Question for the pros: natural egd, value after purchase?

[Texas Leaguer]

Is the volatility tied to the war or the lab grown competition?

There has been volatility in the market for some time. Macroeconomic forces have had the biggest impacts. The Great Recession is a prime example. Russia's war in Ukraine, coming on the heels of widespread supply chain disruptions due to Covid, is certainly the biggest driver of volatility today.

High prices of diamonds and concerns about inflation are currently pushing some consumers in the direction of synthetic diamonds. This is likely to be a transitory time in the market however, as synthetics become more available and continually cheaper.

There are some signs that the war may be entering a phase that will lead to a resolution. Ukraine's recent gains on the battlefield seem to be lifting markets which suggests that many people are expecting things to settle out. It remains to be seen how long sanctions affecting the diamond market will continue to stay in place even after hostilities end however.

Long term, the war will resolve along with supply chain issues, and the market for natural diamonds will likely resume a more predictable trajectory.

 

[Texas Leaguer]

I know you didn’t ask me but adding my 2c theory anyway. Technological advancements reduces production cost and will encourage more competition which drives prices down. And it’s a lab diamond. Theoretically you can custom order these, like off a menu, a specific color, clarity, size. There is no scarcity, at least no perceived scarcity. And the question of true scarcity of mined diamonds can be debated forever. Is the demand manufactured by the diamond industry or are diamonds actually that rare in nature, which I think they aren’t. However without the Russian supply of mined diamonds, total supply available to the US has decreased until another supplier can fill the gap. So that’s part of the reason mined diamond prices have gone up. I’m very curious about what @Texas Leaguer thinks.

@LLJsmom ,
I agree with your comments about synthetics and the impact of Russia's war on natural diamonds. I disagree with the notion that there is no actual scarcity of natural diamonds. I know our suppliers are having trouble getting rough, and this would not be the case if supply was contrived. Miners would be releasing them now to moderate prices, like oil being released from strategic reserves. This buffers simply does not exist for natural diamonds.

In the time of the DeBeers monopoly, that was indeed the case. But those days are long gone. It's a popular myth that persists, as conspiracy theories tend to do.

 

[Rockdiamond]

However without the Russian supply of mined diamonds, total supply available to the US has decreased until another supplier can fill the gap. So that’s part of the reason mined diamond prices have gone up.

From my perspective, not really. The natural diamond price increases are broad based. We could make a case that lack of Russian goods affects the price of goods from India…. but the market doesn’t seem to bear that out. The prices were going up at a time of less than optimal demand. It really seems to be greed based.
Plus it’s likely that Indian firms are still and polishing Russian rough.

 

[joey_v]

The experts who just commented - do you feel the prices for naturals will go up in the face of rising demand for lab and decreasing demand for natural?

5y? 10y?

 

[Rockdiamond]

The experts who just commented - do you feel the prices for naturals will go up in the face of rising demand for lab and decreasing demand for natural?

5y? 10y?

One of my favorite Yogi quotes-
I’m excellent at making predictions- except if they involve things that will happen in the future.

 

[Mrs_Strizzle]

@joey_v

I doubt you'll get any of the big dogs to make a prediction for lots of reasons. So here's my less than 2 cent worth-

We have over 100 years of history to track synthetic ruby and sapphire and what they are worth even with perfect color and clarity. Today those 100 plus year old rings are worth what the setting brings, with near zero value in the synthetic. Gem quality natural ruby and sapphire has only gone up.

We have many years (don't know exact) of tracking moissanite, what was supposed to replace diamonds at the time. People have paid lots of money for them. If you look on Loop Troup or Diamond Bistro you will see they basically sell for their settings now too on the 2nd hand market.

I tend to believe the lab diamond market will stay along the same trend as history as paved with these. Perhaps there will be a big disruption, it's not impossible. But now I don't see a different path.

As for the natural diamond's worth you have to ask, will you be taking it off your wife's finger to sell in the future if the market goes crazy? If so, will you then have to replace it with something bigger/better? Will you really come out ahead? My husband better not take my diamond and think he's replacing it for something less than what I've got !

Or will it be that the stone you are considering which is quite expensive and impressive will be so self limiting due to those that are willing to spend that much $ on something that doesn't house a family or make money itself? (Obviously people do, and that is awe inspiring to me. All my six figure spends have to bring mailbox money now, but I hope to one day be in this position!) Will spending this amount make sense to others in the future? Who knows.

