The Diamond Pro

Lab-Created Diamonds: Prices & Value

By Michael Fried
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BOTTOM LINE RECOMMENDATION

The price of lab-created diamonds have plummeted in recent years, and we predict that trend will continue. With lab-created diamonds, the resale value is zero. Jewelers don’t want to buy back lab-grown diamonds and if you try to sell them on eBay, you’ll get pennies on the dollar. That’s one of the reasons we recommend buying a natural diamond from a reputable online vendor like Blue Nile or James Allen. You’ll get a beautiful, real diamond at a fraction of the price of what you can find in bricks and mortar stores.

Having said that, if you’re intrigued with the idea of a lab-created stone and not bothered by seeing your diamond on sale for a lower price, you can get more bang for your buck by going with a lab-created diamond. We recommend James Allen for lab-created diamonds. They’re IGI certified and their high-end photography allows you to view each diamond up close before purchase.

OVERVIEW OF LAB-CREATED DIAMONDS

Lab-created diamonds are man-made diamonds that mirror the qualities and appearance of natural diamonds. These synthetic stones consist of carbon atom structures with the same chemical and visual characteristics of natural diamond crystal. For example, this stunning 2.77ct is a lab-created diamond. It’s a beautiful stone, but the value and resale value is incredibly low.

DIAMOND PRO DECLARATION

We believe diamonds are beautiful and a great choice for high-end jewelry, but we don’t buy into the marketing that you must buy a diamond for your engagement ring.

In other words, our goal isn’t to persuade you to buy a diamond. We’re here to help you get the best bang for your buck. We work to find the right balance of quality and size for your budget, all while avoiding rocks or pitfalls along the way.

We also agree that synthetic diamonds look exactly like natural diamonds (as long as we’re referring to lab-created diamonds and not diamond simulants or cubic zirconia). I won’t go into the technical details of how diamonds are made because that’s not the issue. The main concern is value and wanting our readers to make smart, long-lasting purchases.

This article focuses on the value and prices of lab-created diamonds. If you’re interested in the ethical issues related to diamond buying, see this comprehensive article.

PRICES OF LAB-CREATED DIAMONDS

Just as with natural diamonds, the prices of lab-created diamonds fluctuate greatly. They can be as low as this 1.08 Carat for $1,960 or as expensive as this 4.03 Carat for $95,890.

Here are the main factors that impact the price of lab-created diamonds:

Shape: The most popular diamond shape is the round brilliant and also the most expensive. That’s partly because Round Cut diamonds offer the most brilliance and sparkle. After that, Oval Cuts and Asscher Cuts are the next most expensive.

Cut: A diamond’s cut impacts its beauty more than anything else. An ideal or excellent cut diamond will be more stunning and more expensive than a “Good” or “Very Good” cut diamond.

Carat Weight: The weight of the diamond, such as 1 or 2 Carats, affects its price. Typically, the heavier the stone, the more it will cost.

Color: Lab-created diamonds are graded by the IGI on a scale of D to Z. A D colored diamond is colorless, while a Z diamond has a noticeable yellow or brown tint. Diamonds with a better color grade will be more expensive, but the difference isn’t always noticeable. That’s why we recommend looking for a diamond in the G-J range, because they look colorless to the naked eye but cost far less than D, E, and F colored diamonds.

Clarity: When we talk about diamond clarity, we refer to how clean it is of blemishes and inclusions. Diamonds without inclusions will be more expensive than diamonds with noticeable imperfections. We recommend looking for VS1 and VS2 diamonds because they’ll be eye-clean but cost much less than FL or VVS diamonds.

Certification: The certification itself doesn’t increase or decrease a diamond’s price, but verifies what it is you are paying for. We recommend an IGI certificate for lab-created diamonds. The IGI offers the most extensive and reliable grading for lab-created diamonds. By choosing an IGI certificate, you’re ensuring that the diamond you’re getting is what the sellers say it is.

LAB-CREATED DIAMONDS VS. REAL DIAMONDS

Lab-created diamonds are made over the course of several weeks, while real diamonds take billions of years to form. Lab-grown diamonds are created through a high-temperature carbon growing and compression process. Real diamonds are cut from a rough stone into the shape and carat weight that’s desired. Similarly, once a synthetic diamond is grown, a cutter forms the shape.

