Secondary market for used lab-diamonds?

[Cherubian]

I have read one of the drawbacks to lab-diamonds is a weak secondary market, where prices are lower and the market is illiquid. I'm wondering if anyone has suggestions where I could look for lab-diamonds online?

I know about loupetroop, idonowidont, diamondbistro, and ebay of course. I don't think they sell lab-diamonds on RapNet... I believe IGI, GCAL, and EGL are the primary places that grade lab-diamonds so I would stick to these certifications. But is actually possible to get an amazing deal on a used lab-diamond? I’m in the market for a 1.5-2+ct Oval or Round and just thought it might be interesting to look around.

Thank you.

 

[OoohShiny]

@ChristineRose keeps up to date on the MMD side of things so hopefully she can chime in

Pretty much all diamonds are worth less on the secondhand market, it's a sad/annoying fact of life, but the MMD market is currently so small that it's hard to accurately value individual stones.

@denverappraiser might be able to advise on his understanding of the market and values, I know he's contributed to this section of the forum before

Have a look through the various threads in this section because there are several vendors mentioned here and there - I can only think of Brilliant Earth and Good Old Gold off the top of my head, but I know there are more!

 

[ChristineRose]

Hi Cherubian.

There really isn't what I would call a "market" for lab diamonds. That is, there isn't a place you can go with a lab stone and walk out with cash a few minutes later. There are places you can sell your stones, like you mention. I would add e-Bay to the list.

As far as resale value, mined diamonds will typically sell for 10 to 70% of their purchase price. The lower value would be if you got a generic diamond at a mall store, paid a mall store price, and sold it to a pawn shop or WE BUY GOLD place. The higher values might be for a branded superideal purchased from on of the top vendors with moderate markups.

There are a few exceptions, but it's very hard to find lab diamonds that aren't in the generic, so-so cut category. Once you take that into account, the resale value of a lab stone is comparable to that of a mined stone. If I knew of even one resold superideal lab stone, it probably did go for 70% of retail.

GCAL is the best certification. They are very reliable, but their categories don't line up to the standard GIA categories. IGI is acceptable. They are cheap and less through, but not dishonest. EGL is dishonest. Maybe. There are many labs called EGL, and it's not advisable to mess with them too much.

If you do look at e-Bay be certain to check the certificate, and use all the normal caution you would making any major purchase on e-Bay.

 

[denverappraiser]

You are making a leap. Namely that because they are difficult to sell, they therefore must be easy to buy. The problem here is that part of what makes them difficult to sell is that the market is tiny and full of trouble. eBay works, but it’s a minefield because there are so many people that confuse synthetic with simulant. Either deliberately or through misunderstanding. A quick search shows 17,000 "synthetic diamonds" for sale there at the moment and I would venture to guess that 98% are not diamonds at all, synthetic or otherwise. They’re out there, but it takes careful hunting and, of course, just because they’re there doesn’t make them a bargain. Craigslist is even worse. Sharks abound.

You’re right, Rap doesn’t sell them, but then Rap doesn’t sell to the public anyway so they don’t much matter.. Yes, those are the labs to be looking at.

The other problem you’re likely to find is a lack of variety. 1.5-2.0 is decidedly big in this business, and as recently as 5 years ago, that was HUGE. Unavailably huge. Newer stones haven’t made it through the chain yet. You’ll find them at pawn shops occasionally, but what I’ve seen is quite a bit smaller than that and it's unlikely you'll have more than one or two to choose from. They just don't have the supply.

 

[rockysalamander]

Not a pro on lab diamonds, but would agree that the simulant, lab created, synthetic world is fraght with fraud, misuninformation and difficulty. I've now helped several folks find a lab-created diamond from D. Nea. They are not cheap and you need to spend time finding one with good proportions, just like earth-mined.

 

[OoohShiny]

Many thanks for your input, @denverappraiser and @ChristineRose!

 

[Cherubian]

Great discussion guys, thank you.

A lot of the secondary issues we've addressed in lab diamonds also make me wonder about the secondary market for mined diamonds.

