All the more reason to buy certified.

[MarionC]

http://www.nytimes.com/2014/04/20/business/when-diamonds-are-dirt-cheap-will-they-still-dazzle.html?hp&_r=0

 

[Tourmaline]

This guy obviously knows nothing about diamonds.

 

[MarionC]

This guy obviously knows nothing about diamonds.

Hm...why do you say that?
I didn't read the whole article, just the part where he talked about documentation of gems & art because when even when great fakes are produced there are people who will still want the real deal.
When they can make diamonds indistinguishable from the mined product you need certification.

 

[Harpertoo]

I'm not sure if it even matters if the author is knowledgable about diamonds. As an economist he's exploring the idea of how scarcity or perceived scarcity creates demand and drives markets....

I think the forum has even discussed this before as in : would you still enjoy diamonds to the same extent if they were cheap and plentiful?

 

[MarionC]

I'm not sure if it even matters if the author is knowledgable about diamonds. As an economist he's exploring the idea of how scarcity or perceived scarcity creates demand and drives markets....

I think the forum has even discussed this before as in : would you still enjoy diamonds to the same extent if they were cheap and plentiful?

Harper, I would enjoy them more - and more of them- if they were cheap & plentiful!
But only if they were rare & expensive to everyone but me

actually I don't know the real answer to that.
you are asking what drives us.
Flowers are cheap & plentiful, but those who really get into horticulture in a big way still search for the rare & expensive species.
It's a great game. For me it's 75% beauty and 25% hunt. If you don't have to hunt, probably the psychological value goes down.

 

[GeorgeStevens]

You can buy certified all you want, but if lab-created diamond technology finally gets perfected for gem-quality stones, the price of diamonds may fall dramatically. About 80% of all diamonds produced already are synthetic. (Annual global production is 100,000 kg synthetic and 26,000 kg mined). The question is if the technology, already 50 years old, can be advanced to grow gem-quality diamonds in massive quantities, rather than tiny stones from GE, Sumitomo, etc., or the ones and twos in gem quality currently coming from SCIO, Gemesys, AOTC, etc.

If lab diamonds and natural diamonds are close to indistinguishable (which some of them are, unless you look at the crystal pattern closely), and if lab diamonds can be mass produced eventually, people may stop paying the crazy prices currently paid for natural stones. Diamonds are not a particularly rare product relative to other luxury goods, gemstones, etc--see the huge production volumes cited above. The high prices of diamonds are kept high only by consumer demand (and, formerly, a cartel). If consumer demand shifts, perhaps because mass-produced diamonds become available, the price of natural diamonds could collapse too, as they no longer would signal wealth or status. Buying a certified diamond doesn't protect your investment from this possibility. This is why, imho, the only good long-term investments in diamonds are super high-end stones that will always have a market among people with limitless money even if synthetics can replicate them (things like an 80-carat flawless pink) or stones with incredible provenance from royalty, first ladies, etc.

 

[MarionC]

I assume this includes PS members!

 

[John P]

(I suppose this thread will get moved to the MMD forum?)

The OP's subject-title is a good one RE consumer purchases.

Some items not in the article:
* The term 'cultured diamonds' is banned by the FTC. They must be traded as MMDs, Synthetics, etc.
* The labs put them on visually different reports, classified as Synthetic.
* Disclosure enforcement is rampant.

From the beginning the trade-at-large has compartmentalized every step, from diamond-press to market, to create clear separation of MMDs from those with natural origins. For now it remains a niche market. I think the tech is extremely cool (please don't attack me, friends) but there remains a major stigma surrounding the product. The non-natural/lab-made origin is simply a deal-breaker for most people, although 'green' and 'no-conflict' have definite appeal.

The larger buzz has been the possibility of "sneaking" them in as natural. In China, especially, there has been a constant call for improved detection and definitive proof of natural origin. I would have thought that consumer market to be early-adopters, but it has not been the case thus far.

Within the trade the main disclosure concern has regarded melee, which is traded with less involvement and oversight from the major labs. Everyone from mining-houses to labs to bourses/dealer's-clubs is working to address that.

http://www.idexonline.com/portal_FullNews.asp?id=39104

Of course the crooks seem always to be a step ahead of the police.

