If you walk into a jewellery store, to browse the diamond jewellery for a Valentine’s Day gift, you might not notice any difference in the gems. However, since last fall, customers there have been given an unusual choice: diamond from below ground or from above the ground.
Diamonds, among the hardest materials in world, are formed from millions of years of geological pressure, and must be extracted from mines deep in the earth. This labour-intensive process, along with tight industry manipulation and marketing that leads to a perception of rarity and mystique, drives their prices.
But the aboveground versions are not imitation diamonds, like cubic zirconia or moissanite. They are stones that have the same chemical properties of diamonds but were made in a laboratory.
Over the past five years, the quality of synthetic diamonds — first produced in the 1950s for industrial uses like cutting and polishing — has increased to the point where they have made their way into jewellery stores as gems set in rings, necklaces and earrings.
At jewellery stores, Lab Grown diamonds or Synthetic Diamonds are sold under different label to distinguish them from natural diamonds. “Grown” diamonds or “Synthetic” diamonds— a term the Diamond Producers Association disputes as misleading — cost consumers 30 to 40 per cent less than natural diamonds.
Not surprisingly, companies like De Beers, Rio Tinto and other members of the Diamond Producers Association have cried foul, saying lab diamonds are inauthentic. The manufacturers of synthetic diamonds, on the other hand, are promoting the environmental benefits of their process, hoping to attract millennias more concerned about being green and saving money than embracing the tag line “a diamond is forever.”
However, it may turn out that the buyers of these synthetic diamonds, particularly those trying to get more diamond for less money, may lose out in the end.
Let us start with how synthetic diamonds are made. The process can be completed in as little as three months. There are two approaches. One simulates the crushing force of the earth by applying high temperature and high pressure to dissolve carbon into a diamond seed. The other is akin to a 3-D printing approach, with pieces of carbon being layered on a diamond seed in a vacuum chamber.
The result is a diamond that has the same properties as a natural diamond but different and distinguishable crystal patterns.
This is not the first time gemstones have been manufactured. In the late 1800s, Auguste Verneuil, a French chemist, manufactured the first synthetic rubies. His process has also been used to make synthetic sapphires and synthetic emeralds. Cultured pearls, where an irritant is placed into the oyster to create a pearl, have been made since the 19th century in Japan.
The first synthetic diamonds were created in the 1950s for industrial uses by General Electric. They did not approach gem quality until the 1970s and 1980s, beginning with coloured diamonds.
Tom Moses, who oversees the laboratories and research at the Gemological Institute of America, said it was not until the past five years that synthetic diamond producers began to create stones that could compete with natural diamonds — and fool people into buying them.
They look the same to the naked eye, but many in the diamond trade say they are deceiving buyers.
“It’s almost a fraud on the buying public to say they’re the same thing as diamonds from an economic standpoint,” said Tom Gelb, a co-founder of the Diamond Durability Laboratory and a consultant to the diamond industry.
Mr Gelb bets that the value of synthetic diamonds will drop as production costs fall. It is a gem’s rarity, he says, that maintains its value. If price is the issue, he suggests sticking with a proven fake, cubic zirconia: “You can get one for $25, so why would you pay $3,500 for a synthetic diamond?”
Pricing in any industry is governed by the principles of demand and supply. As the price for grown diamonds are less compared to natural diamonds, millennial generation is showing preference for buying grown diamonds. This is driving demand in the synthetic diamond segment, and as there are no restrictions on the supply of grown diamonds, lab diamond producers are increasing their production to meet the increasing demand.
However, when the supply increases it leads to reduction in prices. This is true for lab-grown diamonds too. Prices of lab-grown diamonds have decreased by 25 per cent in the past one year and diamond experts think that this trend will continue.
One argument for buying gemstones is value appreciation over a period. The value of natural diamonds have historically increased over a period. But lab grown diamonds are beating this trend with decrease in value over a period.
Another reason buyers of lab diamonds would be hurt financially would be their ability to resale lab –grown diamonds. Alan Bronstein, a diamond trader who is president of the Natural Color Diamond Association, a trade group said that there was no secondary market for manufactured diamonds, largely because diamond traders will not deal in them. “If people think they’re getting a bargain when they buy a synthetic diamond, the discount that they’re getting is not considerable enough when you think of the possibility that they won’t be able to recover some financial benefit if they need to sell it,” he said.
This holiday season, the sale of lab-grown diamonds would be to customers who had not thought of buying diamonds or have a strict budget and would bargain for a bigger rock than a natural diamond available in the said budget. In both cases, customers would end losing almost everything they spent on buying the synthetic diamond because of decreasing prices of synthetic diamonds and a lack of resale market. From the above facts, we can say that lab-grown diamonds are bad value creators and thus should be avoided.