The Largest Jewelry Market in the World

The largest jewelry market in the world is India, where consumption has fluctuated roughly between 500 and 600 tonnes a year over the past decade, depending on the price. It is said that Indians hold about 15,000 tonnes of gold, mainly in the form of jewelry. A sizable portion of the demand in India comes from rural parts, where jewelry is foremost a saving instrument.

China has recently moved into second place globally in terms of gold jewelry consumption,after recent growth lifted demand in 2007 to just over 300 tonnes. In contrast, the recent economic and financial crises in the United States, on top of structural change, have meant poor demand for luxury products like jewelry, pushing the United States to third place as demand fell to only about 260 tonnes in 2007. The remaining two in the top five consumers are Turkey and Saudi Arabia. In Turkey, the earthquake of 1999 and the banking crisis of 2001 had adversely impacted domestic demand till 2002. Recovery of the Turkish lira, along with far greater economic and financial stability, has since aided the revival of demand.

If we review global ranking in terms of where the jewelry is produced, the top two stay unchanged,but Turkey moves up to third place while Italy claims fourth. The latter used to be number two, but structural change and market share loss (mostly to Turkey and south-east Asian countries) for its exports in the United States have seriously undermined its output. Fifth place again goes to Saudi Arabia.

Jewelry consumption is critical to the overall gold market as it is the single largest physical user of the yellow metal, typically accounting for about two-thirds of the total demand for gold. Despite this fact, jewelry often plays second fiddle to investment (and on occasion other elements of supply and demand) as the most important determinant of the gold price due to its price sensitivity. Jewelry is best seen as a price taker rather than a price maker, tending to expand or contract depending on the price of gold and therefore acting as a “cushion” for the other supply and demand variables.

Fine Jewelry and Costume Jewelry

In recent years, the lines have blurred between what is considered fine jewelry and costume jewelry. In the past, something like a gold pendant, for example, would be featured only with a gold chain. In today’s more informal times, however, the piece could be found on a leather or silk cord.

This process has been extended further by recently high prices such that a predominantly steel or brass item might carry a small gold accent, weighing a fraction of a gram.A common theme to Western markets is the shift from plain gold to pieces with stones and the move to branded or high-fashion designs. All these carry much higher markups over the value of contained gold, and this is important as the trend for sales in terms of total value, number of pieces,or weight of pure gold can go in opposite directions. 

These trends are also spreading to developing world markets, in particular China where 18-karat gold is gaining market share.These trends are also important as, in industrialized markets, consumers within the overall jewelry segment devote ever more expenditure proportionately to other materials, such as diamonds, or to the perceived value of design and branding, all of which cuts the amount of money being spent on gold. In addition, all jewelry has been losing market share to other discretionary areas, such as foreign vacations or technology goods (such as cell phones), both of which typically enjoy far greater advertising budgets. This has culminated in the weight of gold sold in jewelry form declining steadily in the industrialized world over the past decade or so.

Gold in Jewelry

The use of gold in jewelry can take many forms but, for the purpose of statistics, it is typically measured only when in “karat” form. This specifically excludes an article of costume jewelry made from, say, brass to which a gold plating has been applied. A karat is a measure of purity of gold,defined as parts per 24. Some jewelry, such as that in China, exists in 24-karat form (essentially pure gold), but the highest caratage typically sold is 22-karat (the norm in India) as other metals such as copper and silver are added to bring sufficient strength to the alloy. Just beneath that sits 21-karat, the norm for many Middle East markets. Purchase of these high-karat grades is often motivated by investment considerations. For this to work, the pieces can carry only a small amount of labor or markup over the value of the contained metal.

