On January 13, a patient infected with the newly-named COVID-19 coronavirus was identified in Thailand, the first known incidence of the disease spreading outside of China. By April 27, a little more than three months later, it was known to have infected more than 3 million people, although the actual figure is almost certainly several times that amount, in 210 countries and territories. More than one third of the planet’s population, and an overwhelming majority of individuals living in developed economies, had been placed under some type of lockdown.
COVID-19 had disrupted the world economy in unprecedented ways, shutting down entire economies and much of the movement of people and products between nations. Governments scrambled to react, balancing on one hand the threat to public health, and on the other the risk of economic collapse. It was an apocalyptic dilemma that few, if any, had imagined, let alone planned for.
But, as China first demonstrated, if strict measures are instituted, mainly through social distancing, it is possible to mitigate the spread of the outbreak, reducing the incidence of infected individuals to more manageable levels over an approximately eight-week-period. Consequently, during the second part of March, with the number of COVID-19 patients sharply down, China gradually began releasing its economy from lockdown.
By April, the pattern began to be repeated in parts of Europe, which was the second primary target of COVID-19. But other regions, which included the hardest hit nation, the United States, as well as Latin America, Russian, India and Africa were still in the midst of the epidemic, or only experiencing its initial growth phase.
NATURE OF COVID-19 RAISES QUESTIONS ABOUT ECONOMIC RECOVERY
For the diamond and jewelry industries, like many other sectors, the type of economic crisis posed by COVID-19 was unparalleled.
Business simply had been brought to a screeching halt, irrespective of the market conditions which had existed previously, which in general were stable.
This would ordinarily indicate a quite speedy return to business as usual, if the experience of countries like Israel, which are familiar with shutdowns brought about BY military conflagrations, is anything to go by.
Although there are exceptions to the rule, a ceasefire agreement will generally be followed by the markets returning to normal activity within a surprisingly short period of time, on condition that the underlying economic health of the nation has not been compromised.
To allow wheels of business to begin turning again, companies will need to live under restrictions that ensure continued social distancing, hygiene and safety standards, and the disinfection of both workplaces and products.
But COVID-19 raises a number of questions, the most important being that very little is known about the disease. Will the release of a country from economic lockdown lead to a resurgence in the number of infections, forcing the government to return to more restrictive measures, or will the incidence of the pandemic continue to decrease, as a growing percentage of the population develops immunity? Or will COVID-19 only be eradicated through the development of an effective vaccine, however long may that take?
What is definitely the case at present is that, while the virus still is present in the general population, a return to the world as it existed prior to January 2020 is unlikely. The wheels of business will begin turning again, but under restrictions that ensure continued social distancing, hygiene and safety standards, and the disinfection of both workplaces and products.
The rare Tutti-Frutti bracelet, which was sold by Sotheby’s on an online auction for $800,000.
WILL DIAMONDS AND JEWELRY BUCK THE TREND ONCE AGAIN?
For the luxury industries, including the diamond and jewelry sectors, operating businesses during a world health crisis, is particularly challenging. While major economies are resuming activity, the economic effect of the more than two months of inactivity have yet to be measured. Nonetheless, many economists believe that a worldwide recession is inevitable, and that surely will impact on consumers’ disposable income.
On the other hand, diamond jewelry has long had a habit of bucking the trend, for several reasons. One is the popular perception that a natural diamond is a store of value, and during times of uncertainty that is a sought-after characteristic. Second, diamond jewelry has a built-in safety-net, which is matrimonial jewelry.
Crises come and go, but during times of trouble, just like during times of plenty, people get married. And, when they do, they buy diamonds.
Anecdotal evidence suggests that, despite the trauma many have experienced, parts of the public at least have not lost their appetite for fine quality diamonds. The auction house Sotheby’s, which as a result of the lockdown was forced to cancel a large number of public events, has reported encouraging results from online sales of jewelry. This includes a rare Tutti-Frutti bracelet, which was due to be sold at a live auction in New York, but instead was sold online for $800,000.
Sotheby’s has run four online sales since the beginning of March, and in general they exceeded the company’s expectations. In total, the sales collectively brought in $6.1 million, more than the high estimate of $5.7 million.
“Clients are sequestering at home and, generally speaking, are leading relatively dreary lives,” said Catherine Becket, a specialist at Sotheby’s in charge of the Magnificent Jewels sales series. “They’re wearing their big diamonds inside their homes because it brings joy.”
“Everyone is waiting for this to be over,” she continued, “and I suppose knowing that a million-dollar piece of jewelry is waiting for you is a fulfillment of when things return to the new normal.”