Among rising prices for just about everything, the world’s hardest stone is bucking the trend. If you’re shopping for an engagement ring or other gem-adorned jewellery, you’ll find diamonds are delivering increasingly more bling for your buck.
That’s thanks to falling prices for lab-grown diamonds, which are baked in high-pressure or vacuum chambers rather than mined from deep inside the earth. Better technology and a growing supply mean synthetic diamonds are now selling for between 75 per cent and 90 per cent less than their natural equivalents, according to New York-based diamond industry analyst Paul Ziminsky. The discount was only around 10 per cent in 2016, he said.
If you’re in the market for an engagement ring, that means you might be able to spend less than $2,000 on a one-carat diamond, instead of dropping around $7,000 on a natural one. But when it comes to buying what is possibly the world’s best-marketed symbol of everlasting love, there is more to consider than the price per carat.
Are synthetic diamonds as good as mined ones? Do they hold their value? And are they truly more sustainable, as manufacturers claim? Those are some of the questions consumers face amid a cacophony of conflicting information and half-truths from lab-diamond producers and the traditional diamond mining industry.
To be sure, lab-grown diamonds aren’t ersatz gems. Unlike popular diamond imitations, like cubic zirconia or moissanite, they are the real thing – and just as durable.
In 2018, the U.S. Federal Trade Commission declared that synthetic diamonds are authentic diamonds. In some cases, even trained gemologists might not be able to tell a lab-grown version from a mined one without using special equipment, according to the Gemological Institute of America (GIA).
John Ollmann, owner of Calgary-based jewellery store Crazy Diamond Johnnie, has a go-to tagline to help his clients grasp the difference between a natural and a synthetic diamond. “The only one that can identify it,” he likes to say, “is your wallet.”
But a more complicated question revolves around diamonds as a store of value. Natural diamond prices typically rise by 2 per cent to 3 per cent a year on average, said Bhushan Vora, owner of Vaughn, Ont.-based Gem Star Inc., a jewellery manufacturer and wholesaler that also provides appraisals.
That, though, doesn’t mean you can sell a natural diamond for what you paid for it, Mr. Vora said. Jewellers will pay you about 50 per cent of the retail price, he said.
Reselling a lab-grown diamond, on the other hand, can be a challenge, according to Mr. Vora. The product is so new there isn’t yet an established market for pre-owned lab diamonds, which makes jewellers reluctant to buy them, he said.
That can be a rude surprise for some people, Mr. Ollmann said. Many jewellers allow shoppers to return their diamond purchase within 30 or 60 days. But if you miss that window with a synthetic diamond, you may be out of luck. He’s seen a buyer who couldn’t off-load an unwanted engagement ring with a synthetic stone for anything beyond the value of its gold ring band, he said.
Despite that, with synthetic diamonds now selling for so much less than their mined equivalents, you might be out less money with a lab-grown gem you can’t off-load than with a natural diamond you can sell for much less than what you paid, Mr. Ollmann said.
Mr. Ollmann’s target client is the budget-conscious jewellery buyer. His signature attire in a series of marketing videos on YouTube involves a golden wig and bow tie along with rainbow suspenders. But lab-grown diamonds appeal to a range of consumers, and have become ubiquitous at jewellers across the country, including at chains like Michael Hill and Spence Diamonds. Even mining giant De Beers Group now sells them, through its Lightbox jewellery brand.
A thornier question around lab-grown diamonds is whether something that’s become so affordable and easier to produce can continue to carry luxury status.
Making a diamond involves getting carbon atoms to bond around a tiny diamond crystal to form a stone almost identical to those created inside the Earth over billions of years. In the lab, the process now takes a matter of weeks.
And with more and more companies getting into the diamond-making business, supply has soared and prices dropped, said Edahn Golan, a diamond industry analyst based in Tel Aviv.
Consumers are increasingly embracing the cheaper, synthetic gems. Sales now account for around 15 per cent of the US$89-billion-a-year global diamond jewellery market, up from around 1 per cent in 2016, according to Mr. Ziminsky.
Some diamond industry analysts believe artificial diamonds are about to become their own market, separate from that for the traditional – and more exclusive – one for mined diamonds.
Mr. Ziminsky sees lab diamonds becoming the stuff that ends up in cheaper jewellery like charm bracelets. Engagement rings, on the other hand, are a symbolic and emotional purchase, he said.
“The reality is, a $500 engagement ring just doesn’t pack the same punch as a $10,000 engagement ring,” he said.
At the same time, lab-created gems have opened the diamond market to people for whom it was previously out of reach, Mr. Golan said. Others – including those shopping for engagement rings – are simply buying a bigger rock rather than spending less on the purchase, he added.
As recently at 2015-16, the largest jewellery-quality synthetic diamonds were under 1.5 carats. Now you see lab-made gems in excess of 10 carats, Mr. Ziminsky said.
Price and size aren’t the only selling points for lab-created diamonds – they’re often the more sustainable choice, many consumers are told.
From an environmental point of view, “there’s no doubt that synthetic diamonds come out better,” said Saleem Ali, professor of energy and the environment at the University of Delaware.
Making diamonds is an energy-intensive process, and China, a major supplier, relies heavily on coal for the job. But some producers exclusively use renewable energy to cook up diamonds, Prof. Ali said. Israel-based Lusix, for example, uses only solar power to make its lab-created gems.
Diamond mines, by contrast, cannot run on renewable energy, although some have made efforts to add sources like solar and wind to the mix, Prof. Ali said.
The energy used by mines is not the only concern with the industry. Diamond mining has long been tainted by ethical concerns ranging from environmental damage through to conflicts, corruption and forced labour.
While diamond profits are still linked to conflict in places like the Democratic Republic of the Congo and corruption in countries such as Zimbabwe, the mining sector has considerably cleaned up its act since the 1990s, Prof. Ali said.
The industry now uses the Kimberley Process, a UN-established system designed to track the origins of the diamonds and reduce the flow of conflict diamonds. Consumers know they are purchasing an ethically-sourced diamond if a jeweller can produce a certificate showing where the gem came from, he said.
And in countries like Botswana, what Prof. Ali calls “relatively responsible” diamond mining turned one of Africa’s poorest countries into one of the continent’s wealthiest per capita.
Synthetic diamond production, however, doesn’t offer those employment and wealth-creating opportunities in the developing world.
Despite the cheaper price tag for a lab-grown diamond, some consumers will always be drawn by the allure of the story of a stone mined in a remote part of the world and how it helped that community.
Others just want “a nice, flashy one-carat diamond that they can afford – and they’ll get a synthetic diamond,” he said.
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