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Economics of Lab Diamonds

MRBXXXFVVS1

Brilliant_Rock
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Dec 5, 2019
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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

Ideal_Rock
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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

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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.
 

kb1gra

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I think like many things, the beautiful premium examples will still have some value, while the mass market junk will fall to the bottom and be undesireable.
 

lovedogs

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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

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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

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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

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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

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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?
 

kb1gra

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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?

Just as lab gemstones have, if anything the lab stones push up the prices of premium mined examples.
 

MelloYello8

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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

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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

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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

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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
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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

Super_Ideal_Rock
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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
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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.
 

123ducklings

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I always feel like these threads are interesting but highly speculative. That said, I have to revive it because is it just me or has there been a shift in the market, at least for smaller stones?

During this weird COVID quarantine period I’ve developed a hobby of watching the lab diamond sales, and they have been plentiful. There were always deals to be had before, but I felt that quality was often questionable and from my view it was a bit of a gamble on less-known vendors.

Enter the rolling Bloomingdale’s sales on already well-priced Lightbox jewelry, and then the James Allen sales which are comparable (and for the smaller sizes even better) with nicer settings. Of course these stones aren’t super ideal, but they are a reliably “nice enough” option for many of us. After the last few months, I can’t imagine paying more than the Lightbox $800/carat threshold for any lab diamond 1ct or smaller.

Have the recent sales changed your view of lab diamonds at all? Mined diamonds? Synthetics?

Has anyone been watching prices in other areas of the lab diamond market (larger stones, engagement rings, specialty cuts)?
 

AprilBaby

Super_Ideal_Rock
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Yes! I feel terrible paying more than $800/ ct for diamonds. I love my engagement ring but if I lost it I would replace it with a bigger lab created!
 

sd_flp

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I’d love for MMDs to go down in price, esp the current retail of ideal cuts. That said, I think it might be a while. I’ve been waiting for moissanite to go down for a year and their pricing has still been the almost the same, even after introduction of lab diamonds. Originally I thought that the demand for moissanite would go down significantly but it doesn’t seem like the case, at least not yet...people like me still appreciate them and continue to buy them. I am also a millennial too, if that makes a difference. A lot of my peers/friends aren’t crazy about diamonds or jewelry in general and those that do either belong in a different income bracket or are just nerdy about jewelry. Many of my friends have opted for alternative engagement rings because they don’t care for the cost of diamonds and/or would rather buy something else that is still just as pretty or more practical.

I also feel there will be a market for those who are picky about ideal specs. My engagement ring diamond is less than a carat but I don’t regret spending more on it than the going price for lightbox diamonds...well, ok, I technically didn’t pay for it, but I wanted it have specs that were better than what Lightbox currently offers. I bought a pendant last year from Lightbox and was really disappointed with the cut of the white diamond. I am used to seeing better cuts with my moissanite jewelry so it was really underwhelming. I couldn’t wait to return it. That said I’d probably feel less picky about the cut if this stone was a quarter carat or if the diamond were a fancy color.

Lastly, I’ve seen an explosion of sales not just with MMD but most non essential goods in the most recent months. I wouldn’t be surprised if some of it has to do with the current environment, sadly.
 

MeowMeow

Brilliant_Rock
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Nov 27, 2009
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The only thing seeing all those sales is doing is making me even more interested in a lab diamonds eventually lol. I have a 10 or 15 year plan to recreate the necklace my dear family member lent me for my wedding but using lab diamonds and lab rubies instead for a long term birthday or anniversary since ill be using my custom cut ruby for my engagement ring II so that they match.

As far as I'm concerned I hope lab diamonds continue to sell well so that it will hopefully be easier for me to source them when the time comes!
 

AprilBaby

Super_Ideal_Rock
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7A579FD8-70A2-40D8-9B74-F98109C70A90.jpeg I got two light box .50 ct necklaces in silver and had them reset into earrings. Cost for diamonds: $800, cost for setting $200.
 

MeowMeow

Brilliant_Rock
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7A579FD8-70A2-40D8-9B74-F98109C70A90.jpeg I got two light box .50 ct necklaces in silver and had them reset into earrings. Cost for diamonds: $800, cost for setting $200.

Oh wow! Those look amaaaazing! Makes me want to repierce my ear quick so I can wear earrings again! Great job!
 

123ducklings

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Jun 10, 2020
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7A579FD8-70A2-40D8-9B74-F98109C70A90.jpeg I got two light box .50 ct necklaces in silver and had them reset into earrings. Cost for diamonds: $800, cost for setting $200.

These turned out beautifully!
 
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