My impression is the secondary market in mined diamonds is difficult because
1) People think their rings/diamonds are worth the appraisal value which are hugely inflated
2) People with nice diamonds often don't need to sell them for cash since they don't need money in the first place, and are likely to hold onto them until they die. So the cycle of diamonds coming onto a market is often ~60 years (married in 20s, death in 80s)
3) Many people paid a huge amount for diamonds/rings in mall stores, and can't/won't accept the huge discount on the secondary market.

Any other factors I'm missing? When I to pawn shops, the diamonds I see are generally very small and very low quality, likely from people I can imagine who would need money now. That dynamic probably doesn't exist with larger stones, and when faced with the steep discount in the secondary market, I believe many people tuck them away in a corner of their dresser and forget about them. The cost of holding and maintaining one is nothing, compared to something like an un-used car or empty house.

Thoughts?

Diamonds/rings often being an emotional purchase makes the market quite irrational at the retail/secondary market level.

 

[denverappraiser]

What pushes diamonds into the secondary market are mostly divorce and death. Everybody dies. A significant number divorce. Some divorce several times. Diamonds are not perishable, people are.

The secondary market is considerably bigger than people generally think, especially if you include inter-generational gifting (Grandma gives you a diamond instead of you going out and buying one). Some estimates are that it's as high as 50% of the total market.

There’s a funny thing about pawn shops. The good locations to buy aren’t generally the same as the good locations to sell. That’s why the chains are so successful. They can buy in one place and sell in another. By and large, pawn shops aren’t good places to sell expensive things. That doesn’t mean they don’t get them, it just means they sell through different channels. Pawnbrokers are smart. The display case next to the lawn mowers does better with low end goods and they know this. High end designer things do better in auction houses and fancy stores. They know this too.

 

[ChristineRose]

@denverappraiser --Having looked at the synthetic diamond category on e-Bay, I can tell you that the vast majority are CZ, or Moissanite, or fake Moissanite. But a big chunk are treated natural diamonds and even untreated natural diamonds. I don't know if these are there because sellers are confused or lazy, but I suspect it's because they just want to get their stones in front of bargain seekers.

 

[denverappraiser]

@ChristineRose You're finding real stones impersonating synthetics by sellers who really do know the difference? Interesting. I wonder if it works.

By 'fake moissanite' you mean CZ and/or glass?

 

[ChristineRose]

@denverappraiser By fake Moissy I mean unbranded low quality silicon carbide, including a fair amount of industrial material which they refer to as "Black Moissanite." It's drill bits shaped like a cut diamond.

There's often some white sapphire and glass thrown in there as well, but CZ dominates.

 

[Cherubian]

What pushes diamonds into the secondary market are mostly divorce and death. Everybody dies. A significant number divorce. Some divorce several times. .

Totally agree. Death, divorce, and people just holding onto them forever because it's easy to. I would love to see some data on what happens to diamond rings after divorces...

It's just suprising how difficult it is to access the secondary market in a way to find a good deal, considering the large markup on retail diamonds. You would think with the divorce rate at 50%, a lot of diamonds would be coming onto the secondary market. Perhaps these diamonds get harvested from rings at pawnshops, cash for gold, and other places, then the metal sold for meltdown value, and then put on RapNet for a decent mark up.

I have seen sites like idonowidont.com, but their site is difficult to search, and most of the people on there seem to be looking to get near-retail prices or appraisal prices.

Any good ideas on how to see a more efficient secondary market for mined diamonds? Maybe I'm seeing a problem where none exists, but it would be nice to know if there is a solution for this.

 

[denverappraiser]

Divorce rings get sold to dealers or pawnshops who salvage and recycle the materials, they get sold on craigslist/ebay to someone looking for a bargain, they get sold in consignment shops, they get taken apart and made into new things, they get given to the kids (who then use them, sell them, restyle them, or salvage them).

Here’s the heart of the problem.