So I say buy your wife whatever sparks the most joy to her and leave the resale value to her heirs. (Hopefully long after she's gone.)

 

[joey_v]

Thx Mrs Strizzle, good points.

I just wanted to get an idea of what happened with the synthetic ruby and emerald craze, did it cause the prices of naturals to stagnate or dip? I have to wonder, if labs become the defacto standard for engagement rings, what happens to the price of natural? Will it just stagnate or plateau? Will mining just decrease commensurate to diminished demand?

I guess no one really knows.

 

[Mrs_Strizzle]

Thx Mrs Strizzle, good points.

I just wanted to get an idea of what happened with the synthetic ruby and emerald craze, did it cause the prices of naturals to stagnate or dip? I have to wonder, if labs become the defacto standard for engagement rings, what happens to the price of natural? Will it just stagnate or plateau? Will mining just decrease commensurate to diminished demand?

I guess no one really knows.

I don't know the what the immediate effect the synthetic colored stones had on the mined, but as far as I can see the long term results were that mined stones simply shook the "lab" stones off. I'm not convinced that lab diamonds will continue their run. There's been strong marketing and a big splash of misleading info to attract certain buyers, undoubtedly. But will it keep growing? History tells me no, but that's my viewpoint.

There will always be those that value gemstones as the works of art that they are. Billions of years in the ground then made even more beautiful in the hands of the artisans who cut them. But that's from a collector who collected for over 15 years before she set a single one into jewelry. No factory made synthetic would have sufficed. And shutting the mine down would have just made them more valuable to me.

 

[lulu_ma]

I don't know the what the immediate effect the synthetic colored stones had on the mined, but as far as I can see the long term results were that mined stones simply shook the "lab" stones off. I'm not convinced that lab diamonds will continue their run. There's been strong marketing and a big splash of misleading info to attract certain buyers, undoubtedly. But will it keep growing? History tells me no, but that's my viewpoint.

There will always be those that value gemstones as the works of art that they are. Billions of years in the ground then made even more beautiful in the hands of the artisans who cut them. But that's from a collector who collected for over 15 years before she set a single one into jewelry. No factory made synthetic would have sufficed. And shutting the mine down would have just made them more valuable to me.

@Mrs_Strizzle you’ve made some excellent points. I agree with everything you have said.

I think the natural diamond price chart is especially telling. Lab diamonds sales have heated up in the last what, 5 years? And what has happened to the price of natural diamonds?

It’s simple economics really. What happens to prices when there is an endless supply of Lab diamonds?

 

[Rockdiamond]

There's been strong marketing and a big splash of misleading info to attract certain buyers, undoubtedly.

Interesting perspectives! I am curious- what sort of claims have you found to be misleading?
Personally, I find that when a seller is committed to one or the other, they generally use arguments that really cut both ways...ie, environmental impact.
Both Lab and mined sellers use the same argument in reverse. And I'm sure they know it's a disengnious argument either way
What else have you guys seen?

The prices of lab grown stones have- in general- decreased.
But, there are areas where prices have actually gone up over the past year.
4mm (.25ct) stones were in short supply for a while, so the prices have gone up.
The labor of cutting and grading isn't going away- and the cost of rough isn't going away either.
The way I see it, with some exceptions, prices on carat sized and smaller stones can't fall that much more.
I also do not equate colored stones to diamonds- in the realm of lab grown versus mined stones.
The unique characteristics of diamonds having to do with hardness- and visuals differentiate them from Rubies, Emeralds, etc.
Another big difference is finite cutting- not such an issue with colored stones.
Boutique cut lab grown diamonds have the potential to hold value well.

 

[lulu_ma]

Lab diamonds can absolutely make sense as long as you are not concerned about resale value.

(full disclosure: I am primarily interested in antique diamonds--so the concept of environmental impact doesn't sway me)

 

[Ch176]

We sold my wife’s former diamond which was a ACA to WP diamonds and received almost 80% back of what we paid for it.

Same. Sold my wrong to them when I got divorced

 

[yssie]

Unlike these sticks in the mud, I would be happy to provide a precise prediction.

I am confident you will see a surge of 118.999% in value 6 years, four months, and two days from now.
(My Portend Platform (TM) is precise only to the thousandth’s place at the moment, I’m afraid. We are working daily to add more significant digits.)

