Ruin to Resurrection, the Perpetual Path

Ruin to Resurrection the Perpetual Path - Edahn Golan
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The growing stream of bad news is threatening to engulf us like a depressing cloud of darkness blocking all light. We are facing widespread infections, rising death numbers, mandated quarantines, nose-diving stock markets, dropping global trade, and above all, deep concern for loved ones.

The combination of health threats and economic decline are especially worrying. In some places, political uncertainty is adding another layer of bleakness. Under these circumstances, the easiest thing to do would be to write about how terrible things are right now, and how worse it will be going forward. That would easily reflect the general market sentiment and, after all, bad news is contagious too, as it reinforces our concerns.

There are plenty “celebrating” the bad, so instead, I’ll explore a different angle, and back it up with facts and numbers.


It should be stated up front, that the economic situation is bad, far beyond the typical cyclical downturn. Polished diamond exports from Israel fell 73% in February. In Antwerp, polished diamond exports fell 58% year over year, while polished diamond exports from India fell “just” 41%.

The sharp declines were especially dizzying after the unusually strong retail activity in the US in January. Total jewelry sales rose 4%, and sales by specialty jewelry retailers leaped more than 11% year over year, the largest retail surge since 1996, a quarter century ago.

Diamond jewelry retail sales in the US soared 20% after 9/11.
Combined with everything else, no wonder that when talking with traders, wholesalers, manufacturers, and retailers, there’s a recurring theme: a bleak outlook. People are talking in near doomsday terms. But while the short-term is clearly terrible by all accounts, the apocalyptic long view is not justified.

Terror and Resurrection

The world was shaken to its core by the events of September 11, 2001. The world changed after that day, and along with feelings of anger and hopelessness, the economic landscape changed as well. No one was in a mood to spend large, definitely not on luxury.

And yet, following 9/11, diamond jewelry sales leaped out of the abyss of the disaster. Diamond jewelry retail sales in the US soared 20%, although global retail sales increased just 5% as Americans rushed to propose, get married, and express their love the following year.

The value of diamonds set in jewelry sold in the US jumped 19% (compared to 7% globally), and gross polished diamonds imports into the US rose 15% in 2002.

Just months after the attack, Americans bought a lot more diamonds, increasing their expenditure even though they were still licking their wounds in response to the unprecedented and horrific terror attacks whose effects we can still feel more than 18 years later.

Economic Ruin and Resurrection

In 2008, the Lehman Brothers mega-economic meltdown and housing fallout hit the global economy hard. Many lost their lifesavings, and many more lost their jobs as entire industries fell deep into ruin. And yet, just a year later, jewelry sales leaped 5.4% in the 2009 holiday season.

History shows us that after large-scale disasters and economic meltdowns, there is a tendency to spend on diamond jewelry.
Americans felt they survived, saved, did well, and decided to reward themselves. So they bought diamond jewelry to celebrate overcoming the hardship.

In 2009, diamond jewelry retail sales increased only 3% compared to 2008; however, considering the circumstances, any growth is quite impressive. Most other industries posted year-over-year declines. Moreover, the small resurrection in 2009 was just the opening act for 2010, which turned out to be a fantastic year for the diamond industry.

Natural Disasters and Resurrection

Ruin to resurrection is not limited to Americans. On March 11, 2011, Japan was struck by an unusually large 9.1 earthquake, the strongest to ever hit that country. Following this, it was hit by a devastating tsunami with waves that rose 40 meters high and rushed pass the shores some 10 km deep onto the island. Some 16,000 people were killed by the waves that also led to the meltdown of three nuclear plants in Fukushima, raising yet another scare.

And yet, in the midst of the disaster, and after hundreds of thousands of families lost their homes, diamond jewelry sales surged. In 2011, the year of the triple disaster, diamond imports rose 32.2%. In the following year, imports rose another 10.9%.

Although revenues at Japan’s shopping centers generally trended down, with almost every sector reporting a decrease in sales, jewelry sales consistently increased. According to the Japan Department Stores Association, sales of jewelry, luxury, and precious metals rose through the period, even during stormy weather.

Coronavirus and Resurrection

History is a great educator. It has shown us that it will get better after it gets worse. For the diamond industry, as each of these three events demonstrates, it got much better.

The tendency to spend on diamond jewelry is a response to large-scale deaths, disasters, and economic meltdowns. In the eye of some, the current situation is more 2008 than 2001 or 2011 – primarily economic. Others, me included, see it as more 9/11 and Fukushima and less 2008 – more like external forces that are dragging down the economy.

Already there is reason for cautious optimism as China is reporting a slowdown in the number of people infected by COVID-19 and a drop in the number of deaths. Apple, for example, already re-opened its stores in the country.

A Path to Resurrection

Masked lovers graffiti - COVID-19- Ruin to Resurrection, the Perpetual Path

Diamond jewelry is a symbol of love, eternity, and success. When coming back from a bad situation where we felt our lives were threatened, we experience a need to celebrate, outwardly express our love, and signify our triumph. Buying something of value, symbolic, and everlasting is a common response.

There is a path out of this current difficulty, and the diamond industry will no doubt fare well. All indications are there that not only will diamond jewelry sales rebound, but this is likely to happen even earlier than other industries, as past large-scale fallouts have shown.

The question on the diamond industry’s mind is what to do now. The main issue is cash flow, which creates uncertainty, a characteristic of every crisis. In January, utilization of bank financing was low, an indication that the industry was already bracing for impact. Self-financing is far more common today than in the past.

After a year of scaling back, improving efficiencies, and adjusting business strategies, the diamond industry is prepared for a difficult year, despite the eulogies we read in the economic and general press.

Consolidating the decision-making process and limiting information has an adverse effect on employees who are already in limbo anyway. Instead of this, opening up and bringing everyone into the process will lead to greater commitment and a desire to see it succeed.

Some of the needed steps could be painful and feel wrong. Polished diamond wholesalers will do everything to avoid selling their goods at a loss. But to generate cash flow, this is sometimes necessary. This short-term loss is a life-line if done correctly. Many of the firms that survived the 2008 crash did just that and fared better than those that sat on their expensive inventory, waiting for prices to rise again.

For now, we need to make it through the crisis. Those smart about it will emerge on the other end better prepared for the new challenges and reap the benefits of a market resurrection that is surely to come.


Edahn Golan
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Edahn Golan has 20 years of experience as a diamond industry analyst. He has a unique ability to provide a global view with context to the exclusive granular data he shares. The New York Times, Wall Street Journal, Business Insider, and other leading publications quote him regularly.


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Comments 6
  1. Helpful perspective. Do you know whether there was increased industry consolidation in those prior down periods, with companies with the best balance sheets and cash flow capabilities gaining share from the smaller, independent jewelers?

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      Thanks. Consolidation is common. If usually took the form of weak/failing companies selling their diamond inventory and the owners leaving the business or becoming salespeople for other companies. You can see it happening in the past year as well.

      It’s rare that consolidation takes the form of one company buying another and most employees of the purchased company working for the buying company.

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