How do Lab vs Earth mined Diamonds retain value- or trade up?

[Rockdiamond]

Hi All!
A common theme in discussions comparing Lab to Earth mined diamonds is value retention.....which relates to trade up.
It seems to me that both issues are so similar between Em and LG as to be insignificant.
In either case consumers have a hard time recovering full value. ..t it also seems to me that in both cases the diamond (wherever it was made) retains a better percentage than most other god consumers buy.
As a vendor I see no reason for sellers not to extend trade up as they would with EM diamonds.
Thoughts?
@DejaWiz

 

[lovedogs]

Neither retain value well. Some people think buying "earth grown" diamonds is a good investment and they are very wrong.

 

[Diamond Girl 21]

I would be much more likely to purchase a lab grown diamond if I had the option to trade up. I think it's a great feature, and would provide a bit of comfort for those of us who tend to want to change things up from time to time.

 

[anangel]

I agree that a trade up policy would both add significant value to the consumer and show that the vendor believes prices have hit a stable enough point where this is a viable option.
One of the arguments we often hear for lab diamonds is that they are essentially worthless in the second hand market and that the cost of production is going down to the point where they will be as common/cheap as CZs. It’s obviously not a person attack on anyone who goes the lab grown route, but I do believe those types of statements make people think twice before purchasing a LG diamond.
@Rockdiamond do you feel prices are relatively stable? I noticed DBL has a large and lovely selection of LG diamonds lately.

 

[Rockdiamond]

Neither retain value well. Some people think buying "earth grown" diamonds is a good investment and they are very wrong.

This is near and dear to me. On the one hand, I detest when people “oversell” aspects of anything I’m shopping for. So when I see diamond sellers claiming they’re a good financial investment, I cringe ( or put up a PS post
But don’t throw the baby out with the bath water.
Diamonds have traditionally held more value than most other consumer goods.
Speaking in broad terms- someone who bought a $25k diamond last year won’t easily be able to get back their $25k. But they certainly might be able to recover $12500. Sounds like a horrible investment- which you t is is the financial aspect was the primary reason for purchase.
Bit if you bought it to enjoy and fell on hard times ( heaven forbid) the $12500 might change your life.
*add to this that readers of PS are more likely to buy more desirable diamonds at non exaggerated prices

 

[aisa901]

I recently watched a YouTube video that did a great job trying to put this into perspective.

Here are my coles notes:

1.0 carat, natural mined, E color, no fluoro, VS1 clarity, triple "excellent" cut, round brilliant = $9030, resale = 40-60% or a loss of approx. $3612 - $5418 maybe more. This scenario also assumes you did not overpay for the diamond in the first place. The other option is an upgrade where you would recoup 100%.

1.0 carat, lab grown, E color, VS1 clarity, triple "excellent" cut, round brilliant = $2030, so right away, we have a savings of at least $6000 for a diamond with the same attributes. Assuming there is 0% resale value, there is a maximum loss of $2030. If you purchase your LGD from JA, there is a lifetime upgrade policy requiring you to spend double the initial cost of the stone and you can choose to upgrade to another LGD or a NMD.

Apparently there is some research which suggests that up to 70% of consumers (millennials) would consider a LGD for a CS for their ER. So it is feasible that a second hand market could exist based on consumer acceptability of a LGD for ER's.

The video goes on to show more cost comparisons for different carot diamonds.

My own thoughts:

Let's assume people are willing to pay 30% for a pre-loved LGD, in the example above where the stone cost you $2030, you would incur a loss of $1421... not bad imo, especially if you were able to get some years of enjoyment from the stone.

 

[Rockdiamond]

@Rockdiamond do you feel prices are relatively stable? I noticed DBL has a large and lovely selection of LG diamonds lately.

Where did I put that crystal ball….lol
Seriously- I’ve heard all that.
From my perspective: live for today( responsibly keeping an eye toward the future)
How many times have you ( or I) hesitated than wished we’d have acted?
So if I see some LG stones that represent value to me today, I might buy them.
By the way, if you’re in the business, buying Earth Grown diamonds ain’t for the faint of heart either.
No guarantees in either case.
Again, personal perspective- if we , as a vendor, buy and merchandise that LG diamond ( making jewelry, testing and photography, etc) it’s no longer a commodity.
But for sure, we live in “interesting times”
Who knows?
Bit it is fun to speculate

ps- thank you for the kind words about our stones!!

