#106 - Inflation

Posted on Thursday, December 16th, 2021 at 5:20 pm by LaLonde Jewelers

Does anyone know what inflation is? I wonder.

Well, it has finally hit the diamond industry. Let me explain.

First, I am going to freak you out and tell you what happened in Germany around 1918. A thing called Hyperinflation. This meant that when you went to dinner it was to your advantage to pay before you ate because if you waited till after, your meal could cost 25% more.

 

For the last year I have wondered why diamond prices haven’t increased and now all of the sudden BAM… a major increase in prices. This was not because there was a larger demand or a shorter supply. It was because the big boys who supply them started to notice that they were losing money.

You see before they would think if I can sell these 10 diamonds then the amount of money that I will receive will be enough to purchase this car, or this boat or this house. But now all of the sudden all these items cost more because of inflation. So, it is only natural that I must increase my diamond prices so that I can still afford to purchase what I wanted.

We all realized diamonds didn’t go up in value, the dollar went down in value. After we sell our diamonds, we are going to have to pay more dollars to replace them.

The trick as I see it is, if there is not so much money floating around and the money gets stronger, then it won’t be so bad when you sell that diamond for less money than you paid, but less money will buy more. Like that car, boat or house.

But for now, we just have to ride this roller coaster.

Written by Dan LaLonde, G.G., G.I.A.
Lalonde Jewelers & Gemologists
The Gem Expert
www.thegemexpert.com



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