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Economics of Lab Diamonds

MRBXXXFVVS1

Brilliant_Rock
Joined
Dec 5, 2019
Messages
688
Given the recent Bloomingdale's sales, I started to wonder about the economics for lab diamonds. Assuming both Lightbox and Bloomingdale's are not losing money, that means the COGS is less than $400/carat. Thoughts?

Will the MMD category eventually become a "commodity" and sell marginally above cost? If people are willing to accept lower colors, clarity, and cut would prices be even lower?

If lab diamonds get to CZ pricing, would that change the appeal of them for you? Less appealing due to supply, popularity, and access? Or more appealing due to affordability?
 

LilAlex

Shiny_Rock
Premium
Joined
Mar 3, 2018
Messages
358
They have zero intrinsic value. As long as they are sold for more than the cost of manufacturing and distributing and advertising, someone will make money. But it may not be enough to make that proposition worthwhile.

I expect that there will be a "race to the bottom" and then they will almost entirely lose their appeal -- like synthetic ruby, sapphire, etc.
 

OoohShiny

Ideal_Rock
Premium
Joined
Apr 25, 2014
Messages
7,376
I am pretty sure this has been discussed a few times on here, lol.

I think it's impossible to say for sure how they will be viewed once they become more widespread (availability and public knowledge) but, either way, there will be a market for them.

They will also co-exist with Mined diamonds - the markets for each will be different and there are enough people in the world that each market will have buyers.
 

lovedogs

Super_Ideal_Rock
Premium
Joined
Jul 31, 2014
Messages
11,025
They have zero intrinsic value. As long as they are sold for more than the cost of manufacturing and distributing and advertising, someone will make money. But it may not be enough to make that proposition worthwhile.

I expect that there will be a "race to the bottom" and then they will almost entirely lose their appeal -- like synthetic ruby, sapphire, etc.
many of us still really like lab made gems and happily buy them, especially when they are precision cut.
 

Niffler75

Brilliant_Rock
Joined
Jan 3, 2020
Messages
934
There seem to be a lot of consumers motivated to seek out 'ethical jewellery' with interest in lab created stones and pieces made using recycled precious metals. I read a really good article on this the other week, will try to find it.

Will this be a passing trend or a larger shift in buying is anyones guess.
Personally I am with @lovedogs. I love the lab stones in precision cuts! ;)2
 

kb1gra

Brilliant_Rock
Joined
Jul 6, 2012
Messages
725
There seem to be a lot of consumers motivated to seek out 'ethical jewellery' with interest in lab created stones and pieces made using recycled precious metals. I read a really good article on this the other week, will try to find it.

Will this be a passing trend or a larger shift in buying is anyones guess.
Personally I am with @lovedogs. I love the lab stones in precision cuts! ;)2
I doubt, however, that the majority would be willing to pay a premium for ethical. If naturals were the price of labs and labs 5x as expensive, I doubt we would be seeing the same trend. It's convenient that the current trend towards "ethical" also involves "significantly less expensive."
 

vintageloves

Shiny_Rock
Joined
May 30, 2013
Messages
414
Diamonds are unique because our culture uses them as gatekeepers to marriage and family. Want to get married? Gotta get that rock.

The world is changing. Young people have less money than ever and from what I can tell increasing numbers of men are deeply resentful at having to spend thousands on a ring. Moissanite has exploded in popularity since I got engaged (2004) and those same forces (an inexpensive way to obtain a traditional looking ring) will continue to make lab diamonds popular.
 

MRBXXXFVVS1

Brilliant_Rock
Joined
Dec 5, 2019
Messages
688
Do you think that low lab diamond pricing will put downward pricing pressure on and cannibalize earth mined diamonds, or are they 2 completely independent categories?
 

