Many buyers have been priced out of the market, meaning a correction may be in order

Both diamond and colored stone dealers reported that sales in August slowed considerably from earlier in the summer. Increasing concerns about the direction of the U.S. economy and unease in Europe appear to have curbed many consumers’ appetite for spending on non-essentials. This has triggered a cautious response among retailers just as manufacturers have started gearing up for holiday orders.

Currently, sales activity appears concentrated at opposite ends of the market, with both extra-fine-quality collector gems and the inexpensive commercial gems seeing demand. Calls for color at mid-level price points ($2,000–$4,500) are few and far between. A major challenge facing retailers is that prices for many fine-quality gems are simply outside the comfort zone of many middle-class consumers.

At present, price resistance is most apparent for top grades of natural ruby. Prices in this category have risen consistently during recent years as the scarcity of unenhanced material became pronounced. This is facilitating the greater acceptance of natural ruby from non-Burmese sources such as Mozambique and Madagascar. The irony is that the dominant “ruby” product in the market today isn’t even ruby—it is a glass and ruby blend. But that, as they say, is another story…