Standardizing diamond rates with Solitaire Price Index
When was the last time you cross-checked the change in the price of the diamond jewellery you bought from your jeweller? Never? In that case, you’re not alone. Most of us may or may not be aware that the price of diamonds change from time to time.
This is because there has never been any genuine effort to index these price trends and standardise them. As a result, the price of a diamond at every store could turn out to be different.
As a buyer, you might have a fair idea of how the jeweller decides the prices. It is decided on the cut, colour, carat and clarity of a diamond which are the four basic attributes of a diamond.
It is usually enough to evaluate the worth of a diamond based on these characteristics. But other parameters like its depth and fluorescence also affect the pricing. However, what your jeweller can only give you is a vague estimate when it comes to the change in the price.
Hence, diamonds too need standard pricing. It was with this purpose that the Solitaire Price Index (SPI) was introduced by Divine Solitaires in April 2006. The brand publishes its “Nationwide Standard and Transparent Price List” on the 1st of every month.
What is the SPI?
Divine Solitaires documents the price of each of its diamonds in the Nationwide Standard and Transparent Price List. The SPI is calculated considering the diamond prices in this list and is an average of these prices.
In simple terms, the SPI is an index that tracks trends in diamond prices. In each month’s SPI, the change in loose solitaire prices is reflected and compared to the previous month’s and year’s figures.
For diamond jewellery consumers, potential or regular, who keep an eye out for the trends in solitaire prices, this index could serve as a very helpful one-stop reference point.
The purpose of SPI
The aim behind formulating the SPI was to bring transparency in the loose diamond industry and standardisation in the pricing of diamonds. This will answer all kinds of questions and doubts of the consumer regarding the actual price of these precious stones.
The prices in the Nationwide Standard and Transparent Price List are based on results from extensive analysis of the industry. The global economy, the demand and supply chain taken into consideration.
It is also necessary to understand the two major factors that influence the price of diamonds. They are usually, if not always, interlinked. The first and the most important one is the demand and supply.
Diamonds are consumer goods, albeit luxury goods. The rules of demand and supply apply to them as much as they do to other commodities. Just as it is with any product, the demand and supply of diamonds, and hence, the production influences their pricing.
The other factor is the economic performance which also affects the price of diamonds. The most classic example of this is the Great Recession of 2008.
It was a time when the economic depression caused the global economy to bleed. It led to a lack of employment opportunities and naturally, a dip in the incomes of consumers.
Though not for a long time, the diamond industry too hit a rough patch back then. It resulted in a low demand for polished diamonds and stagnancy in their prices.
From an investment point of view as well, the SPI and the Price List serve as very important tools.
Until recently, consumers have hardly seen diamonds as a reliable investment asset. The diamond industry has only started catching up in terms of transparent pricing but it has a long way to go.