A chinese buyer’s best friend? Demand for gems rivals gold

Photo: Fancy Diamonds.net

As the country’s government continues to introduce austerity measures, Chinese buyers are turning to precious stones such as jade, which are less likely to attract attention than gold or diamonds. Indeed, Hong Kong jewellers are crowded with Chinese buyers from the mainland, according to The National, while one jade ring at Christie’s this year sold for HK$20m, five times its estimated value.

As a result, Tiffany has even raised its profit outlook for 2013 as demand for gems in China pushes up its international sales.

China remains interested in gold investment, though, with consumption growing by 29 per cent to reach 1,000 tonnes, according to the World Gold Council. Indeed, China and India account for more than 50 per cent of demand for the world’s gold.

Falling gold prices have helped to stimulate demand further as buyers look for more affordable assets. Indeed, in April 2013, gold values suffered their largest two-day drop in three decades.

But precious stones are starting to rival precious metals.

Earlier this month, Hong Kong held an exclusive display of diamonds from the Rio Tinto Argyle mine in Australia. 58 out of those 64 diamonds were pink diamonds, but three were “Fancy Reds”, which are worth 20 times white diamonds. Indeed, Argyle’s diamonds in that category fetch more than US$1m per carat.

“It’s extraordinarily hard to put a price on [Fancy Reds] and, frankly, the imagination is the limit,” Alan Davies, the chief executive of Rio Tinto’s diamonds and minerals division, told The National.

No wonder, then, that Chinese buyers are queuing up to get a piece.

At the moment, the Chinese market only accounts for 5 per cent of diamond investment, but the country’s expanding middle class are stepping up their activity.

“We expect, through the course of 2020, for that to be over 20 per cent,” Davies added.