 

[GeorgeStevens]

I think slowly this stigma will erode. There used to be stigmas on online dating, and now something like 1/4 marriages are among people who met online -- but of course they will never admit it. I suppose at some point many years ago people didn't admit that they were wearing cultured pearls - but now 99% of pearls are cultured. (I don't think the man-made vs. cultured nomenclature will ultimately matter.) Nor do people admit they're wearing heat-treated emeralds and sapphires, even though celebrity estate sales regularly turn up such stones.

I think ultimately when the technology works for mass production (and eventually they'll get it right - there's too much $$ at stake), the bulk of the common diamond market end up being synthetics and priced based on the cost of production of synthetic stones rather than the current discount to mined stone prices. This will result in diamonds costing a fraction of what they do today. As the NYTimes says, that will result in a downward spiral - diamonds are less useful as status symbols, so more people turn to synthetics, which leads mined diamonds to being even less useful as status symbols. Eventually you end up like the pearl market, where a string of cultured pearls costs $50.

I don't think this will happen today or even in the next 10 years, but we'll get there. These views don't make me popular here, but it's what I believe as a diamond consumer who has thought about these topics (and decided to buy synthetics.)

 

[kenny]

Watch what happens when she finds out you proposed with a fake.

Good, bad, right, or wrong, irrational or rational, a real natural diamond means something to zillions of women.

How exactly is fakes getting cheaper, or even better, going to change that?

 

[redwood66]

Because what seems like a large percentage of the PS posters like antique and older cut styles, what are your opinions on these diamonds? I am someone who has grown to love them thanks to PS and while their value is less than the perfect graded white ideal diamonds it has grown to be a much higher cost than previously garnered. Having just bought an antique stone that appears to have been cut in the late 1800's per ericad, I would be interested in everyone's thoughts on those type stones and how they pertain to this discussion. For me the romance and history of this stone is of value to me. I will never know its actual history but one can have fanciful imaginings right?

 

[John P]

Watch what happens when she finds out you proposed with a fake.

Not actually fake. Simply lab-grown a few weeks ago, instead of a few billion years ago.

Good, bad, right, or wrong, irrational or rational, a real natural diamond means something to zillions of women.

I heard this in one of the showrooms where I do training:

"That's correct. Synthetic diamonds are made in a lab, not in the earth. Unless you have discussed it together, I only suggest a synthetic diamond for your synthetic girlfriend. Meanwhile, get your real lady a real diamond."

 

[MarionC]

[/quote]
I heard this in one of the showrooms where I do training:

"That's correct. Synthetic diamonds are made in a lab, not in the earth. Unless you have discussed it together, I only suggest a synthetic diamond for your synthetic girlfriend. Meanwhile, get your real lady a real diamond."[/quote]

I can already predict the niche market - when we have robot companions instead of humans these stones will be simpatico.

 

[denverappraiser]

I don't expect much from the New York Times but you would think a self identified 'economist' would know better.

Where to start?

1) Colorless synthetic diamonds aren’t significantly cheaper than comparable mined stones, nor are they expected to become so without a quantum shift in technology. People have been sitting on the proverbial edge of their seats waiting for that shift since diamonds were first grown in the 50's. We're still waiting. Meanwhile the price of mined diamonds have skyrocketed. Cheap synthetic diamonds might happen, and it might even happen soon, but I'm not holding my breath. It also might be 100 years or it might be never. I've been reading articles reporting the end of the diamond business for decades and, so far, the forecasters haven't done so well. Most, like this guy, don't even get the known facts straight before they leap into the bold speculation.

2) The price of mined diamonds is NOT a monopoly controlled by DeBeers, and hasn’t been for decades. There are not mountains of diamonds in vaults in South Africa, Russia or London waiting to collapse the market when people come to their senses and suddenly stop wanting them.

3) The ‘premium’ associated with type IIa diamonds is a hypothetical one. They tend to be white and clear stones, which command a premium for other reasons, but IIa is of no interest to anyone beyond the cutter and possibly a certain set of geology nerds.

