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

[Mrsz1ppy]

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

Between those two the 1.75 is the “safer” option for someone who’s concerned about potential future value.

This. Most people have a budget in dollars, not carat size. I have $20,000, what are my choices, vs. I want a 4 carat G VS2 no matter the cost

 

[joey_v]

So to circle back, I got a quote from WP Diamonds in NYC, they estimate a straight cash buyback transaction of $45,000 on the 3.6 D VS2 pear. My jeweler said there’s a buyback for $70,000. Purchase price is around $78,000.

On the one hand, the buyback by my jeweler is nice, on the other hand, if they go kaput, then apparently my options show a significantly diminished storage of value.

 

[distracts]

So to circle back, I got a quote from WP Diamonds in NYC, they estimate a straight cash buyback transaction of $45,000 on the 3.6 D VS2 pear. My jeweler said there’s a buyback for $70,000. Purchase price is around $78,000.

On the one hand, the buyback by my jeweler is nice, on the other hand, if they go kaput, then apparently my options show a significantly diminished storage of value.

Your options for an immediate buyback from a jeweler - which aren't your only options, should you be amenable to a consumer-to-consumer transaction or listing it on consignment, either of which may get you significantly closer to purchase price if you can wait around for a sale. Sell fast or sell for the most possible - you don't get to choose both.

 

[Karl_K]

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.

yes
They may get more enjoyment out of the larger diamond however.
I was curious how the numbers would work out for my own curiosity and figured someone else might like it.

 

[Rockdiamond]

Such an interesting discussion!

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

Based on my calculations, a 4.08 G/VS2 LGD can be had for less than $20k...possibly substantially less.
And my experience has been that many people are open minded about this....I was surprised.
Karls' points about spending less on the LG diamond than sales tax on the natural....that is not lost on a lot of folks.

This. Most people have a budget in dollars, not carat size. I have $20,000, what are my choices, vs. I want a 4 carat G VS2 no matter the cost

This has been my experience, for the most part.
Yes, there's still a fair percentage of buyers who will not consider a LGD for any reason. but those numbers are changing.

Once we start considering things like Tennis bracelets.... it's even more skewed towards LGD's from what I have seen lately

I find the Bloomberg chart to be very misleading.
If we look at a specific, very high grade 1ct...maybe the decrease was that sharp.
But commercial one carat lab growns have NOT dropped in price over the past year. Now, the price difference between a J/SI1, and D/VS1 LG's is pretty close.

BTW- when I told DW " Honey, next time you want a colorless diamond, let's get you a lab grown."
The couch is pretty comfortable in my house, thank the gods

 

[Rockdiamond]

My jeweler said there’s a buyback for $70,000. Purchase price is around $78,000.

Joey- I'm pretty sure all of us participating wish the best for you!
But there are a lot of things you've been told that raise red flags.
Reliable companies that offer buyback restrict it very heavily. They have to if they have integrity!
Imagine if a whole bunch of folks decides to sell in one day.
There's simply no way to maintain the capital to buy all those diamonds back.... so sellers really restrict it.
For example- by only allowing "branded" diamonds.
Or- restricting the offer by time- maybe a year for example.

The statements being made to you- as you're relating them- make it sound very sketchy.

 

[Texas Leaguer]

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?

Natural diamonds are currently losing some market share to synthetics, partially because of unrelated factors driving up the cost of natural. Synthetics actually present a counterveiling downward pressure on the price of natural (reduced demand). The market for lab grown diamonds is probably in the Goldie Locks zone right now.

Based upon past history of gemstone synthetics in the market, I think it reasonable to assume synthetic diamonds will follow a similar trajectory. Yes there are differences in these markets, but the similarities are strong.

I see the market for lab diamonds bifurcating between bridal (sentimental/emotional) and fashion (bling for bling's sake). Synthetic mellee and accent stones will be prominent in the latter market.

Initially, lab diamond sellers (Debeers is an exception) were positioning them relative to Rap pricing of natural. I saw ads for 50% of rap. A few months later 70% off. Recently 90% off. Eventually comparison to rap will lose all meaning, if it has not already. It's a different product, albeit with the same chemical and optical properties. It's a hyper competitive marketplace and the technology will likely improve exponentially (as it always does) resulting in oversupply and ever declining cost of production.

What happens to the natural market is harder to predict. Though it is losing some market share to synthetic presently, this is likely to be somewhat temporary. For certified diamonds I don't believe the availability of synthetic will be a significant long-term factor on the price of natural.

 

[yssie]

What happens to the natural market is harder to predict. Though it is losing some market share to synthetic presently, this is likely to be somewhat temporary. For certified diamonds I don't believe the availability of synthetic will be a significant long-term factor on the price of natural.

I agree, I don’t either.

Blue sapphire, for example - high quality mined material in “generic consumer” size isn’t easy to find, of course, but it’s not an impossible ask either. Synthetic sapphire has been around for a long time, but there’s a healthy market for mined material.