If you’d like details you’ll have to create an account at my Portend portal. Choose your Portend Package, provide your full name, address, age, social security number or tax ID, and credit card details. We pinky swear to not charge your card for your first prediction.


…FWIW, ditto @lulu_ma. And the discussion of rarity is very relative - even if (mined) diamonds are rarer now than they were in DeBeers’ gilt days, outside of maybe investment size and fancy colour they’re still downright commonplace compared to many other precious gemstones. Makes market comparisons a perspective challenge - impossible to judge #ImpactOfSyntheticAlexOnMined, for a random example, because the market for mined is chasing after such limited material to begin with…

 

[nala]

How much were people paying for lab grown diamonds initially compared to now?

 

[RetroQT]

Unlike these sticks in the mud, I would be happy to provide a precise prediction.

I am confident you will see a surge of 118.999% in value 6 years, four months, and two days from now.
(My Portend Platform (TM) is precise only to the thousandth’s place at the moment, I’m afraid. We are working daily to add more significant digits.)

If you’d like details you’ll have to create an account at my Portend portal. Choose your Portend Package, provide your full name, address, age, social security number or tax ID, and credit card details. We pinky swear to not charge your card for your first prediction.


…FWIW, ditto @lulu_ma. And the discussion of rarity is very relative - even if (mined) diamonds are rarer now than they were in DeBeers’ gilt days, outside of maybe investment size and fancy colour they’re still downright commonplace compared to many other precious gemstones. Makes market comparisons a perspective challenge - impossible to judge #ImpactOfSyntheticAlexOnMined, for a random example, because the market for mined is chasing after such limited material to begin with…

I’m ignorant at best. But with lab grown, don’t you have control over the size of the rough compared to earth mined? If so, then I would assume that plays a factor. Easier to grow enough rough for a 5ct E VVS vs finding it in the earth.

 

[yssie]

I’m ignorant at best. But with lab grown, don’t you have control over the size of the rough compared to earth mined? If so, then I would assume that plays a factor. Easier to grow enough rough for a 5ct E VVS vs finding it in the earth.

I totally agree. I think it might not be right this minute because the technology is still maturing, but it definitely will be within a few years [easier to grown enough rough for a 5ct E VVS].

I wouldn’t recommend any of my loved ones spend “real-to-them” money on lab diamonds until the market stabilizes.

 

[yssie]

I tallied up all my diamond (loose stones or diamond-heavy jewellery) sales - over all the years I’ve been buying for and selling from my own collection - and I end up at a 9.3% loss. I own only mined diamonds.

Some key points:
1. 9.3% loss from what I originally paid. Not current market value.
2. That number is amortized over 62 pieces.
3. This is between consignment and private sales. Most of my sales are at higher loss, but I’ve taken money home on some consignments that offsets those losses.
4. I’m not a professional. Just a consumer.
5. There is obviously significant selection bias in what I rehome vs what I keep, since it’s all from personal collection.
6. I tend to value rehoming to “good homes” more than getting top dollar. In many instances I have chosen a lower takehome in favour of selling to the person I know will appreciate the piece(s) most.
7. I didn’t count anything I just gave away.
8. I put a ton of time and effort into personal/private listings.
9. I know my subject - diamonds - well.
10. The people I rehome to know that I know my subject - diamonds - well. I suspect this has the most impact on minimizing loss, frankly.


So no, it’s not a given that consumers will take a bath on resale. But @joey_v, just how much of your time, effort, and money are you willing to invest in order to prevent that? Selling a diamond for reasonable price requires a lot more knowledge and buyer trust than selling a stereo, as you yourself explained so well earlier in this thread. Trends and generalizations may guide - but can’t conclusively determine - your own personal experiences.

I’ll say straight up that anyone who spends high tens or hundreds of thousands of dollars right now on a lab diamond is IMO off to a really bad start on that future resale front. That obviously may or may not matter to someone.

 

[LLJsmom]

Thank you @yssie @Mrs_Strizzle @lulu_ma. You all said it better than I did. Scarcity and cost to market as well as demand determine price. Labs are low on the first two which may significantly impact the third. My gut says labs have not hit the bottom of the supply curve yet.

 

[yssie]

My gut says labs have not hit the bottom of the supply curve yet.

Mine too.

 

[Karl_K]

Riddle me this:
Person 1 buys a mined diamond for $20000.
Person 2 buys a similar lab diamond for say $3000 and puts the other $17000.00 in a decent investment.
In 20 years which is going to be worth more?