4) Rather like the example he gives of autographed baseballs, the ‘value’ of the real thing isn’t all that connected to the availability of fakes or substitutes or even how good the fakes are. There are plenty of good examples of this and autographed baseballs is actually a pretty good one. It’s been solidly demonstrated repeatedly in the gem business. Synthetic rubies of wonderful quality are readily available for a tiny fraction of the cost their mined counterparts. They've been available for over a century. It takes an expert with tools to tell the difference. This in no way has tanked the ruby business. If anything, the opposite is true. The best of the best rubies go for stratospheric prices. What's tanked is the poor quality fakes. It been a great boon for the labs and the experts. People who buy the real thing demand paperwork. The same applies for sapphires, emeralds, spinels and a fair number of other stones. Why do these people think diamonds are different?

5) For those who haven’t noticed, wearing large diamonds isn’t a very good flag of significant wealth, and never have been. People have been wearing fake diamonds for as long as they’ve been wearing diamonds and, done properly, the fakes are really quite credible. Fooling even an experienced observer who isn’t using tools and who doesn't take the time for a careful inspection has been a piece of cake since at least the introduction of Cubic Zirconia in the 70’s if not before.

 

[MarionC]

For those who haven’t noticed, wearing large diamonds isn’t a very good flag of significant wealth, and never have been. People have been wearing fake diamonds for as long as they’ve been wearing diamonds and, done properly, the fakes are really quite credible. Fooling even an experienced observer who isn’t using tools and who doesn't take the time for a careful inspection has been a piece of cake since at least the introduction of Cubic Zirconia in the 70’s if not before.

Some of the wealthiest people wear small diamonds, drive a practical non-flashy car and live in a modest home. In fact, I'll bet Warren Buffet doesn't even wear a diamond...but if he does it's probably a fake

 

[spicyitalian]

For those who haven’t noticed, wearing large diamonds isn’t a very good flag of significant wealth, and never have been. People have been wearing fake diamonds for as long as they’ve been wearing diamonds and, done properly, the fakes are really quite credible. Fooling even an experienced observer who isn’t using tools and who doesn't take the time for a careful inspection has been a piece of cake since at least the introduction of Cubic Zirconia in the 70’s if not before.

Some of the wealthiest people wear small diamonds, drive a practical non-flashy car and live in a modest home. In fact, I'll bet Warren Buffet doesn't even wear a diamond...but if he does it's probably a fake

LOL

 

[WillyDiamond]

As stated in an earlier post by a PS member, if the diamonds can be made in quantities, then more people can afford them, thus a reduction in cost to the consumer. The only people against lower cost diamonds would be the jeweler we buy from. Perhaps they will make it up with volume.

edit: Additionally, the price of a diamond is not a supply/demand equation. It is controlled by a few giants in the industry.

 

[diagem]

As stated in an earlier post by a PS member, if the diamonds can be made in quantities, then more people can afford them, thus a reduction in cost to the consumer. The only people against lower cost diamonds would be the jeweler we buy from. Perhaps they will make it up with volume.

edit: Additionally, the price of a diamond is not a supply/demand equation. It is controlled by a few giants in the industry.

Interesting discussion. I can't see synthetics hurting natural Diamonds but do definitely see a more welcomed adjacent product in the future.
I also foresee more potential for colored synthetics vs. colorless. I think the play of color in conjunction with innovative designs can have great future design potential.

Re: "...Additionally, the price of a diamond is not a supply/demand equation. It is controlled by a few giants in the industry."[/p]

Current Diamond prices are only set by the price buyers are willing to pay for them, even those "few giants" in the industry depend on tender/auction results to price out their productions. As long as industry players are willing to fight for certain popular and sought after rough segments and pay record prices translates prices to demand driven values. Ironically when a plurality of people expect and keep claiming for natural Diamond values to drop we keep witnessing the opposite reality within the industry. Industry members are willing to pay higher prices of naturals as to present times. Unfortunately for such a rather small world industry we do need to take into accounts speculative periods but all in all we are witnessing an uptrend.

I would have thought such a primitive industry will show signs of value insecurities (due to synthetics) but to my dismay it's not showing any signs of such behaviors.

 

[Tourmaline]

Denverappraiser, you said all the details of what I was thinking in my first comment!

 

[denverappraiser]

As stated in an earlier post by a PS member, if the diamonds can be made in quantities, then more people can afford them, thus a reduction in cost to the consumer. The only people against lower cost diamonds would be the jeweler we buy from. Perhaps they will make it up with volume.

edit: Additionally, the price of a diamond is not a supply/demand equation. It is controlled by a few giants in the industry.