 

[Rockdiamond]

1.0 carat, lab grown, E color, VS1 clarity, triple "excellent" cut, round brilliant = $2030, so right away, we have a savings of at least $6000 for a diamond with the same attributes. Assuming there is 0% resale value, there is a maximum loss of $2030. If you purchase your LGD from JA, there is a lifetime upgrade policy requiring you to spend double the initial cost of the stone and you can choose to upgrade to another LGD or a NMD.

Excellent analysis of the dollars and loss involved!!
PS- other sellers also offer upgrades and interchange between LG and EM diamonds

 

[Garry H (Cut Nut)]

Firstly LGD double the carat weight costs less than double to grow and cut.
2xCt wt = <2x$'s
Natural (can we stop using loaded terms like earth grown and earth mined please folks - or others will start using synthetic):
Double carat weight and cost goes up by Four times.
2xCt wt= 4x$'s

At this time LGD are trading off natural rarity. That will stop as competition and over investment develop.

So David, expect the cost of your trade ups to be a smidge of your sell price.
$10k sale comes back and is worth $1-2k. Or at least make a 3 times add in cash.

 

[John Pollard]

I've heard of 'apples to apples' upgrade programs for LGD. Meaning, if you buy (example) - a 2.00 carat F VS1 IGI Ideal lab-grown today - whatever a stone with identical specs is selling for the day you return is your value toward upgrade.

 

[Garry H (Cut Nut)]

I've heard of 'apples to apples' upgrade programs for LGD. Meaning, if you buy (example) - a 2.00 carat F VS1 IGI Ideal lab-grown today - whatever a stone with identical specs is selling for the day you return is your value toward upgrade.

Makes perfect sense, could cause some debates though.

 

[denverappraiser]

About 5 years ago, colorless LGs were about 3/4 the price of the of otherwise similar natural diamonds. Now it’s about half that. That’s a clear and important shift but, like all trends, it’s a mistake to project that forward and say that they will therefore soon they will be zero. That’s not how the future works (usually). That said, dealers don’t like to carry inventory because of this. It affects the buyback market but in two ways. First, they obviously need to sell based on TODAYS prices, not where they were on some date in the past, and they need to buy accordingly. Second, they need to hedge their bets on the future. Getting stuck with a big inventory when prices are going down is a disaster. Jewelers are shy about inventory anyway, but LGDs are a particularly worrisome category. The result is a lot simply won’t buy them at all. It’s just a more conservative approach to these things.

 

[Alybetter]

Neither retain value well. Some people think buying "earth grown" diamonds is a good investment and they are very wrong.

I agree. The majority of people aren’t buying investment diamonds. I don’t intend to sell the lab stones I’ve purchased, but if I did, I assume I would get back less than 50%, maybe less than that. Which is about what I got back when I recently sold my mined diamonds. Thankfully, with the prices on lab stones so reasonable (right now), I’m not feeling the punch to my bank balance as I did when I purchased mined diamonds.

 

[DejaWiz]

I've heard of 'apples to apples' upgrade programs for LGD. Meaning, if you buy (example) - a 2.00 carat F VS1 IGI Ideal lab-grown today - whatever a stone with identical specs is selling for the day you return is your value toward upgrade.

This would be my mindset to what a fair trade-in value for an upgrade program is.

Today: 2ct F VS2 Ideal = around $6500
In five years, maybe seven: same 4Cs = $4000

That's a net loss of $2500, but the buyer still gets to put $4000 towards an upgrade.

That's a much better position than what almost all LGD sellers have now, which is no upgrade program for them.

 

[Garry H (Cut Nut)]

I get about 5 spam emails a day offering me almost unlimited LGD's on memo.
The supply is increasing.
The awareness is increasing.

I believe less than $100-200 per carat is where melee will end and $500 per carat for any larger size at wholesale prices.

 

[Rockdiamond]

Trade up and buy back programs are a gamble. In any event.
To make it more palatable, many places institute rules. Spend double and get back what you paid for the first one.
From my perspective this would compensate drop in value on the stone being traded in.
Critical thinking about buyback programs or trade up programs that don’t require the buyer to spend double leads me down very scary paths for companies offering such programs- if value falls and a crowd of folks decide to ask for buybacks in a limited space of time. More power to them if it’s worked. I see no difference between EM and LG diamonds in thIs regard.
Being in the business as long as I have, I’ve seen Earth mined diamonds drop in value - and there have been dramatic drops. At this very moment I feel there’s a bit of a bubble in certain EM diamond segments.

I believe less than $100-200 per carat is where melee will end and $500 per carat for any larger size at wholesale prices.