Placed side by side, a lab-created and a natural diamond look nearly identical. The price and value, however, differ—sometimes dramatically. For example, this 1.11ct H VS2 lab-created diamond looks almost exactly like this 1.10ct H VS2 natural diamond. The lab-created stone costs $3,640, while the natural diamond costs $5,280. That’s a 45% difference in price.

However, the lab-created diamond doesn’t retain any value. It can’t be resold to a jeweler and it won’t garner more than a few dollars on a site like eBay. On the other hand, the natural diamond can be resold for at least 50% of the original price—but potentially much more.

ARE LAB-CREATED DIAMONDS WORTH ANYTHING?

Lab-created diamonds have no resale value. That means if you buy a lab-created diamond, you won’t be able to reap any part of what you paid for it. For example, if you bought this 1.20ct lab-created diamond, you’d have a beautiful stone, yet no jeweler will buy it back. If you try to sell it on eBay, you’ll get pennies on the dollar. From a value perspective, you’d need to buy a lab-created diamond at a massive discount to justify giving up the value retention of natural diamonds.

ARE LAB-GROWN DIAMONDS CHEAPER?

Lab-created diamonds are cheaper than natural diamonds but they’re a worse bang for your buck since there’s no resale value. As we explain in this article, you shouldn’t view your diamond as an investment, but you shouldn’t ignore its value entirely.

For example, let’s say an average natural diamond retains about 50% of its value after purchase. Eventually, the value of the diamond will rise (historically, diamond prices rise consistently). If you ever try to sell your diamond, you should get at least half (or possibly much more) of your original purchase price.

Here’s an example: this is a stunning 1.21ct diamond that we found. Its an incredible value at $5,866. We asked companies that purchase diamonds how much they’d offer for it. They thought the diamond was stunning and were willing to pay $3,150. That’s 54% of the original purchase price. If diamond prices rise (as they historically do), the value only increases.

With a lab-created synthetic diamond, you would not have the same experience. For instance, this beautiful 1.33ct lab-created diamond costs $3,800. It’s cheaper than the similar natural diamond we just talked about. However, if you were to try and resell it, you might make $50 or less.

WHY ARE LAB-CREATED DIAMONDS SO EXPENSIVE?

The process for creating synthetic diamonds isn’t cheap. It requires specialized machinery, diamond-growing experts, diamond cutters, and more. Different than cubic zirconia or moissanite, lab-created diamonds involve either High Pressure-High Temperature (HPHT) or Chemical Vapor Deposition (CVD) processes. In order to multiply the carbon atoms and compress them into a diamond, they need time, innovative technology, and expertise. That’s why a beautiful 1.52 carat lab-created diamond will still cost you $6,020.

PLUMMETING VALUE OF LAB-CREATED DIAMONDS

In the last three years, the price changes in the lab-created market have been absolutely alarming. We recently did our own comparisons with products from the major online retailers of lab-created diamonds (MiaDonna, Diamond Foundry, and Brilliant Earth) to natural diamonds from Blue Nile. We use Blue Nile as our baseline because they’re the largest, most reputable online diamond retailer.

We compared a GIA certified diamond from Blue Nile to an IGI certified diamond from Brilliant Earth. For lab-created diamonds, IGI Certified diamonds are the standard. The GIA, on the other hand, is what we recommend for natural diamonds. As we explain in our IGI article, it’s a much more “generous” laboratory, so we adjusted the grades accordingly.

Price Comparison: Beginning of 2017

For the lab-created stone, we chose Brilliant Earth’s 0.70 I VS1 IGI certified round diamond for $1,870. For the natural diamond, we used Blue Nile’s 0.70 J VS2 GIA certified round diamond for $1,499. Take a look at both diamonds to evaluate the quality for yourself. For these two identical diamonds, the lab-created choice was 25% more expensive than the natural diamond.

At the time, we also compared 12 other pairs of natural vs. lab-created diamonds. On average, the lab-created diamonds were 23% more expensive than similar real diamonds.

Just one year later, the difference is staggering.

Price Comparison: End of 2017 to present

From the example above, you can see that at the beginning of 2017, lab-created diamonds were actually higher priced than their natural diamond counterparts. By the end of 2017 leading up to today, there’s a very different landscape. Prices have dropped dramatically for man-made diamonds while prices for natural diamonds have increased slightly. The change is dramatic.

To show this more vividly, let’s take a look at more comparable diamonds from Blue Nile and Brilliant Earth. With the lab-created diamond, you can find a 0.72 I VS1 IGI round diamond for only $1,350. Through Blue Nile, you can find an identical natural diamond for $1,963. The natural diamond is now more expensive than the lab-created stone.

