Sabrina Thompson, a 30-something restaurant manager from Toronto, says she turned to Craigslist to sell her diamond engagement ring after her relationship ended.
An embittered Thompson, who wants C$1,800 (US$1,810) for the half-carat ring, says the cash will help her move on with her life.
“He said I could keep it, but I wouldn’t have given it back anyways,” she said. “If it doesn’t sell in the next month, I’m probably just going to go to a pawnshop.”
Experts say a growing cadre of people, especially in North America, are thinking along the same lines. Rather than hanging on to memories of a failed relationship or departed relative, they are opting to “recycle” their diamonds.
“You have no money to pay your medical insurance, you have no money for your mortgage,” said Chaim Even-Zohar, a consultant with Israel’s Tacy Ltd. “So you take your jewelry and your diamonds to the pawnshop.”
It’s a trend that is sending ripples through the gem industry at a time when high-quality rough diamonds have become more difficult to find, and more expensive to mine.
The growing influx of “used” gems means prices could stagnate over the long term despite the supply restraints, Even-Zohar said during a presentation at PDAC, the huge mining industry convention held last week in Toronto.
To be sure, analysts were already expected a short-term dip in prices as a weak global economy cuts disposable income in Europe and North America. However, the forecast by Even-Zohar, a respected expert, seemed to confirm a nagging fear that recycling could hurt explorers and miners for years.
The numbers already point in that direction, he says. The rough diamond market, before the stones are polished and cut, was worth about US$15.2 billion last year, and could drop about 10 to 13 percent this year. At the same time, Even-Zohar expects US$1 billion worth of recycled diamonds to be put back into the market this year.
Anecdotal evidence signals that something is afoot. Russell Oliver, a Toronto jeweler known for camp TV spots where he waves fistfuls of cash at the camera, said more diamonds than ever are passing through his shop.
“I can’t tell you if there’s more divorces, or more people are handing over their inheritances,” said Oliver, who calls himself “The Cash Man.” “I can’t tell you why, but in the last year, 2011, I bought so many diamonds.”
By his estimate, Oliver bought 30 percent more diamonds last year than in years past.
Cash-for-gold operations like Oliver’s buy rings, remove the diamonds, melt down the gold and sell the materials to wholesalers. They ship the diamonds to cutting houses for polishing and recutting and the gems go back on the market.
In the early 1900s, diamonds became a popular means of ensuring that if a man broke off an engagement, the woman would have financial compensation for any damage to her reputation.
Later, as Americans became more wealthy, engagement rings got bigger and more expensive, but that is changing fast.
“Men are still buying diamonds for women, but they’re not as expensive as they used to be,” Salmon Partners analyst Raymond Goldie said.
Add to the mix an aging population, fewer marriages and an uncertain financial outlook and the traditional market for diamonds is losing traction.
In January, Tiffany & Co said holiday season sales had weakened markedly in the US and Europe, prompting the retailer to lower its full year forecast.