Melee is already there.
Nor do I think you’re off base on larger sizes potential in the future.
But ....( I can’t believe I have to write this here) won’t some LG diamonds be worth more for intrinsic reasons? Differences in cut. To say nothing of the fact that a segment of people will gladly pay more to get a better piece of jewelry or a specific hand picked stone.
(I see no reason not to identify diamonds pulled from the ground as EM and Lab grown diamonds as such- they aren’t synthetic)

 

[Garry H (Cut Nut)]

(I see no reason not to identify diamonds pulled from the ground as EM and Lab grown diamonds as such- they aren’t synthetic)

All man made gems marketed and sold as their natural counterparts have been called synthetic David - by all branches of gemologists and Gemmologists (by some wired quirk of history - the two M's are actually correct, even though I do not agree).

The only change that ever came about is that the US FTC decided that synthetic was a bad usage. They have their geopolitical reasons which have nothing to do with the actual gem industry scientists.

An Introduction to Synthetic Gem Materials

A synthetic gem material is one that is made in a laboratory, but which shares virtually all chemical, optical, and physical characteristics of its natural mineral counterpart, though in some cases, namely synthetic turquoise and synthetic opal, additional compounds can be present.

www.gia.edu

So you stop using EM or mined and please use natural or I will use synthetic.
(for those reading - we are freinds and have bigger barnies than this one - but next time David uses those terms I will reply to him)

 

[Rockdiamond]

I could not find a date on the GIA article…. But the fact they declare LG diamonds “Not frequently encountered “ seems to indicate an old article.
The word “Synthetic” appears exactly nowhere on an LG diamond GIA lab report.
It’s a semantic issue, as opposed to Gemological IMO
You’re perfectly welcome to refer to either however you’d like.
And I agree-The respect, admiration and affection I have for Garry would never be dulled by an internet disagreement ( and we’ve had plenty

 

[Garry H (Cut Nut)]

GIA GTL pulled it recently because they want business and the FTC ruling supported their decision.
All other international gem orgs use synthetic because they don't see the reason to create different categories for different gems. But then they are not half billion dollar or more a year businesses and tax free ones at that!

 

[Rockdiamond]

I think this is a textbook example of “disruption”.
I have found that some of the stalwarts of the wholesale NY diamond scene just can’t accept the changes that are happening now- as well as trying to anticipate what’s on the horizon.
Which makes perfect sense if you think about it.
In some ways these old timers in NYC are living in a bubble.
The “natural” ( feel better Mate?diamond business is built on a series of rules which we all accept without question.
LGs force questions.



Earth mined
Earth mined
Earth mined

I’m the devil

 

[denverappraiser]

Theres a premium for diamonds mined anywhere other than earth.

 

[DejaWiz]

Theres a premium for diamonds mined anywhere other than earth.

Road trip, anyone?

 

[Diamond Girl 21]

Road trip, anyone?

I'm in!

 

[DejaWiz]

I'm in!

Now we just need to find a platinum planet to make a ring big enough to set it in.

 

[MillieLou]

Is there a reason to believe that lab diamonds won't end up the same as lab sapphires, rubies and emeralds - pretty, chemically indistinct, but worth barely a fraction of a natural equivalent?

Genuine question - I expect there is a reason, or people wouldn't be spending such sums on them right now!

 

[DejaWiz]

Is there a reason to believe that lab diamonds won't end up the same as lab sapphires, rubies and emeralds - pretty, chemically indistinct, but worth barely a fraction of a natural equivalent?

Genuine question - I expect there is a reason, or people wouldn't be spending such sums on them right now!

From what I understand, they already are worth only a fraction of their natural counterparts.

Think it was Garry that posted a little while back that he has received phone calls and emails from suppliers quoting up to 90% off of rap sheet natural pricing for the cheapest LGDs, and 70-80% off for the quality offerings.

 

[John Pollard]

Theres a premium for diamonds mined anywhere other than earth.

Not if they arrived here special delivery. Spoiler alert: A PriceScope blog post will drop today, with a guest appearance on this topic. Nice timing, Neil.

Earth mined
Earth mined
Earth mined

It could be the chorus of a song, @Rockdiamond ?

To re-state the issue: LGD growers and sellers got chafed by the term synthetic applied to their product b/c synthetic gets associated with fake. They have pushed back by applying the term mined to the natural product b/c mining gets associated with environmental harm.