Imagine a ring. $2000 diamond (The dealer paid $1000 for it) and $1500 worth of ring that includes a few little stones, a few grams of platinum and a whole bunch of labor. Another $500 worth of taxes, ‘extended warranty’, and similar add-ons. $4,000 out the door. 6 months same as cash! The store gives an appraisal that says it’s ‘worth’ $6,000, and somehow everyone forgets what the transaction really cost. It's a $6,000 ring now. What happens on the secondary market?

The dealer can still get that diamond for $1000 from their regular vendor. Not only can they get it, they can get it on consignment with no money out of pocket until they sell it. They get no grief from the Sheriffs, and they can spend their inventory dollars on other things. The ring is now ‘used’ and basically unsalable for them beyond salvaging the materials. Call it $100 in parts. What will they bid? $800 is a strong offer. $600 is more like it. The customer thinks that’s ten cents on the dollar! They freak out. That may be low, it depends on the piece, but it’s not crazy ripoff low.

 

[DoeEyes]

@ChristineRose I hope it's ok for me to come into this old thread and ask for your advice. You seem to be knowledgeable about the pre-owned MMD market.
I'm currently waiting for lightbox to launch so I can buy the halo pendant 1ct, it will be $900 with the setting and the center stone is supposed to be 8/9 carat according to their website (0.88.) Obviously the cut and quality of these stones is still unknown, but from what I've read they are going to be nice.
What I'm wondering is whether it's possible to find a similar MMD for the same or less than LB. I'm willing to go down to like .65 but probably wouldn't want to go lower than that, and definitely don't want anything bigger than 1 carat. It needs to be round cut and I basically just want the whitest and sparkliest I can find. It can be loose or already set, I'll be taking it to my local jeweler to have it set in a new setting anyway.
I know about all the websites where you can find these but I'm just not knowledgeable enough to separate the non-diamonds (moissanite, cz, enhanced etc) and I also don't know how to determine the quality of a stone even when I find one so I'm deferring to the expertise of PSers. What do you think? Would I ever find something that's a better deal than LB will be?

 

[ChristineRose]

Hi @frogplus.
That's a very difficult question to answer because there's no way to determine the quality of the Lightbox stone.

There's really only a handful of places to get a genuine lab diamond. Most of what's on E-bay is fake. One way I recommend is getting a good jeweler to help you, but that's not going to save you any money.

The two big online sources of stones are Brilliant Earth (aka Gemesis) and Diamond Foundry. Diamond Foundry only has bigger stones. The extra cost of growing a big stone is more than made up for by the higher sales price.

If you set the Brilliant Earth parameters to include bad cuts, high colors (like J) and bad clarity, they have a decent selection of stones under $1,000. But most of them I would not recommend. I wouldn't recommend any cut less than super ideal, because an IGI superideal is not that super. I also wouldn't recommend a high color like J, at least not for an online purchase, because lab J tend towards gray.

Here are two that look promising. They are J but appear to be well cut.
https://www.brilliantearth.com/lab-diamonds-search/view_detail/6074914/
https://www.brilliantearth.com/lab-diamonds-search/view_detail/6318656/

The normal next step is to request idealscope images. I don't even know if Brilliant Earth does that.

If you want to look on e-Bay, don't even consider something without a GIA, IGI, or GCAL certificate. Assume everything else is a CZ. I didn't find even one genuine diamond on E-bay that matched your search parameters.

 

[ChristineRose]

Here's another option for you:
http://diamonddealfinder.com/enquiry.php?id_field=242646
It's an SI2 mined stone. TBH, you might be better off letting the folks in Rocky Talky find you a bargain that's high color, lower clarity, or maybe not quite a superb cut, possibly used. All of these are compromises but at least you'll know what you're getting and you'll have a better selection.

Christine

 

[DoeEyes]

Thank you @ChristineRose ! I'm just sitting here waiting for LB to launch, and in the meantime I'm reading everything and seeing what my alternative options are if LB is really not that great, or something else happens where I'm not able to get one from them in a timely manner (if it's like 6 months wait time I probably will just move along).