Find your diamond
Find your jewelry
shape
carat
color
clarity

Value versus price? How do the synthetics really compare to naturals?

Wink

Ideal_Rock
Trade
Joined
May 3, 2001
Messages
7,373
I read an interesting article the other day, and it makes me think about upgrades and buybacks as a demonstration of product value.

Here is the article, written by Rob Bates of JCK.

https://www.jckonline.com/editorial-article/resale-lab-grown-diamonds/

It is interesting to me that many in the business, including some of the big boys do not have a good buyback or trade up policy when it comes to the synthetic diamonds they sell. (Lab-grown as they prefer to call themselves.)

Why is it that most vendors do not feel that their products have a value worthy of buybacks and trade ups?

I have my thoughts and am interested in hearing yours.

Wink
 

oldminer

Ideal_Rock
Trade
Joined
Sep 3, 2000
Messages
6,336
Vendors have to consider the level of liability for offering any sort of buy-back or trade-up policy. Many firms offer some version of these while many don't. The concept was partially secured by continual long term historical increases in diamond prices which have not been so impressive in the past several years. Past events are no guarantee of future performance, as they say in every investment business prospectus.

With synthetic diamonds, many folks will enjoy lower prices as production is perfected and increased over time. There is certainly no historical precedence which could indicate any hopeful alternative since man made diamonds are so relatively new in the market. There never will be a shortage of man made diamonds comparable to shortages of many categories of mined diamonds.

Such trade-up and buy-back offers are only as solid as the firms which offer them. In times such as we are living in, I think we may see some alterations and even some eliminations of such offers in the months and years to come. I could be wrong, but my crystal ball is all I have to know the future any better than anyone else.:cool2:
 

denverappraiser

Ideal_Rock
Trade
Joined
Jul 21, 2004
Messages
8,709
Hardly any vendors of anything have buyback policies. Outside of a certain limited amount that falls under warranties, say the first 60 days after purchase, I can't think of a single one. Cars? Houses? Electronics? Food? Artwork. I applaud your policy, but it's an unreasonable expectation for the industry.

I was just doing some research for an article on this very topic. Synthetic diamonds are reportedly getting cheaper in relation to mined diamonds. I'm not so sure this is true but I'm having a hard time finding historic data, even for just a few years. It's easy with mined stones but the historic data on factory stones is tough to find.
 

amoline

Shiny_Rock
Joined
Oct 11, 2018
Messages
308
Hardly any vendors of anything have buyback policies. Outside of a certain limited amount that falls under warranties, say the first 60 days after purchase, I can't think of a single one. Cars? Houses? Electronics? Food? Artwork. I applaud your policy, but it's an unreasonable expectation for the industry.

I was just doing some research for an article on this very topic. Synthetic diamonds are reportedly getting cheaper in relation to mined diamonds. I'm not so sure this is true but I'm having a hard time finding historic data, even for just a few years. It's easy with mined stones but the historic data on factory stones is tough to find.
Subaru is an example of a car brand that does almost the same thing - every year, I get a letter from the dealership offering a "guaranteed trade in" value - that they will guarantee AT LEAST a certain number based upon the model and year of the car and that can go up depending on the condition. Subaru will not buy other car types, and they will offer only on Subaru vehicles that were purchased from Subaru (and not other generic dealerships)

The difference is you can't really put significant "wear and tear" on a diamond - it's not like every time you put a ring on there's a certain level of of depreciation expected over time. While diamonds may not be great investments, they don't depreciate in the same way as other goods.

That's not me being argumentative and trying to push back on your point, btw, it's just adding information to the pot per se.

---

When I think of this, personally, I think it is very important to remember that PriceScope and its members who are the people to buy from the likes of BGD, HPD, WF, etc, etc... -- we are not the average diamond and jewelry buyers. I truly think that most vendors do not offer buy back or trade up because it's simply entirely irrelevant to their business model and the type of customer received.

Most average people only ever buy or own one diamond in their lives. If you own a pair of diamond studs you're probably ahead of most people. In fact, 5 of my friends (I'm in my early 20s) got engaged this year - and only one was engaged with a diamond. The rest were simple bands, sapphire, or morganite.

That's just me pondering in general and not opening the can of worms that is the synthetic vs mined debacle.
 

amoline

Shiny_Rock
Joined
Oct 11, 2018
Messages
308
I'm aware that they aren't the same thing -- hence me saying almost the same, and not "the same." I am not stupid.

And, in fact, the offer from Subaru that comes every year offers a straight buy back cash price AND a trade in value amount. So it is very much also a buyback program. But that's off topic to the thread, from which I will now excuse myself.
 

Dancing Fire

Super_Ideal_Rock
Premium
Joined
Apr 3, 2004
Messages
30,650
It is interesting to me that many in the business, including some of the big boys do not have a good buyback or trade up policy when it comes to the synthetic diamonds they sell. (Lab-grown as they prefer to call themselves.)

Why is it that most vendors do not feel that their products have a value worthy of buybacks and trade ups?


Wink
Wink, An easy answer to your Q, b/c they aren't stupid. Why should they offer a buyback when they know that MMDs will be cheaper next month?.
 