MelloYello8

Shiny_Rock
Joined
Jul 6, 2018
Messages
270
I wonder how mines diamonds will be affected because the market is a little different from other gemstones. My understanding is quality natural rubies, sapphires and emeralds are rarer than diamonds but there is more demand for diamonds because of engagement rings. I don’t think lab gemstones poach the market from natural counterparts because people seeking heirloom rubies aren’t the same people looking at flame fusion ones at the mall. However, with regard to diamonds, I do think we are seeing lab diamonds poach the market at least engagement rings and upgrades. I’d say people like me more than a decade ago went for lab diamonds for ethical reasons and it didn’t poach the newly mined diamond market because the prices weren’t much less if at all, so the only other alternatives were non-diamond rings or pre-loved ones, thus not decreasing demand. Because now of the price difference, I think there are a lot more people going for the lab diamonds in lieu of new mined diamonds, which theoretically would drive prices down. However there are so many other factors, predictable or not, that can also move the supply and demand curves one way or another.
 

LilAlex

Shiny_Rock
Premium
Joined
Mar 3, 2018
Messages
358
Just as lab gemstones have, if anything the lab stones push up the prices of premium mined examples.
Well -- and I'm new to this part of the forum so I'm sure it's been discussed to death alraedy -- the risk is that the uninitiated are turned off because It's suddenly a very complex market and an unlevel playing field.

It's an easy commodity to just walk away from -- unlike oil and real estate which we are all "forced" to consume our entire adult lives.
 

123ducklings

Rough_Rock
Joined
Jun 10, 2020
Messages
33
I think for many shoppers today it’s all about size and sparkle. As lab diamonds become more mainstream, a premium price for mined will be harder to justify to the young man looking to buy a 2+ ct engagement ring.

There are so many different variables and marketing spins to consider, but what I am interested to see is how mined diamonds with more personality — lower color grades, inclusions, fluorescence — will be affected. I suspect that they’ll gain popularity. If we’re to believe that diamonds from the earth are more special, won’t we increasingly want to see that specialness? Will a colorless, eye clean, ideal cut diamond feel as special to the woman who grew up seeing them on every finger, neck, and ear?
 

Buttercookies

Rough_Rock
Joined
Jun 13, 2020
Messages
72
Given the recent Bloomingdale's sales, I started to wonder about the economics for lab diamonds. Assuming both Lightbox and Bloomingdale's are not losing money, that means the COGS is less than $400/carat. Thoughts?

Will the MMD category eventually become a "commodity" and sell marginally above cost? If people are willing to accept lower colors, clarity, and cut would prices be even lower?

If lab diamonds get to CZ pricing, would that change the appeal of them for you? Less appealing due to supply, popularity, and access? Or more appealing due to affordability?
I think MMD will eventually lose its values because of lab diamond. De Beer Ian smart in embracing this market because they know that if they can dominate LMD by providing good diamond (not great diamond) they can keep MMD value high.
 

anangel

Brilliant_Rock
Joined
Aug 1, 2008
Messages
515
many of us still really like lab made gems and happily buy them, especially when they are precision cut.
I agree. With no disrespect to anyone, I think my certified PS standards lab diamond platinum solitaire will hold its value better than a smaller Lightbox piece set in silver. It’s not saying the Lightbox piece isn’t lovely, and a real lab diamond, but there is a certain amount of value that comes with a larger stone that has been evaluated.
That being said, at the end of the day, I make it a personal rule of thumb to never spend more money on jewelry than I’m comfortable “wasting”. The reality is, they are all just pretty pebbles be it diamond, sapphire, moissanite or even CZ- they are worth nothing more than the value we see in them.
 

dk168

Ideal_Rock
Premium
Joined
Jul 7, 2013
Messages
5,942
I personally cannot justify spending thousands on an earth-mined diamond, however, I am happy to spend about 400 USD/ct of MMD/lab created stone for a precision cut OEC or Octavia for rings.

If there is a waiting list for a MMD Octavia, I would join right away!

DK :))
 

vintageloves

Shiny_Rock
Joined
May 30, 2013
Messages
414
Lab diamonds don’t need to hold their value. They just need to be priced less than a mined diamond depreciates in the second hand market. Assuming a comparative product, a lot of people would rather spend 1200 and risk getting back nothing than spend 5K and get back 3000. Especially because consumers don’t look at jewelry as something they’ll later sell.
 
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