Editor’s Note
This article highlights a surprising trend in the domestic luxury market, where sales of watches and jewelry have surged despite broader economic headwinds. The insights from industry executives point to shifting consumer priorities in the post-pandemic landscape.
This is the domestic market situation relayed by a high-end watch brand executive. Another executive analyzed the reasons behind this trend.
The actual market situation is not much different. Looking at the growth rate of Hyundai Department Store’s watch and jewelry product category (based on January-October), it increased by 28.1% compared to the same period last year. A visit to the jewelry district in Jongno 3-ga, Seoul, revealed unanimous praise for diamonds. One jewelry store owner explained the situation.
A diamond, born from compressed carbon, is just an unremarkable rock if not polished; its value changes depending on how it is cut. After being cut to proper proportions and polished by expert hands, it undergoes meticulous grading by appraisers. In the trading process, its value depends on the grade received on the certificate, and there are numerous types of certificates. The globally recognized GIA (Gemological Institute of America) is a leading gemological laboratory. Others include Europe’s EGL and IGI, along with dozens of labs in various countries. In Korea, numerous labs like Wooshin, Mijo, and Hyundai also determine diamond grades.
When labs grade diamonds, the 4Cs are central: Cut, Carat Weight, Color, and Clarity. Who established these criteria? The concept of the 4Cs was first proposed in 1939 by De Beers, the world’s largest diamond mining, trading, and processing company, founded 125 years ago in 1888. ‘Cut’ is the most important factor determining a diamond’s beauty, cut into shapes that maximize its brilliance, such as Round Brilliant, Pear, Oval, Emerald, Princess, and Cushion cuts.
‘Carat Weight’: One carat equals 0.2g, originating from the use of carob tree seeds to weigh gems. One ounce is 142 carats, and experts call 1 carat 100 points. High-carat diamonds are rare, so their value increases exponentially with carat weight.
Diamond ‘Color’: Traditionally, the more colorless (white tone) and transparent, the higher the value, graded from D, E, F to Z based on nitrogen content causing yellow or brown hues. Exceptionally vivid colors are classified as Fancy Colors, not on the D-Z scale. Among similar conditions, fancy color diamonds are graded in order of red, pink, blue, green, orange, yellow, brown, but their rarity makes them highly valuable.
‘Clarity’: The fewer the inclusions, the higher the clarity grade, divided into 11 grades: FL (Flawless), IF (Internally Flawless), VVS1, VVS2, VS1, VS2, SI1, SI2, I1, I2, I3.
On November 12, during a resurgence of COVID-19 in Europe, a 14.83-carat pink diamond sold for $26 million (approx. 28 billion won) at a Sotheby’s Geneva auction, setting a record price for a ‘Fancy Vivid Purple-Pink’ grade stone. Two months earlier, in September, a 102.39-carat diamond was offered at a Sotheby’s Hong Kong auction without a reserve price. Sotheby’s did not even announce an estimate and conducted simultaneous online bidding.
This unprecedented bold move, interpreted as leaving a colorless D-color, flawless ‘Flawless’, Type IIa diamond (considered the purest due to no nitrogen) to market forces, surprised the industry. Starting at $1, this mega-diamond found a new owner for $15.7 million (approx. 17.4 billion won).
Despite COVID-19 grounding flights and making social distancing routine, ultra-high-value jewelry continues to sell steadily. Auction houses have clearly struggled to find breakthroughs, evident upon closer inspection. High jewelry, commanding astronomical prices, requires thorough previews, making it a delicate and demanding category. When large-scale previews and live auctions stalled early in the pandemic, companies quickly activated online auctions, pouring resources into contactless services and digital previews. Consequently, Christie’s and Sotheby’s ‘online jewelry auctions’ have broken price records twice in the past six months, engaging in fierce competition. Christie’s Geneva ‘Magnificent Jewels’ auction in November achieved an 89% sell-through rate. Whether driven by revenge spending amid pandemic restrictions or economic anxiety, the desire to acquire high jewelry is higher than ever.
Today, high jewelry is also thriving as an investment. In traditional societies, gem ownership was legally restricted to specific classes, dependent on social order. Now, anyone with money can own it. However, properly understanding its value and context solves the part not differentiated by money and power alone, as the focus shifts from symbols of wealth and power to displays of discernment and taste. Today, taste has become another name for class, and the ultimate power is owning what others cannot. Moreover, jewelry doesn’t end with acquisition; it can be worn and, due to its unique durability, retains its intrinsic value over time.
Jewelry value can be divided into material, fashion, emotional, and socio-cultural value, depending on purpose. These elements work together to create special value for individuals. Those prioritizing material value rationally assess the worth of the gemstones and precious metals. For example, diamond grades or gold weight allow quantitative calculation, making quality-to-price or price-to-quality the judgment criteria. Unlike fine art, jewelry can be worn to complete a personal fashion statement. Satisfaction doubles when understood as ‘wearable’ art objects, not just occasional display pieces. Wearing it also showcases one’s taste and discernment, essential for modern individuals focused on self-expression.
Emotional value in jewelry stems from the psychology of purchasing idealized dreams and symbols of victory. Buyers of luxury brand jewelry tend to seek satisfaction from both socio-cultural values (brand image, prestige, cultural resonance) and personal emotional value. Here, the joy of fulfilling desires for comfort and happiness takes precedence over rational judgments of price and grade.
For investment, the intrinsic value of the raw material plays a significant role in jewelry. People crave what others don’t have, so high-quality rare gems have an advantage due to limited supply. A small stone of excellent quality can be more valuable than a large stone of ordinary quality. For white diamonds, value is assessed by the 4Cs: Carat, Color, Clarity, Cut. With equal weight, the more colorless, the fewer inclusions, and the more precise the cut, the higher the value. For investment, choosing stones over 5 carats and of the highest grade is advantageous.
However, the keyword defining 21st-century high jewelry is ‘color’. Unlike white diamonds, color carries absolute weight in evaluating fancy color diamonds and colored gemstones. For colored stones, preferred origins and colors vary by gem type, and whether the color is natural or treated critically impacts value assessment. Therefore, a reliable certificate from a credible institution stating origin and treatment status is essential.
Recently, super-rich investors’ interest has focused on fancy color diamonds with deep hues. Colored diamonds occur roughly once in every 10,000 white diamonds. The production of highly popular pink diamonds constitutes only about 0.03% of total diamond output. Compounding this, Australia’s Argyle mine, which produced 90% of the world’s pink diamonds, recently closed.
For example, high-quality pink diamonds are valued at about 20-50 times more than comparable white diamonds. Blue diamonds also enjoy popularity among investors rivaling pink diamonds. Purchases concentrate on the top color grade, Fancy Vivid, and the next grade, Fancy Intense. For yellow diamonds, which have relatively abundant output compared to pink, blue, and green, interest focuses on top-grade, large-carat stones.