Factoring in for inflation even if you sell a diamond for more than you paid for it, very few people beat inflation doing so even after 20 years.
Buy diamonds to enjoy them, be it mined or man made.

 

[Mrsz1ppy]

Riddle me this:
Person 1 buys a mined diamond for $20000.
Person 2 buys a similar lab diamond for say $3000 and puts the other $17000.00 in a decent investment.
In 20 years which is going to be worth more?

Factoring in for inflation even if you sell a diamond for more than you paid for it, very few people beat inflation doing so even after 20 years.
Buy diamonds to enjoy them, be it mined or man made.

Strictly answering your question, I would think the 17,000 in the stock market would do better in 20 years. However, human nature being what it is, I think most people would take the 20,000 and buy a bigger lab diamond, than the same size as they could get for a natural.

 

[yssie]

The issue with this comparison is IMO exactly what @Mrsz1ppy described - most people set a budget and then try to get the most "bang" for that amount of money. So it's gonna be $20k out of pocket on a diamond either way, which is what makes the discussion of future-proofing value relevant.

Riddle me this:
Person 1 buys a mined diamond for $20000.
Person 2 buys a similar lab diamond for say $3000 and puts the other $17000.00 in a decent investment.
In 20 years which is going to be worth more?

Factoring in for inflation even if you sell a diamond for more than you paid for it, very few people beat inflation doing so even after 20 years.
Buy diamonds to enjoy them, be it mined or man made.

 

[Ch176]

Riddle me this:
Person 1 buys a mined diamond for $20000.
Person 2 buys a similar lab diamond for say $3000 and puts the other $17000.00 in a decent investment.
In 20 years which is going to be worth more?

Factoring in for inflation even if you sell a diamond for more than you paid for it, very few people beat inflation doing so even after 20 years.
Buy diamonds to enjoy them, be it mined or man made.

This! I’m not new to mined diamonds (am fairly knowledgeable) but am to LGD. I recently went to purchase a larger size (7ct) eternity band for myself. When I went looking at a very reputable local jeweler the woman asked me if I wanted mined or lab stones. I said ‘what’? Lab? I had never really heard of them (I haven’t bought fine jewelry in a few years). After doing my research I decided to go with lab (from Jon at DG). Why? Because they are real diamonds (It’s not my thing to wear simulants or counterfeit brands) and the price was a third of the same quality mined version. And I could get superior cut from a vendor I trusted. I felt much more confident in labs after I saw that many of the online vendors I trusted for their quality (eg BGD) are offering them.

Now I do know that I’m unlikely to fetch a decent resale from it should I want to sell it in the future (and I have sold/upgraded mined stones so this was a consideration for me). That was the only downside for me. The savings, coupled with the authenticity of the diamonds, was what sold me. And to be clear, I was willing to spend the 3x but all things considered this was the much better deal. Although I do realize that might not be how everyone goes into this type of purchase (as others have noted).

All that said, I would be hesitant to spend 10s of thousands on a lab right now simply because I do agree with the concerns about trajectory of the market. However I’m interested to see where things go. I suspect we’ll see some stratification of the market just as mined diamonds has, where high quality labs (based on cut and branding) may hold their own.

 

[Ch176]

This! I’m not new to mined diamonds (am fairly knowledgeable) but am to LGD. I recently went to purchase a larger size (7ct) eternity band for myself. When I went looking at a very reputable local jeweler the woman asked me if I wanted mined or lab stones. I said ‘what’? Lab? I had never really heard of them (I haven’t bought fine jewelry in a few years). After doing my research I decided to go with lab (from Jon at DG). Why? Because they are real diamonds (It’s not my thing to wear simulants or counterfeit brands) and the price was a third of the same quality mined version. And I could get superior cut from a vendor I trusted. I felt much more confident in labs after I saw that many of the online vendors I trusted for their quality (eg BGD) are offering them.

Now I do know that I’m unlikely to fetch a decent resale from it should I want to sell it in the future (and I have sold/upgraded mined stones so this was a consideration for me). That was the only downside for me. The savings, coupled with the authenticity of the diamonds, was what sold me. And to be clear, I was willing to spend the 3x but all things considered this was the much better deal. Although I do realize that might not be how everyone goes into this type of purchase (as others have noted).

