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The lab-created diamond market seems to be having the rug pulled out from under them. If you purchased a lab-created diamond just one year ago, you would see the same diamond on sale for a fraction of the price you paid then. This has created a unique opportunity as well as some risks that we will discuss below.
If you are on a budget and are not as concerned about the timelessness of a natural diamond, you can get a beautiful lab-created diamond at an excellent price. We recommend James Allen for lab-created diamonds. Take a look at this stunning 1.73ct diamond for an incredible price. There is no way you can get a natural diamond similar to this for anywhere close to the same price.
If you are concerned that the ring you purchase today may be in store displays for a fraction of their current price, then buying a lab-created diamond may not be the best choice for you.
Lab-created diamonds (which have also been referred to as lab-grown diamonds, synthetic diamonds, artificial diamonds, cultivated diamonds or cultured diamonds) are man made diamonds that mirror real, natural diamonds. Because they actually consist of carbon atoms structures, lab-grown diamonds display the same chemical and optical characteristics of a natural diamond crystal produced by the geological processes of Mother Nature. Synthetic diamond prices are generally lower than real diamonds, and the price of lab-created diamonds continues to drop (as much as 30% in a year). This is due to lab-grown diamonds not having any resale value and that the demand for lab-grown diamonds continues to decrease.
Take a look at this stunning 2.77ct lab-created diamond. There is no questioning its beauty. But when looking at lab made diamond prices and value, there’s more to consider than what initially meets the eye.
While we think diamonds are beautiful and a great choice when you’re looking to make a high-end jewelry purchase, we don’t buy into the marketing that De Beers has rammed down our throats for a century, convincing people that you must buy a diamond when you get engaged. The founder of this site even wrote an article for Huffington Post to that effect.
Our goal is not to convince people that they should buy a diamond.
We are here to help people who are buying diamonds to get the best bang for their buck. We find the right balance of quality to get the biggest diamond you can within your budget and help you avoid any rocks or shoals along the way.
Let’s get one thing out of the way: I agree that synthetic diamonds look exactly like natural diamonds (so long as we’re referring to lab-grown diamonds, not diamond simulants or cubic zirconia). I’m not going to get into the technical details of how they make diamonds because that is not the issue.
Take a look at this diamond ring. What do you think of it? Does it look like a diamond? Yes it does, because it is one.
This article focuses strictly on the questions of value of lab-created diamonds. If you’re interested in the ethical issues related to diamond buying, see this comprehensive article.
Lab-created diamonds and natural diamonds differ primarily in how they’re made but also other qualities like price, resale value, rarity and desirability. Here, we give a breakdown of lab-created diamonds vs. natural diamonds:
|Lab-Created Diamonds||Natural Diamonds|
|Lab-grown in a matter of weeks||Formed under the earth’s crust over billions of years|
|Constructed of carbon atoms structures||Constructed of carbon atoms structures|
|Lower price with no resale value||Higher price with resale value at 50%+|
|Available in a range of shapes and carat weight||Available in a range of shapes and carat weight|
|Somewhat desirable for engagement rings||Very desirable for engagement rings|
You can’t tell the difference between lab-created diamonds and real diamonds without specialized equipment, even if you’re a professional gemologist. The best way to tell the difference between lab-grown diamonds and real diamonds is to look at the grading report.
If a professional gemologist is determining if a diamond is real or lab-grown, they use magnification to look at the nature of the inclusions. The inclusions in a natural diamond appear slightly different than in a lab-created diamond. There are sometimes also differences in how the diamond reflects light compared with a synthetic diamond.
In general, though, when looking at a lab-created diamond next to a real diamond, you can’t distinguish the two.
This is the million dollar question that is not so easy to answer. In short, they are cheaper but they are worse bang for your buck. As we explain in this article, you shouldn’t view your diamond as an investment.
On the other hand, you shouldn’t ignore the value entirely. Let’s say an average natural diamond retains roughly 50% of its value after purchase. Eventually the value of the diamond will rise (historically, diamond prices rise consistently), so if you ever try to sell it, you should be getting at least half (or possibly much more) of the original purchase price.
I will give you an example. This is an absolutely stunning 1.21ct diamond that we managed to find. It’s an incredible value at the price of $5,220. We asked some companies that purchase diamonds from consumers how much they’d offer for it. They loved the diamond and were willing to pay $2,820 for it. That is 54% of the original price. If diamond prices rise (as they historically do), the value will only increase.
No matter the synthetic diamond price, lab-grown diamonds have no resale value. Take a look at this 1.21ct diamond. There’s no doubt that it’s a nice-looking diamond. Yet no jeweler will buy it back. If you try to sell lab-grown diamonds on eBay, you’ll get pennies on the dollar for it. So, from a value perspective, you would need to be buying man made diamonds at a massive discount to justify giving up the value retention of natural diamonds.
On the one hand, you can look at it that an earth-mined diamond will lose 50% of it’s value more or less immediately after purchase but a lab-created diamond will lose all of it’s value. But on the other hand, a lab-created diamond will start off being at least 50% cheaper than a comparable natural diamond.
