Gem dealers are anticipating downward price shifts, but the market hopes to fend them off

Current market conditions are consistent with the seasonal sluggishness expected during summer. Dealers report that activity has slowed in the commercial grades, but there is action at the high end. Heading into the important fall season—when retailers traditionally stock up for the holiday—the gem trade is facing price corrections in certain diamond and colored stone categories. Reports of a slowdown in the Chinese market have, apparently, removed an important barrier that may have prevented an earlier correction. Prices for many colored stones have seen modest to sharp increases during the past few years, so a moderate correction would be expected under typical conditions.

A word to the wise: Periods of price correction tend to see buyers vacate the market in anticipation of buying at the bottom. Historically, however, this approach has proved hazardous. Market peaks and valleys are difficult to predict. Instead, buying inventory throughout the cycle will prevent a lopsided cost-to-value ratio.

Although North American jewelers are reporting that business is still fairly slow, market data indicate modest growth in an improving economy. Sapphire continues to lead in color. Nevertheless, greater consumer awareness of gem varieties outside of the big three is growing. This is likely due in part to TV-based marketing of price point gem products. Ethiopian opal, blue topaz, blue zircon, chrome diopside, garnet, and sunstone are some of the gems expected to be in demand this season.