The price of diamonds *IS* a supply/demand thing. There’s an argument that demand is the result of marketing activity, and that’s done by the sellers, but there’s nothing particularly unique about this for diamonds. At best you can say that the DeBeers campaign to connect diamonds to engagement at just the right time in history was very clever and effective marketing but it didn’t rewrite the rules of economics.

The majority of the cost of diamonds as most people buy them is in the cutting and distribution processes with a definite nod towards taxes and documentation. These are identical for both manmade and mined stones. Even manufacturing costs are not zero by the way. What’s kept the growers afloat lately is that fancy colored natural diamonds are insanely expensive. In the business of mined stones, this is a tiny specialty while with synthetics it’s the mainstay. Again, colorless man-made diamonds are NOT significantly less expensive than their mined equivalent. People buy them for other reasons.

Every jeweler I know would be THRILLED if prices came down. They’re buying and selling for what amounts to a commission and the commission is better on cheaper goods. A lot of jewelers are actually getting OUT of the diamond business and concentrating on mountings, repairs, and other gems. This is a direct result of the high prices. Buy your diamond online and let them do the rest of it. This is a giant shift from the US jewelry business of, say, 30 years ago. I don’t think MMD’s are going to be the driving force but the general economic rule is always that what goes up must come down. It’s happened before and surely it will happen again. The losers in a price drop would be the people who are carrying inventory. That’s the same people who have been the winners while the prices have climbed and the clever ones are banking their money so that they will be one of the survivors for the next cycle. As I type I’m getting advertising from ‘investment’ firms suggesting that it’s a good idea to be making just that bet. I’ll leave it for the psychics to predict the future but I, for one, do not recommend diamonds as a financial vehicle, for jewelers or anyone else.

BTW, Warren Buffett s company Berkshire Hathaway is one of the biggest jewelry firms in the country. They are invested heavily in manufacturing, supplies and in retail. Indeed he dresses pretty modestly but he could certainly arrange to wear something blingy if he wanted.

 

[Texas Leaguer]

Neil covered the topic very comprehensively. No surprise there!

I think the analogy to synthetic corundum is a historical perspective that is very telling about buyer psychology and should make those who predict a crash for mined diamonds pause and reflect.

Frankly, I did not see anything new in the New York Times article. Such predictions about the dire impacts of synthetic gemstones have been a time honored practice - clearly to gain headlines. I would think the Times could do much better. Why not mention that these concerns are not new and that they have never come true - and tell us why it will be different this time.

 

[Karl_K]

Lets look at this from another direction for minute.
What would be needed to bring the prices of MMD down to a level significantly cheaper than mined?
1: break thru in production, right now there is little cost difference between larger rough and man made rough. If anything the MMD is more expensive in larger sizes. The technology isn't there to make huge amounts of large rough.
2: Break thru in cutting. Cutting costs are not cheap. Even in low wage countries training and retention is expensive. The larger the stone the more skill is required and the more time the diamond spends on the wheel. Production is currently inefficient and labor intensive.
3: break thru in diamond grading cost, speed and accuracy.
4: changes in the distribution and marketing model for diamonds.
5: millions if not billion of dollars in capital, which is a huge barrier and if they could produce MMD for 1/4 the cost of mined would they pass the savings on or keep the added profits to make the $$$ back quickly?
There really is no incentive to massively undercut the prices of mined goods to a low level.

I would love to see diamonds both mined and MMD selling at much lower prices so more people could afford to enjoy my creations but I just don't see it happening anytime soon.

 

[diagem]

...and there is always the other side of the coin..., or reporting.

http://www.telegraph.co.uk/finance/...wont-be-staying-at-todays-levels-forever.html

 

[Texas Leaguer]

...and there is always the other side of the coin..., or reporting.
http://www.telegraph.co.uk/finance/...wont-be-staying-at-todays-levels-forever.html

Yes exactly. On the one hand you have sensationalism, on the other reality.

 

[Modified Brilliant]

Choice is good. Nobody is saying that a consumer MUST buy a diamond, natural, cultured, synthetic or otherwise. Life is full of choices. I feel that most people will continue to purchase a mined diamond as a symbol of love. But some will not. The availability of created colored gemstones is an option for those that choose to go that route but they have never taken the place of natural mined gemstones.

