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January 7, 2021

Dear Friends,

Greetings and best wishes for good health and a happy New Year.

We are witnessing a powerful transformation of the political, economic and social order. Within the US, new societal norms combined with the unprecedented impact of Covid-19, adoption of new technology, and a generational shift of economic and social power will have great impact on the economic and social values of society. How, when, where and why people buy jewelry is changing.

The US Democratic party has won political power and we can expect significant economic and social change. The political shift is a reflection of what people want and the direction society will take. This new direction will impact everything as the mainstream gravitates to a new social order. Norms of behavior and how people value themselves and those around them will change. A new generation will demand and apply different societal values.

It is important to maintain a dispassionate perspective about what is happening. From a business perspective there is no idealistic left or right, but rather an objective understanding of what is. We must not be judgmental. We must accept and respect the views of others if we are to survive the great wave of change that is coming our way. We must observe what is happening beyond our sphere of influence to understand how change will impact us.

The new order will think differently about meritocracy versus fairness. The rights and entitlement of the individual will dominate the role of free markets as new laws and regulations seek to establish a fairer society. Taxation will increase and political correctness will be required as the pendulum swings wildly from hard right to hard left.

President Joe Biden will work to unite the US as friction escalates from a polarized population. He will be a force of moderation, centering the pendulum of change and encouraging the US to settle down and adopt a reasonable rate of change. I am hopeful that President Biden and his leadership will manage and moderate progressive expectations in what is sure to be a volatile economic and social environment.

Jewelry industry

What does this mean for the diamond and jewelry industry?

In the short term we can expect the continuation of strong stimulus in the form of government grants and loans. The distribution of money will encourage consumer expenditure, resulting in fairly good jewelry sales.

Expectations of increased taxation and measures to “control wealth” will impact the wealthy class. Diamonds and gold will be seen as a store of value in a world where low or no interest rates push the stock markets to unsustainable levels. When the Covid-19 emergency settles down there will be hell to pay and the rich are going to pay it, financially and socially.

A key threat is positioning the role of jewelry in society. Flagrant displays of conspicuous consumption will be unacceptable. Finer, fewer and better jewelry reflecting the personal tastes, desires and values of the individual will be important. The idea that a consumer wants something personal, important and valuable is not going away.

Social responsibility

Social responsibility is a primary consumer concern and a value that must be addressed by the diamond and jewelry trade. A major selling point will be reliable information about the legitimate source of jewelry. Jewelry products that are beneficial to society will be preferred. The circular economy is coming on strong and we expect recycled and pre-owned jewelry to gain traction.

Leaders of the industry should be careful not to greenwash diamonds. The trade in Zimbabwean diamonds and blood diamonds from the Congo is shameful.

Social responsibility is not just a consumer matter. It is a defining aspect of our humanity and who we are as a trade. We should ask ourselves: Is our diamond dream someone else’s nightmare? Do we care if people are killed or hurt so we can sell jewelry? Are we responsible for what we buy and sell? Are we doing what we can, should and must do to provide ethical and socially responsible diamonds and jewelry?

Store of value

Diamonds as a store of value are an opportunity in a volatile, uncertain world where nothing is sure and secure. What is the value of money and the role of stocks when interest rates are zero?

Consider that current high equity prices are the result of excess money not having an alternative home. If there are expectations that interest rates will increase significantly the stock market will deflate and possibly pop. Inflated equity prices support a wealthy class who are the primary diamond buyers.

While no one can predict the future, we can have reasonable expectations. No matter what does or does not happen, economic uncertainty and volatility are on the horizon. We should consider the impact that this has on how people feel about jewelry and diamonds as a store of value.


The short-term outlook for US diamond demand is positive due to continued government financial stimulus. The jewelry industry faces medium- to long-term challenges related to the cessation of the financial stimulus. Trending social norms oppose conspicuous consumption and may question the role of jewelry in society.

The trend toward social responsibility and the cycle economy will intensify. Diamonds and fine jewelry as a store of value have a role to play in a world of increasing uncertainty and volatility.

On the global front, while the US is shifting to the left, authoritarian regimes in China and Russia are shifting to the right. China is supporting increased consumption, which is driving diamond imports, but that future is uncertain. The Chinese government is taking proactive measures to control the economy and may take measures that will reduce diamond consumption.

I take this opportunity to thank you for your continued support of the Rapaport Group. On behalf of all of us at Rapaport I wish you, your families and associates a year of health and happiness.

Best wishes,

Martin Rapaport