markets Analyst Edward Strerck, the price of uncut diamonds will probably rise to 9 percent next year, 1.4 percent in 2013, and 4.8 percent in 2014, 2.6 percent in 2015, and 3.2 percent in 2016. Whereas the Gold Price would rise by 19 percent in 2012, but will then start declining from 2013 for next three years, is what is stated by median of seven analyst forecasts compiled by Bloomberg News.

“We expect emerging nations, first and foremost India and China, to drive the demand for diamonds in the upcoming years, while consumption of developed nations is likely to moderate somewhat. On the supply side, the commission of new mines should be largely offset by depletion of matured ones”, said Vladimir Sergierskiy, an analyst at Moscow-based Finam Investment.

Within 2016 the supply of this precious stone would be higher than the demand and would surpass by 7 million carats which was a shortage of 1 million carats this year. Rob Henderson, chief economist at National Australia Bank, said that, “The current gold price doesn’t reflect the underlying supply and demand fundamentals. It much more reflects an artificial demand for gold as a hedge and as a store of value against inflation. That means the market is prone to a pretty substantial correction sometime in the future.”

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