All that said, I would be hesitant to spend 10s of thousands on a lab right now simply because I do agree with the concerns about trajectory of the market. However I’m interested to see where things go. I suspect we’ll see some stratification of the market just as mined diamonds has, where high quality labs (based on cut and branding) may hold their own.

Also - just a curiosity question. But is there anything from the cultured pearl market that could be applied here? I see LGD as potentially similar to that offering.

 

[lulu_ma]

Even factoring in inflation of 94.41%, the diamond that my husband purchased for me over 20 years ago, would easily cost $20K more to buy today (from a regular jeweler not a luxury brand).

Do I wish we had bought Apple stock instead? Maybe-but not really. I love my engagement stone. But it is a moot point. At that time, we put our savings into buying our first home not the stock market.

Again, I am not buying diamonds for investment value. However, I do consider Store of Value when making my purchases.

FWIW, I think @Mrsz1ppy and @yssie are right. People generally buy labs to maximize their budgets.

 

[RetroQT]

I think would buy lab for a “fun” piece, not an heirloom quality piece. For instance, I want an oval, but the project I have in mind would be considerably expensive if I tried to find a mined diamond. I have plenty of those that are good sizes and in vintage or bespoke settings. In the case of the oval I’d like, I’d consider going with a lab diamond from DG.

 

[distracts]

How much were people paying for lab grown diamonds initially compared to now?

At some point not so long ago, lab grown diamonds were a similar price or more expensive than mined diamonds in sizes that were desired (over 1 ct got equally/more expensive than mined). They've dropped a LOT in price lately - I got my 2.05 ct Lightbox diamond for $1400? $1200? Something like that. For me, the price had dropped enough so that I knew I wouldn't kick myself if it dropped all the way to zero.

 

[Karl_K]

Strictly answering your question, I would think the 17,000 in the stock market would do better in 20 years. However, human nature being what it is, I think most people would take the 20,000 and buy a bigger lab diamond, than the same size as they could get for a natural.

Whats the cost comparison for a mined diamond equal to a $20k lab?
lab: 4.08 G/VS1 $20050.00
mined: 4.02 G/VS1 $123230.00
Lets say a few years down the road the lab $ value is $400 and you could get a high 80% cash back on the mined: $98584.00 for a loss of $24646.00
Then you have to calculate the difference in tax also.
At %10 $200.00 vs $12323.00
Yikes your paying 1/2 the cost of the lab diamond just in sales tax.

 

[yssie]

Also - just a curiosity question. But is there anything from the cultured pearl market that could be applied here? I see LGD as potentially similar to that offering.

The pearl industry is messy. I liken it to where the diamond industry was a century ago - with pearls it’s all about who you know and where you buy. There are no globally-respected (and globally-accessible) grading authorities. Most research is affiliated with big names and big brands.

When Mikimoto cultured pearls he fought a battle to convince the general public that they were, in fact, “real” pearls. Lab diamonds have not had this battle - no one disputes that they are in fact diamond, emotional sensibilities aside.

Once Mikimoto created a market for his “real” cultured pearls, they took off. For three reasons:
1. Cultured pearls were available. They weren’t competing with a natural pearl market, not really, not in practice, because natural pearls were so rare. Much more rare than mined diamonds.
2. Cultured pearls were affordable. Here, there are definitely similarities to the mined/grown diamond markets.
3. Cultured pearls quickly became nicer than natural. Rounder, prettier, bigger, more lustrous. The advantage to choosing cultured was that you’d actually get an objectively more attractive specimen! This was a huge draw for the burgeoning pearl consumer market. With lab diamonds… The more attractive/larger specimen will cost less than the mined version, but it won’t be nicer than the otherwise-identical mined stone.

 

[yssie]

Whats the cost comparison for a mined diamond equal to a $20k lab?
lab: 4.08 G/VS1 $20050.00
mined: 4.02 G/VS1 $123230.00
Lets say a few years down the road the lab $ value is $400 and you could get a high 80% cash back on the mined: $98584.00 for a loss of $24646.00
Then you have to calculate the difference in tax also.
At %10 $200.00 vs $12323.00
Yikes your paying 1/2 the cost of the lab diamond just in sales tax.

For most people I think the real world purchase decision would be
- 4.08 G VS2 lab diamond for $20k
Or a
- 1.75 G VS2 mined diamond for $20k

Not everyone of course, but IMO for most people! Between those two the 1.75 is the “safer” option for someone who’s concerned about potential future value.



Edit: Copied clarity wrong. But same philosophy.