What I do definitely see changing is emphasis on origin. I think buyers of mined diamonds are going to be that much more interested in where their stones were dug out (or sifted up) and where they were cut… And I can see the future mined diamond consumer market associating premiums with specific geographies. I can def see origin starting to matter in a way (or maybe I should say - at a scale) that it never has before.

 

[Rockdiamond]

We're all got our linguistic pet peeves. Someone hates the term "Earth Mined"
For me, it's "synthetics"....of course, we're all free to call then whatever we want. But Lab Grown diamonds are exactly that- diamonds. The word synthetic seems to make it seems they're different.
I do agree that tying the price to the Rap sheet isn't going to work in the long term.
But I disagree that it's an entirely different market. The overlap is huge.
I agree that it's not possible to guess what natural prices will do....

 

[yssie]

We're all got our linguistic pet peeves. Someone hates the term "Earth Mined"
For me, it's "synthetics"....of course, we're all free to call then whatever we want. But Lab Grown diamonds are exactly that- diamonds. The word synthetic seems to make it seems they're different.
I do agree that tying the price to the Rap sheet isn't going to work in the long term.
But I disagree that it's an entirely different market. The overlap is huge.
I agree that it's not possible to guess what natural prices will do....

The terminology is all over the place. I had actually written “lab grown and synthetic” at first, and then edited it because I figured those words are redundant. Maybe not

 

[Texas Leaguer]

We're all got our linguistic pet peeves. Someone hates the term "Earth Mined"
For me, it's "synthetics"....of course, we're all free to call then whatever we want. But Lab Grown diamonds are exactly that- diamonds. The word synthetic seems to make it seems they're different.

Would your objection to the term synthetic also apply to other lab grown gemstones? Because the GIA has always used the terms interchangeably.

Sapphire Series Part 4: Gem Synthetic Sapphire and Diffusion-Treated Synthetics | Research & News

From the series,

www.gia.edu

 

[Rockdiamond]

Would your objection to the term synthetic also apply to other lab grown gemstones?

From my perspective: Diamonds are a stone unto themselves.
We could not have the modern world we do without diamonds.
Starting with diamond drill bits which allowed much more efficient drilling for oil- to the diamond in your smartphone. In fact, I believe GE invented lab grown diamonds for that purpose, way back in the 1950's
It's a mineral that has really affected human history.
I don't put colored gemstones in the same category.

In terms of GIA- I've searched but can't find the word "Synthetic" on a Lab Grown GIA Diamond report.

 

[Texas Leaguer]

The growers of synthetic diamonds would no doubt endorse your perspective! Fact is, GIA has long used the term for any gemstone grown in a laboratory.

Screening of HPHT Synthetic Melee with Natural Diamonds | Gems & Gemology

A screening service allows the lab to screen for synthetic material in diamond melee parcels.

www.gia.edu

There have been attempts by the producers to encourage the use of terms they think are more marketable than 'synthetic'. They attempted to get the world to call them 'cultured' at one point. There seems to be renewed interest in the term 'created' or 'lab created'. The people who order reports from GIA have some say in what term those reports use.

 

[Rockdiamond]

Yet they chose to omit the word "Synthetic" on a Lab Report for a Lab Grown Diamond.
In the case of synthetic sapphires ( for example)...they do use that term

 

[joey_v]

Is a synthetic sapphire the exact same as a natural sapphire?

 

[joey_v]

Joey- I'm pretty sure all of us participating wish the best for you!
But there are a lot of things you've been told that raise red flags.
Reliable companies that offer buyback restrict it very heavily. They have to if they have integrity!
Imagine if a whole bunch of folks decides to sell in one day.
There's simply no way to maintain the capital to buy all those diamonds back.... so sellers really restrict it.
For example- by only allowing "branded" diamonds.
Or- restricting the offer by time- maybe a year for example.

The statements being made to you- as you're relating them- make it sound very sketchy.

They didn’t want to offer a buyback at first. But I suppose losing a potential customer was the changer. Maybe because the purchase is also somewhat medium in size of transaction?

 

[Mrs_Strizzle]

Is a synthetic sapphire the exact same as a natural sapphire?

100% which is why colored gemstones need certs to say they are natural

 

[Texas Leaguer]

Is a synthetic sapphire the exact same as a natural sapphire?

A true synthetic (as opposed to an imitation) has the same optical and physical characteristics as the natural. There are small differences, which enables detection by gemologists or laboratories.

 

[joey_v]

Im working with Miss Diamond Ring for the actual bespoke setting. She says a lot of her customers are moving towards lab this year but still a majority are large naturals.

And she does large celebrity rings so I found that surprising. I asked her what happens to large natural diamonds - she said it’s more a mindset than a store of value. It’s hard to get close to retail on resale and it’s a large sum (7 Ct avg natural), so unless someone is buying a natural 5 to later upgrade to an 8, then it’s really buying for keeps.

I just got off the phone with her.

Very nice woman. Bespoke rings, forged. Not cast.

