Diamonds have dropped to their lowest level in two decades, and the industry has been battered by a bout of buyer’s remorse.
But there are signs that the recent slump in the price of gemstones could be a temporary blip, analysts say.
Diamonds in general are on a bull run and the price is not as far off from where it was in late 2009, when a global glut of diamonds led to a sharp correction.
The rally began in late 2011, when the U.S. Federal Reserve raised interest rates for the first time in almost a decade, and continued through early 2014.
That has led to an uptick in demand for diamonds.
Demand is expected to rise again as the U,S.
and China open new mines, and demand for gold, platinum and other precious metals is also rising.
The biggest selling point to diamond buyers is the rarity of gems.
Diamonds can fetch as much as $1,500 a carat, compared with $600 a carabine in 2014, according to the American Gem Association.
That is a lot of diamonds for someone who might buy a $1 million diamond, said Scott Hennigan, president of Hennigons Diamonds.
“It’s kind of like a bargain basement diamond,” he said.
For some people, though, diamonds are also more valuable because of their sentimental value, said Stephen Gorman, an analyst with Hennigs Diamonds, an investment firm.
Demand for diamonds is up, and so are prices, he said, because of the increased supply of gems and demand from investors.
Many investors have taken advantage of a spike in demand and are putting money into diamond mines, which are expected to be big growth sectors in the next decade, said Hennigans Diamonds executive director Brian Burden.
Gold prices have also surged, reaching their highest level in a decade.
They are still well below their peak in the 1980s and 1990s, but are up from $1.26 an ounce to $1 a pound in the past year.
Prices for gold were higher in 2014 than they were in 2007, when global demand for the metal was booming, according.
There are also some signs that demand for gems is leveling off, said Burden, who also serves on the Diamond Council of America, an industry group.
Most of the demand for gemstones comes from the United States, where the number of mines has jumped from a high of about 60,000 in 2002 to about 2 million today.
But demand from Asia and Africa is still strong, and prices for gems are not far off where they were, he added.
Global demand for jewels has risen in the last decade, according the National Gem and Mineral Council, a trade group.
The number of gem mines in China increased from about 100 in 2008 to more than 400 today, up from a few hundred in 2003, according data from the U-M Global Gem Market Alliance.
Sales in the United Kingdom and Australia also increased in the 1990s and 2000s.