This is one of those difficult calls that everyone needs to make for themselves.
We’re always working on our articles and making sure that the information and advice is up-to-date. It doesn’t help our readers when our assessments are off because of vagaries in the market, or changes in business practices. This article—specifically content about lab-grown diamond prices—was the fasted edit I’ve had to make, by far. The changes in the lab-created market in 2017-2018 have been stunning, and alarming.
Less than one year ago, we compared lab diamond prices from the major online retailers, Diamond Foundry, MiaDonna, and Brilliant Earth, to natural diamonds sold on James Allen.
If you want to skip the details below, here is an example of two diamonds we compared. One is a GIA certified diamond from James Allen, the other an IGI certified diamond from Brilliant Earth. As we explain in our IGI article, they are a much more “generous” laboratory, so we adjusted the grades accordingly.
Brilliant Earth offered a 0.70 I VS1 IGI certified round diamond (stone no longer available) for $1,870. James Allen had a 0.70 J VS2 GIA certified round diamond for $1,590. You should take a look at both diamonds to see the quality for yourself.
So for identical diamonds, the lab diamond’s price was 25% more than the natural diamond. At the time we compared 12 diamonds from numerous lab-created diamond retailers. The average came out to about 23%
Just one year later, the difference is staggering.
At the beginning of 2017, you can see from the example above (we did 10 such comparisons at the time and this one was about average) that lab diamond prices were actually higher than natural diamond counterparts. At the end of 2017, we have a very different landscape. Lab-grown diamond prices had dropped precipitously while prices for natural diamonds have increased slightly. The change is dramatic.
For ease of comparison, let’s take a look at comparable diamonds to the ones we used above from James Allen and Brilliant Earth. With the lab-grown diamond, you can now find an identical diamond for only $1,350. If you look at the natural diamonds from James Allen, an identical diamond is now a bit more expensive, coming in at $1,890.
The natural diamond performed as expected. Diamond prices have historically risen at a steady rate. This is why you shouldn’t completely discount the “investment value” of a diamond.
As expected as the natural price was, the lab diamond’s price was alarming. In just one year, the price dropped 30%. The worst part about it is that there’s no reason for the prices not to drop even further. How would it make you feel purchasing something special, which you felt carried value, and seeing it in a store for a fraction of the price you paid a year later?
This is not a one-off comparison. We analyzed many diamonds and the trend is the same. For example, a one carat I VS diamond cost $4,100 in 2017 and now is down to $2,850 (a 35% drop).
We even saw a fascinating phenomenon that highlighted the alarming nature of the synthetic diamond price change. When looking at diamonds on Diamond Foundry (made famous by their movie-star investor), we noticed that the price of larger diamonds dropped at a faster rate in comparison to others. This shows that the major roadblock in pricing is merely the manufacturing (which will continue to fall), and that there’s no inherent value in the product.
In all, the price for lab-created diamonds have halved in the last two years according a report published by Bain & Company.
The market for lab-created diamonds is eerily similar to what happened when lab-created emeralds burst on the scene in the early 90s. At the time, emeralds were (and still are) one of the rarest precious gems on the market. Innovations in technology allowed manufacturers to replicate a natural emerald and create a virtual copy. I recently had the chance to sit down with a former CEO of one of the largest lab-created emerald wholesalers (the CEO wishes to remain unnamed).
People were excited and started to jump on the bandwagon. Lab-created emeralds started popping up in jewelry pieces in reputable jewelers all across the United States. But it did not 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 a carat. The next day the price was in the $40 per carat range” recalls the former CEO.
Soon thereafter, people were buying “emerald” jewelry in Service Merchandise (and old school catalog discount retailer similar to Sears) for $79 or $99. They were popular for about a year or two, then faded away. You can still buy them, but they are about as far from popular as can be.
Is it fair to compare lab-grown diamonds to emeralds? Yes and no. From a technical standpoint, it’s hard to imagine that lab-grown diamond prices won’t continue to plummet. There is no cap on supply and economies of scale (along with innovation) will continue to force the price down.
Will they 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 purchase when getting engaged (hats off to DeBeers for incredible marketing the last 80 years).
Well, what about someone in the market for an engagement ring today? You can definitely save some money by going with a diamond ring like this in comparison to a natural diamond. But you must be OK with the strong possibility you’ll be seeing something similar in the future going for much less money.
There can be other reasons for going with a lab-created diamond (I have had readers contact me that were engineers wanting a ring, earrings or a pendant and were in love with the fact that it was created instead of natural), but you should recognize that lab-created diamonds will lose most of their value.
We’re not telling you that you should buy into De Beers marketing BS. You certainly shouldn’t feel compelled to buy a diamond. But if you are, you need to be aware of the value issues. I would not be keen on investing such a hefty sum of money on a product if it’s likely that I’ll be seeing the identical product sold for a fraction of what I paid for it in the near future. But if you all you care about is getting the most sparkle for your money, you’ll get more “WOW” for your dollar with a lab created diamond.
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