The main driver for the purchase of the remaining types of gold jewelry is adornment or fashion.Within this, the next major grade is 18-karat jewelry, the norm in areas such as southern Europe.This is the standard typically used in high-quality pieces, especially those carrying precious stones such as diamonds, because at this concentration of gold, the alloy is sufficiently hard to hold stones and color on an effectively permanent basis. This is also the grade at which “white gold” appears gold to which a silver-colored metal such as palladium or nickel has been added in sufficient quantity to mask the yellow of the pure gold and render the piece “white” (industry jargon for silver colored). Beneath that is 14-karat gold, the last grade commercially available in which the majority of the alloy is gold; 8, 9, and 10 karat follow. These qualities are the various norms in northern Europe and North America, and in some markets, the United Kingdom, for example, there is legislation to enforce these standards.

How to Determine the Quality of a Diamond

How to determine the quality of a diamond :

1. Test the diamond with a good diamond tester.

2. Make sure the diamond is not a synthetic such as Cubic Zirconium or Moissanite. A state of the art diamond tester will perform these tests with good results.

3. Once you have determined that the stone is a real diamond, then measure the stone diameter or width and length, depending upon the cut. You will need a diamond measuring device or a good pair of calipers that measure in metric.

4. Once you have determined the type of diamond, style of the cut and then you need to analyze the clarity, cut, and color.

5. Remember that diamonds are evaluated by the four (4) C’s, Cut, Clarity, Color, and Carat. Each of these components has many different scales, such as color have approximately 26 different values and etc.

6. Like I said earlier, there are many many different components to evaluating a diamond. The most common categories are as follows:

The Basics of Buying Diamonds

Size in Brilliant Brilliant European European Mine Cut Points Flawless with Flaw Flawless with Flaw (Carat) Minor Minor

6.25 $1.00 .50 .50 .25 N/A

12.5 $2.00 1.00 .75 .50 .25

18.75 $2.25 1.25 1.25 .75 .50

25 $2.50 1.50 1.50 1.00 .75

50 $5.00 2.75 2.75 2.00 1.25

100 $8.00 4.50 4.50 4.00 2.50

This list denotes the points in carat and price per point. 100 points equals 1.0 carat and it will weight 200 milligrams or .200 grams. And if the diamond is of good quality, I would offer about $450.00 for it. Most diamonds you will run into will be small, from 1/8th to 1/2nd carat. Do not buy chips. They are worthless.

Note; a good way to tell a synthetic from a diamond is weight it. CZ and Moissanite weighs about 75% more than a diamond.

If you are serious about this business, I strongly suggest that you purchase the following books and study the ins and outs about evaluating diamonds and gemstones.

“Diamonds Buying Guide”, by Antoinette Matlins, P.G.

“Colored Gemstones Buying Guide”, by Antoinette Matlins, P.G.

Now, for a couple of personal pointers. You will seldom run into a flawless diamond in the open market. I always purchase at the Brilliant with minor flaw or less. Depends on the evaluation of the diamond. I do not bargain or hassle over the buy price. I make an offer on the above scale and if they accept fine and if not fine, go to the next one. You don’t want to get all the diamond business, just the ones you can make money on.

A buyer of diamonds that I have used and had good luck with so far. I sell most of my diamonds (the ones that my wife doesn’t get first) to private buyers at a hundred percent markup..

Buying and Selling Diamonds and Gemstones

I have received several requests for information on buying, and selling diamonds and gemstones. I thought I would post the following information so any one that is interested in this type of activity will at least have some of the basic information.

First of all let me advise you that I have been buying and selling diamonds for the past couple of years or so. I am still a neophyte. I learned the basics from my son, who has been in the business for several years and has been quite successful in this business.

Buying and reselling diamonds is a very serious business and requires a very comprehensive knowledge of diamonds and also the market for reselling same. There is a 900% markup in the price of diamonds from the jeweler to the buyer of used diamonds.

I do not fool with any type of gemstones at all. There are too many variables involved in determining the type of gemstone, quality and most important of all the value. The diamond and gemstone business reminds me of the age old adage “beauty is only in the eye of the beholder”.

I will attempt to post a few very important things one must be aware of in the diamond business. The first rule of business is “Supply and Demand”. There are a lot of diamonds on the open market and there is a market for them. The key is being able to determine a fair purchase value and be able to sell the diamond at a profit. Just like the used car business.