Diamonds are on sale, but not forever

You can't put a price on true love. Engagement rings are another matter. Luckily for today's proposalready consumers, diamonds are selling at a compelling discount-especially the popular 1-carat range.

- Jinjoo Lee

The bargains are likely only a temporary challenge for the diamond industry, but there are larger forces that threaten to take the sparkle off the stones in the decades ahead.

Hopeful fiancés and fiancées paid through the nose in 2021 and 2022, when the gems' values rose to a multiyear high. This wasn't unique to diamonds, of course. The prices of many discretionary goods soared as stimulus-boosted consumers went on a pandemic-fueled spending spree. Industry analyst Edahn Golan estimates that diamond jewelry sales in the U.S. rose 57.4% in 2021 and stayed elevated in 2022.

Diamonds tend to be popular purchases following disasters: Sales surged in the U.S.following the 9/11 terrorist attacks in 2001 and in Japan after a catastrophic tsunami in 2011, according to diamond industry analyst Paul Zimnisky.

"People buy fewer things [after events like that, but nicer and more meaningful things," he said. "The pandemic was the most recent example of that."

On top of strong demand, the disruption in supply from Russia following its invasion of Ukraine helped push prices even higher in 2022 as western insurers avoided Russian entities and restrictions were placed on the Swift payment system. Even though the U.S. placed sanctions on Russian diamonds last year, loopholes make it possible for Russian stones cut and polished elsewhere in the world-say, Indiato land up in the U.S. The European Union, meanwhile, doesn't have a ban on them.

Russian supply has since bounced back as the industry found pathways through other countries such as China, according to Zimnisky, who estimates that supply from the country is down just 10% compared with preinvasion levels. Polished diamond prices are down about 27% from their peak in 2022, according to IDEX. Zimnisky says al-carat round, near-colorless natural diamond with very slight flaws will set a consumer back $5,185, a $1,900 discount compared with early 2022.