The scarcity of natural diamonds and the trend of future price increases

Natural diamonds have long transcended their meaning as mere jewelry, becoming a finite asset valued for their scarcity, quality, and symbolism. Against a backdrop of stable demand in the high-end segment, the global supply of rough diamonds faces increasing pressure as major mines deplete their reserves, extraction costs rise, and new discoveries fall short of compensating for the deficit.

According to the Kimberley Process, global rough diamond production in 2023 reached approximately 119,119 million carats, lower than the peak levels of previous periods. In this context, the pricing of natural diamonds increasingly hinges on scarcity, quality, and long-term value retention. Join Jemmia Diamond in analyzing the scarcity and future price trends of natural diamonds in detail through the article below.

Natural Diamond Supply is Shrinking

The core of the natural diamond market is its finiteness. Unlike many commodities whose production can be scaled up through increased investment or expanded mining areas, diamonds depend on geological conditions that are extremely specific. Large commercial-scale mines are few, while the exploration and discovery of new mines are often costly with a low success rate.

Data from the Kimberley Process indicates that global rough diamond production in recent years has not shown a sustainable upward trend. In 2023, production was approximately 119,119 million carats, while in previous periods, this figure was higher. This is a significant signal, as it suggests that supply is no longer expanding cyclically but has entered a mature phase, even declining in some regions.

Another factor is that many large mines are nearing the end of their extraction lifecycle. As ore content decreases with depth, companies must dig deeper, process more rock and soil, and consume more energy to obtain the same amount of diamonds. This significantly increases marginal costs. Economically, when extraction costs rise while production falls, prices tend to face upward pressure.

The most prominent example is the Argyle mine in Australia, once one of the world's most renowned diamond mines, which closed in 2020. This mine was particularly important as it supplied a large proportion of natural pink diamonds to the market. With the disappearance of supply from Argyle, the pink diamond market entered a state of extreme scarcity, leading to a sharp increase in the collectable value of these products.

The Argyle diamond mine closed in 2020, making natural pink diamonds extremely rare and significantly increasing their collectable value.

Why Do Diamond Prices Tend to Increase Long-Term?

The price of natural diamonds is influenced by supply, demand, and market expectations simultaneously. Among these, supply is increasingly exerting greater pressure than before.

Firstly, extraction costs increase steadily over time. New mines are often located in remote areas with weak infrastructure or complex operating conditions. Companies not only incur mining costs but also must invest in processing, energy, transportation, environmental compliance, and supply chain security. When input costs rise without a corresponding increase in output, the selling price is forced to adjust.

Secondly, the diamond market is concentrated among a few major producers. This makes supply easily susceptible to geopolitical variables, trade sanctions, changes in export policies, or logistical disruptions. For example, the restriction of diamond imports from Russia in many Western markets in recent years has led the market to restructure its supply chain. Any disruption in this system can push up rough diamond prices in the short term.

Thirdly, consumer demand for natural diamonds continues to grow, especially in the segments of wedding rings, high-end gifts, and investment jewelry. Although the market may fluctuate with the macroeconomy, diamonds retain their role as a special consumer asset, linked to culture, symbolism, and social status. When demand does not decrease proportionally with supply, prices tend to be supported.

Natural diamond prices are increasing long-term due to higher extraction costs, supply disruptions, and stable demand.

Strong Differentiation Among Diamond Products

Not all diamonds increase in price equally. The market is heavily differentiated among product categories.

Rough diamonds and polished diamonds have different valuations, but even within the polished segment, value depends heavily on the 4Cs standard: carat, color, clarity, and cut. A 1-carat diamond with beautiful color, high clarity, and a good cut can be valued much higher than a diamond of the same weight but lower quality.

The segment of natural colored diamonds is a prime example of extreme scarcity. After the Argyle mine closed, natural pink diamonds became significantly rarer. In fact, the prices of this group often do not follow the usual logic of the common jewelry market but are closer to the logic of collectible assets: extremely low supply, selective liquidity, and high price margins.

Furthermore, diamonds with certifications from reputable organizations like GIA generally have better liquidity. In a market where quality is difficult to assess with the naked eye, certification acts as a value standardization mechanism. Diamonds with clear documentation, transparent specifications, and a good origin history are generally more trusted by the market, thus retaining their value better.

Future Price Outlook for Diamonds

On the supply side, the outlook for rapid production expansion is not optimistic. Existing mines continue to age, while discovering new large-scale mines is very difficult. This means the market is unlikely to witness a supply boom large enough to sustainably drive down prices.

On the demand side, demand for high-end jewelry may fluctuate with income, interest rates, and consumer sentiment, but it is unlikely to disappear entirely. Many Asian markets continue to maintain significant demand for natural diamonds, especially for symbolic products such as engagement rings and anniversary gifts.

For high-quality diamonds with clear origins and full certification, long-term value retention is still viewed positively. Rare segments such as pink, blue diamonds, or large, high-quality white diamonds may benefit even more from the scarcity narrative.

Diamonds of high quality, clear origin, and full certification have very high liquidity.

However, it is important to acknowledge that the diamond market does not operate like gold or real estate. The liquidity of diamonds depends heavily on the quality of each stone, appraisal capabilities, and transaction channels. Therefore, if diamonds are considered an asset, buyers need to understand that value lies not in "diamonds in general," but in the specific configuration of each stone.

Natural diamonds are entering a phase where scarcity is no longer a marketing story but a market reality. Global production is declining, many large mines are depleted, extraction costs are rising, and the supply of rare colored diamonds is shrinking. Meanwhile, demand for high-end products persists, creating a foundation for price increases in quality segments.

In the future, natural diamonds are likely to continue to serve as a highly scarce tangible asset, especially for stones with standard certifications, good quality, and clear origins. For consumers, this is a time to understand the true value of a diamond more deeply. For investors, this is a market that requires selectivity, as scarcity itself is the deciding factor in long-term value.

Reference: 26 Perfectly Certified Diamonds created through the most rigorous selection process, perfectly embodying color, clarity, cut, and natural characteristics.