Anyone who's in the trade day to day, can become somewhat tone-deaf, or simply unaware, that it's a disparagement. I had to research this too - but Garry has the right of it.

The FTC became a punching bag in this terminology etiquette war. Initially they included synthetic as a recommended descriptor for LGD (the ISO still do). After years of acrimony coming from both sides they essentially threw their hands up in the air in 2018.

The bottom two quotes are telling.



Comedic translation:

Yes, LGD sellers we hear you. Yeah, no, okay, look, OK! Synthetic is confusing. It is. We'll stop using it.

No, wait, listen natural sellers. Listen. We're out. We're done. Go ahead and keep using it if you want to. Whatevs... We're getting coffee.

 

[Rockdiamond]

Given that I’m a seller of both, I don’t have a dog in either game.....or, more accurately, I have dogs in both.

Anyone who's in the trade day to day, can become somewhat tone-deaf, or simply unaware, that it's a disparagement. I had to research this too - but Garry has the right of it.

Genuinely interested in why you see “right and wrong (implied) in the semantics John.
My own personal experience is that both consumers and dealers benefit from honest representation.
The term “Earth Mined” seems both complimentary as well as accurate from my perspective.
I also have an issue with seller claiming “Green superiority” of Lab Grown diamonds. Which might be part of Garry’s issue.
But for those of us doing our best to honestly represent both.....I just don’t get the issue.

 

[DejaWiz]

Not if they arrived here special delivery. Spoiler alert: A PriceScope blog post will drop today, with a guest appearance on this topic. Nice timing, Neil.



It could be the chorus of a song, @Rockdiamond ?

To re-state the issue: LGD growers and sellers got chafed by the term synthetic applied to their product b/c synthetic gets associated with fake. They have pushed back by applying the term mined to the natural product b/c mining gets associated with environmental harm.

Anyone who's in the trade day to day, can become somewhat tone-deaf, or simply unaware, that it's a disparagement. I had to research this too - but Garry has the right of it.

The FTC became a punching bag in this terminology etiquette war. Initially they included synthetic as a recommended descriptor for LGD (the ISO still do). After years of acrimony coming from both sides they essentially threw their hands up in the air in 2018.

The bottom two quotes are telling.



Comedic translation:

Yes, LGD sellers we hear you. Yeah, no, okay, look, OK! Synthetic is confusing. It is. We'll stop using it.

No, wait, listen natural sellers. Listen. We're out. We're done. Go ahead and keep using it if you want to. Whatevs... We're getting coffee.

To me, this is a clear cut case where the perpetuance of public ignorance/misconception gets favored over educating the public in regards to the actual meaning of the word...and probably mostly amongst the population of the US.

And it wouldn't take much effort for companies to inject that accurate meaning into their website pages that have already had a higher level of effort to explain why an LGD is just as much a real diamond as a natural one.

Here's one example:

Lab-Grown vs. Natural Diamonds: Can You Tell the Difference?

Can you tell the difference between lab-grown diamonds vs real diamonds? Compare engagement rings set with lab diamonds to those featuring naturally mined diamonds.

www.brilliantearth.com

Which is easily modified as:
"Although synthesized by scientists instead of created in the earth’s crust, synthetically occuring diamonds are absolutely real diamonds—they display the same chemical and optical properties as naturally occurring diamonds, unlike the many different types of simulants being sold.

Let's direct our attention to the Merriam-Webster Dictionary definition of the word synthetic:

Synthetic
noun
Definition of synthetic (Entry 2 of 2)
: something resulting from synthesis rather than occurring naturally

Now let's look at the definition for the word simulated:

Simulated
adjective
Definition of simulated
: made to look genuine : FAKE

It's important to understand the difference between synthetic and simulated.

Even expert gemologists can’t tell the difference between synthetic and natural with the naked eye, but just for fun we’re offering you the chance to guess. The engagement rings on this page either feature a synthetic or natural mined center diamond. See if your instincts can determine which is which! Learn more about synthetic diamonds."

 

[Rockdiamond]

@DejaWiz
You- and many of the consumers reading this possess knowledge so far beyond that of the typical consumer. So imagine we’re speaking about of average consumers.
I was speaking of how LG’s force questions......
I realize that I really don’t like the word “Synthetic” to describe the stones I’ve taken the time to locate and purchase.
Why?
They’re like my little babies. Just like the ones we buy from Mars. I mean earth
Seriously- speaking for myself.....I adore what I do for a living exactly because I find something truly special about certain diamonds.
How could I love something “synthetic “.....eeewie!