The natural diamond price change was expected. Diamond prices historically rise at a steady rate. That’s why you shouldn’t completely discount the “investment value” of a diamond.

On the other hand, the price of the lab-created diamond was alarming. In just one year, the price of the two identical diamonds dropped 30%. What’s worse is that the prices might drop even further.

It’s important to note that this isn’t a one-off comparison either. We analyzed several diamonds and the trend is the same. As an example, a one carat I VS lab-created diamond cost $4,100 at the beginning of 2017 and now is down to $2,850 (a 35% drop).

When doing these comparisons, we came upon a fascinating phenomenon that highlighted the alarming nature of the price change. When we reviewed at diamonds on Diamond Foundry (made famous by their movie-star investor), we noticed the prices of larger diamonds dropped at a faster rate than smaller stones. This distinction shows that the major roadblock in pricing is merely manufacturing expenses. The price will continue to fall because the technology will become less expensive. In other words, there is no inherent value in the product.

Overall, the price of lab-created diamonds has halved in the last two years according to a report published by Bain & Company.

LAB-CREATED GEMSTONE PRICES: DÉJÀ VU

The market for lab-created diamonds is eerily similar to what happened with lab-created emeralds. Emeralds were (and still are) one of the rarest precious gemstones in the world. Technology innovations allowed manufacturers to replicate a natural emerald and create a virtual copy.

I recently had the chance to talk with a former CEO of one of the largest lab-created emerald wholesalers (the CEO wishes to remain anonymous).

When lab-created emeralds burst on the scene in the early 1990s, people were excited and jumped on the bandwagon. These synthetic emeralds popped up in jewelry all across the United States. But it didn’t stop there.

“As with any technology, as the demand increases, the competition floods in. The prices for lab-created emeralds plummeted below any level we could have imagined. One day we were selling lab-created emeralds for hundreds of dollars per carat. The next day the price was in the $40 per carat range,” the former CEO recalls.

Soon after, people were buying synthetic emerald jewelry for $79 to $99. Lab-created emeralds were popular for a year or two, then the excitement faded away. You can still buy them, but they’re far from in-demand.

ARE LAB-CREATED DIAMONDS A FAIR COMPARISON?

Is it fair to compare lab-created emeralds to diamonds? Yes and no. From a technical perspective, it’s hard to imagine that the price of lab-created diamonds won’t continue to plummet. There’s no cap on supply and economies of scale, and innovations in technology continue to progress. These factors will all continue to force the price down.

Will lab-created diamonds fade away in popularity? That’s a trickier question. Emeralds are beautiful, no doubt about it. But the diamond market has positioned itself as a must-have when getting engaged (hats off to De Beers’ incredible marketing for the last 80 years).

If I were to pull out my crystal ball, I’d say that lab-created diamonds will thrive in the market for engagement rings priced under $1,000. Similar to the emerald market, no one that’s investing a hefty sum of money will be interested in a lab-created diamond. But if you’re looking at a dull, low-quality diamond from Zales or a lab-created diamond, many people might still opt for a lab-grown stone.

PURCHASING A LAB-CREATED DIAMOND TODAY

If you’re in the market for a diamond engagement ring, you can technically save money by going with a lab-created diamond instead of a natural diamond. But in essence, you’d be throwing your money away. Why spend a few thousand dollars on something that’ll be selling for a fraction of the price in the near future?

Other than sheer price, you might be interested in a lab-created diamond for other reasons. Perhaps you’re an engineer and are intrigued with the technical process of lab-created stones. Or maybe you’re looking for an ethical and environmentally-friendly choice. Even if you were to choose a lab-created stone for these reasons, the value of them is so low, we don’t believe it’s worth it.

BOTTOM LINE ON LAB-CREATED DIAMONDS

We’re not saying you should buy into De Beers’ marketing BS and choose a diamond for your engagement ring. But if you do opt for a diamond, we strongly recommend a natural diamond over a lab-created one. Investing a hefty sum of money on a product that’s likely to be sold for a fraction of what you paid doesn’t seem like a good purchase.

About the author
Mike learned the diamond business from the ground-up at Leo Schachter Diamonds - one of the world's top diamond manufacturers. He has been recognized as a diamond industry expert by Time, PeopleMoney, The Daily Mirror, NerdWallet, The Times Herald, Yahoo Finance Australia, The Art of Charm, The Washington Diplomat, The Next Web, and more. See more
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