 

[Texas Leaguer]

Choice is good. Nobody is saying that a consumer MUST buy a diamond, natural, cultured, synthetic or otherwise. Life is full of choices. I feel that most people will continue to purchase a mined diamond as a symbol of love. But some will not. The availability of created colored gemstones is an option for those that choose to go that route but they have never taken the place of natural mined gemstones.

True Jeff. And the competition for diamonds has always come from other options available for people with means. Cars, boats, homes, art, world travel. Not actual synthetics or the perceived fear of coming synthetics.

If you take a historical perspective, coupled with Karl's outline of the challenges facing synthetic production and distribution, and a look at the present reality illustrated by the article Yoram referenced, I think reasonable people see rising prices for mined diamonds as a whole lot more likely than the reverse!

 

[denverappraiser]

How about this for bold, off-the-wall and game changing speculation, since that's what the article is about? If demand in China continues to grow at a blistering pace, and reserves at the mines continue to become depleted, that market HAS to get filled with something. What? All of those Chinese grooms aren’t going to wait for new mines to be discovered and go into production after all. Theoretically the growers have no such supply limits so, theoretically, they’re able to fill a demand that the ‘dirt diamond’ sellers can’t. That's a formula for prices going up, not down. There's no particular cultural baggage about what an engagement ring is 'supposed' to look like, so the jewelers are free to push whatever they want. Why not MMD's? Synthetics become the real thing and mined stones become the substitute for people who can’t afford the good stuff.

 

[smitcompton]

Hi,

What if we (societal norms) changed the rules of love. What if it became a downpayment for a house that was the necessary guy component for an engagement, not a ring. In the fifties women had hope chests and collected sterling silver place settings or chinaware as their part of household setup.

Personally, I think this would be a far better use of young peoples funds than either real or manufactured diamonds. It would be my recommendation for any young couple. let the diamond come later.

The only other point that I can think about is that only a limited amount of companies are allowed at the tender offers. If you do not buy, you are dropped from participating. So, companies are forced to buy at the tender to continue to be included.



Annette

 

[diagem]

How about this for bold, off-the-wall and game changing speculation, since that's what the article is about? If demand in China continues to grow at a blistering pace, and reserves at the mines continue to become depleted, that market HAS to get filled with something. What? All of those Chinese grooms aren’t going to wait for new mines to be discovered and go into production after all. Theoretically the growers have no such supply limits so, theoretically, they’re able to fill a demand that the ‘dirt diamond’ sellers can’t. That's a formula for prices going up, not down. There's no particular cultural baggage about what an engagement ring is 'supposed' to look like, so the jewelers are free to push whatever they want. Why not MMD's? Synthetics become the real thing and mined stones become the substitute for people who can’t afford the good stuff.

Another uptrend I have been noticing is strong demand in CS, especially natural un-enhanced gems of basically all qualities as long as the colors are pretty and as we all know beautiful colors are purely subjective.

 

[Texas Leaguer]

How about this for bold, off-the-wall and game changing speculation, since that's what the article is about? If demand in China continues to grow at a blistering pace, and reserves at the mines continue to become depleted, that market HAS to get filled with something. What? All of those Chinese grooms aren’t going to wait for new mines to be discovered and go into production after all. Theoretically the growers have no such supply limits so, theoretically, they’re able to fill a demand that the ‘dirt diamond’ sellers can’t. That's a formula for prices going up, not down. There's no particular cultural baggage about what an engagement ring is 'supposed' to look like, so the jewelers are free to push whatever they want. Why not MMD's? Synthetics become the real thing and mined stones become the substitute for people who can’t afford the good stuff.

The closest analogy to that scenario that I can think of is the case of cultured pearls, as alluded to by another poster. The cultured pearl industry basically started because natural pearls were so rare that they could not be found in anything remotely resembling commercial quantities. And there were LOTS of challenges in establishing a cultured pearl industry. However, certified natural pearls of fine quality still command huge prices at auction.

So in your scenario, perhaps the production of natural diamonds does not keep up with demand and MMD becomes economic and widely accepted by the market. There will continue to be an important distinction in the market between a diamond that is lab grown under contolled conditions and one that formed miles deep beneath the earths crust millions of years ago and was brought to the surface by the rarest of geologic events.