 

[yssie]

Hand-forging is indisputably better than casting for some styles, from both aesthetic and manufacturing perspectives.

Casting is indisputably better than forging for some styles, from both aesthetic and manufacturing perspectives.

 

[Rockdiamond]

They didn’t want to offer a buyback at first. But I suppose losing a potential customer was the changer.

Hi Joey,
I am not making these comments directed at any seller- or you specifically- but for the benefit of all reading- to get more viewpoints.
When a seller offers something as substantial as a contract to re-purchase a diamond ( or whatever) they are selling, and it's not a service they are currently offering, I would, of course, want to see it in writing....but even before I did, on its face, seems unlikely.
I understand what's involved. There are some well-respected companies that do offer ( and honor) limited buybacks. If a company is not set up for that, it's a huge deal.
In general- when sellers make claims that seem out of the normal range of what you would expect, use caution.
Maybe it's a totally moot point in your case.

 

[MissGotRocks]

Hi Joey,
I am not making these comments directed at any seller- or you specifically- but for the benefit of all reading- to get more viewpoints.
When a seller offers something as substantial as a contract to re-purchase a diamond ( or whatever) they are selling, and it's not a service they are currently offering, I would, of course, want to see it in writing....but even before I did, on its face, seems unlikely.
I understand what's involved. There are some well-respected companies that do offer ( and honor) limited buybacks. If a company is not set up for that, it's a huge deal.
In general- when sellers make claims that seem out of the normal range of what you would expect, use caution.
Maybe it's a totally moot point in your case.

And regardless, as has been past noted, even if the intention is genuine, it is only good as long as the business continues in business. Not something that you can 100% ever hang your hat on as a sure thing. It could be that he considers you a good customer as you point out but it could just as easily be that he knows what you want to hear. Wouldn’t be the first time - just sayin’!

 

[joey_v]

For sure you guys are right

That’s why I got a second buy back quote

Seems like it appears to have some risk involved

 

[Mrsz1ppy]

OP, I understand where you are coming from. It’s very true that you make your money when you buy, and are at the mercy of the market when you sell. Have you tried to consign the diamond you want to buy? That is where the rubber hits the road.

You either have a relationship with the vendor, who is still in business and will honor their buy back, or you have to try to sell on the open market. What is rare? What will people want when you are selling? No one knows. But history rhymes.

And the only thing that distinguishes your diamond from another is the trust factor of the vendor. That’s why Cartier, Tiffany etc get a premium even for the reseller. If the resale is your main objective, you should look at pre-owned branded diamonds.

 

[denverappraiser]

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.

Synthetic ruby has been on the market since the 1880's and synthetic emeralds since the 1960's. You're asking about a fairly long history and rather few have direct personal experience with either one entering the marketplace. Natural versions of both are doing just fine but it's hard to do a 'what if' scenario of how things would look if the lab stones hadn't come out. My suspicion is that interest has increased because they fill a starter need. High end rubies can get VERY expensive and 95% of the public is priced out of them. The labs fill that market but they definitely don't replace it.

Bridal diamonds are a specialized issue. There are a lot of brides in the world. More than there are diamonds unless we're talking about very small or very ugly ones. Labs fill this market. Guessing about how it would work if they didn't exist is, at best, guessing. One thing is for sure, neither one is going away. I see not reason to expect that 'cheap' engagement rings with lab stones will have a significant affect on the price of naturals.

There are synthetic versions of most gems, not just the two you mentioned, and assorted treatments to many others. I can't think of a single one that has had the effect you're asking about but, as they say, prior experience is not a guarantee of future results.

 

[distracts]

unless we're talking about very small or very ugly ones.

Brides or diamonds???

 

[lulu_ma]

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.

Yikes! I wouldn't buy either of these diamonds BUT if I had to choose I would buy natural diamonds 100% of the time. There is no way I would put any real money into a lab diamond to lose 98% of my money after a few years!

 

[joey_v]

Yeah this has been an interesting adventure for us. At first it was a lab at an unreal price. Then got the lab and it looked unnatural. Then had to raise the budget to get a good lab. Then didn’t like the way it played with the light so then went up again in price and size of the lab oval. Then went too big and then bought a secondary pear.

Then the pear became the favorite leading to looking at consolidating the two to get a natural pear thereby increasing the budget yet again.

Then came the price to stored value ratio and now it’s a hang up.

So unexpected….

 

[joey_v]

Thx to all those who replied

It’s been a fun journey

And enlightening as well

 

[Texas Leaguer]

Thx to all those who replied

It’s been a fun journey

And enlightening as well

@joey_v ,
A thoughtful poster taking his or her due diligence seriously is a real asset for this community. Not only does it benefit you, but all those that come after and read your thread get the benefit of your thought process and responses from the community.

It also helps the prosumers and tradespeople to formulate or review their positions on certain questions, and thus the advice they give to future posters. The numbers may change over time leading to different recommendations, but the logic stays the pretty much same.

Hope you will stay engaged on the forum, even after your primary mission is successfully completed!