• Macroeconomic pressures and government debt financing could dramatically drive up gold prices.
• Falling lab-grown diamond costs combined with rising gold prices have shifted jewelry value primarily to the gold content itself.
• Retailer risk-aversion and reliance on special orders could lead to critical supply shortages in core lab-grown diamond items during peak Q4 demand.
As we approach the Fourth Quarter of 2026, the unease that many industry participants feel is undeniable. Retail has been generally good, but there are challenges- and opportunities- approaching that deserve your attention. Here are five things that I’m focused on:
The current macroeconomic picture has grown increasingly grim, with a 40 trillion-dollar deficit alongside the highest bond interest rates in decades. The last administration chose to fund the deficit with shorter-term bonds, so we will now have to finance 31% of the debt (about $12.5 trillion) in the next 12 months. And since the Fed won’t cut interest rates given fears of an accelerating inflationary scenario, the only way to reduce government borrowing costs is to increase liquidity dramatically. You can now expect Treasury Secretary Scott Bessent to crank up the printing press to suppress the 10-year bond yield, and that added liquidity will be invested somewhere. It seems reasonable to suggest that a significant share will be diverted to gold, so don’t be surprised if gold moves significantly higher now.
The rapid decline in lab-grown diamond prices, combined with the recent upswing in gold, has fundamentally changed our cost structure to the point that, today, we are increasingly no longer in the diamond jewelry business. We are instead in the business of selling gold jewelry adorned with diamonds possessing considerably less value than the gold content. Consider the fact that the gold earring mountings for one ctw lab-grown diamond studs are now more costly than the diamonds mounted in them. In comparison, the production cost of a three ctw diamond tennis bracelet is now only $30 more than a two ctw bracelet. Merchandise accordingly and try to see the value in your offerings through your customers’ eyes, because ultimately, their perspective on price and value is the only one that matters.
From my discussions with many suppliers, I get the impression that business is okay–especially if you’re in the lab-grown diamond business–but it disproportionately features special orders, as jewelers seem to be especially risk-averse this season when it comes to placing Fall stocking orders. The inevitable result will be a crush of special orders during crunch time as demand accelerates for core basics. I understand the reluctance to restock mined diamond jewelry. But I’m seeing high levels of special orders for specific lab-grown product groupings during what is historically a pretty slow retail period, which tells me that when things heat up during peak season, there will be a shortage of this “gotta have it” stuff. Now would be a very good time to think about placing orders for diamond studs (one and two ctw especially), tennis bracelets (three and five ctw), tennis necklaces (seven and 10 ctw), and cash and carry bridal ($750 to $1200 cost engagement rings), especially featuring hidden halo mountings. Don’t get caught short scrambling to find a supplier who has these key SKUs in stock in December when holiday demand spikes.
History doesn’t always repeat, but it often rhymes, and I see events converging today in a way that’s reminiscent of the late 70s. Historically, independent jewelers sourced their products from regional wholesalers, who American jewelry manufacturers in turn supplied. But when gold spiked to $850 per ounce, and Japanese speculation in the diamond market caused De Beers to repeatedly take massive increases in rough prices, it broke the supply chain. The manufacturing sector responded by disintermediating its wholesaler supply networks and selling directly to jewelers. By the mid-90s, those same manufacturers discovered they could source products overseas so cheaply that many of the largest became wholesalers; today, most of these “manufacturers” don’t actually make anything. Recognize that typical wholesaler markup is about 50%, meaning that when you buy an item for $1,500, your supplier is buying it for $1,000. Given the recent massive increases in gold combined with tariffs, it seems inevitable that the current supply chain is about to break, so watch for opportunities to source core basics from your supplier’s supplier.
Our industry needs affordable diamond fashion jewelry, but with gold at ever-higher price levels, watch as designers begin incorporating new, lower-cost components into the diamond jewelry mix. While many industry insiders lament the drop in diamond prices, I’m actually pretty excited about the products we can now produce in price ranges that everyone can afford, in effect democratizing diamonds. We need to get more creative in how we make diamonds wearable, creating new selling opportunities in the form of trend items we need to maintain consumer interest in the most important product we sell. Class dismissed! George Prout has held Senior Executive positions at several of the world’s largest diamond jewelry suppliers over the course of a 50-year career, is Founder of Blantons Factory Direct, and can be reached at sales@blantonslab.com.
George Prout is a 50-year veteran in the jewelry business, having sold his first engagement ring as a 17-year-old sales associate working at Kay Jewelers in 1974. Since then, he has worked for companies that rose to top three status nationally in sales volume to Independent Jewelry stores. Currently he is President of JB Bhanderi, the world’s largest CVD grower and maker of the Surreal Diamond brand. He can be reached at george@surrealdiamond.com.