Last edited:

AV_

Ideal_Rock
Joined
Aug 5, 2018
Messages
2,921
What does come with a repurchase agreement in any terms. [of the list here, say]
 

OoohShiny

Ideal_Rock
Premium
Joined
Apr 25, 2014
Messages
6,717
If I may don my Pedant Hat quickly ;-) :lol: am I correct in thinking that the term 'synthetic diamonds' for man made / laboratory grown diamonds has now been determined to be disallowed in terms of FTC-recommended descriptors?



In the past, the Guides listed the following approved descriptors for non-mined diamonds: laboratory-created, laboratory-grown, [manufacturer-name]-created, and synthetic.

The new Guides still recommend the first three descriptions—though they no longer include synthetic. They also say that manufacturers can use other phrases if those terms “clearly and conspicuously convey that the product is not a mined stone.”
 

Wink

Ideal_Rock
Trade
Joined
May 3, 2001
Messages
7,373
If I may don my Pedant Hat quickly ;-) :lol: am I correct in thinking that the term 'synthetic diamonds' for man made / laboratory grown diamonds has now been determined to be disallowed in terms of FTC-recommended descriptors?


To quote from the FTC Issues New Guides for Jewelry Industry, near the end of the article. "While the FTC has now crossed synthetic off its list of suggested descriptors, it declined to outright prohibit its use, arguing that the term—commonly used by gemologists and scientists—is not deceptive in every instance. But it did rule that it is misleading to use the term synthetic to “suggest a competitor’s lab-grown diamond is not an actual diamond.”

The bolding and italics I added. I grew up in this industry when synthetic was the proper word for a product that had the same physical, chemical and optical properties as a natural gem. If I say a diamond is a synthetic diamond, to me that means just that. It is a man made creation that physically, chemically and optically is a diamond.

It is still different, to me at least, from a natural diamond. Synthetic may have been crossed off the list of suggested descriptors, but I still see it as the best insurance that the public understands what it is buying.

Wink
 

Rockdiamond

Ideal_Rock
Trade
Joined
Jan 7, 2009
Messages
7,988
It is such a strange new world we're living in. If you'd have asked me a few years ago.....heck a few days ago- I'd say I would never want to entertain the thought of selling lab grown diamonds..... But just today I've been exploring sources for them.
The retail landscape is so much more challenging for small businesses today that we can't rule out any revenue source. Like Lab-grown diamonds.
In terms of buy-back trade up.
I have a lot of admiration for firms that offer to buy back diamonds. There are so many potential situations where the seller would be put in a terrible position ( forced to break their word)- or put out of business by offering such a guarantee.
Trade ups, as Neil pointed out, a totally different ball of wax.
I could easily imagine offering a trade up program for Lab Grown stones- as we do for natural mined diamonds. But the potential liabilities for a buy back program are worse than with mined diamonds in my opinion.
 
Last edited:

sledge

Ideal_Rock
Premium
Joined
Apr 23, 2018
Messages
4,121
@Wink, in the case of CBI stones that you sell, does CBI or HPD provide the backing for the trade up and buy back policies?

I ask because when doing research for another international user, I noticed the Belgium CBI dealer, Fortrez, offers similar things except the lifetime buyback is capped at 75% and the lifetime trade policy required a 60% price increase (in USD) for the new stone, so you could get the 100% initial value of the original stone.

As you are well aware, HPD offers 80% lifetime buyback and lifetime trade up with no restrictions (on dollars or any of the C's).

Relating this back to synthetics (I also prefer this term, btw), would it be more realistic to see such programs exist if the manufacturers offered the incentive, as opposed to the dealers/vendors? After all, with synthetics, they seem to have more control on pricing than the dealer.
 

Rockdiamond

Ideal_Rock
Trade
Joined
Jan 7, 2009
Messages
7,988
Relating this back to synthetics (I also prefer this term, btw), would it be more realistic to see such programs exist if the manufacturers offered the incentive, as opposed to the dealers/vendors? After all, with synthetics, they seem to have more control on pricing than the dealer.
This is an interesting question! Other than a situation where the manufacturer is actually partners with the retail seller.... to my knowledge, there's never been any sort of established practice where cutters participate in buying back diamonds.....unless it's for far less than they initially sold it for....
Now, when it comes to Lab Grown- Synthetic diamonds- whatever we choose to call them....the entire market is in it's infancy. After speaking with a few manufacturers this morning, my sense is that it will follow trends which are long established the diamond business. But only time will tell....
 

denverappraiser

Ideal_Rock
Trade
Joined
Jul 21, 2004
Messages
8,709
If a manufacturer has the markup, trade-up is no problem. Buy a widget for $100, sell it for $300, and offer a $300 discount on a purchase of $600 or more. Bring it on. It doesn’t matter what the resale of the used item is. This is especially true if there are restocking fees, resetting fees, cleaning fees, or similar things that can offset the loss. A buyback requires a totally different business model. That works on some things, like a $10 toy where you can return it for a full refund forever because the seller knows that few customers will actually do it. The advertising value is seen as worth more than the cost of occasionally giving a refund. That’s why Costco and their manufacturing partners do this for example. Diamond dealers, especially dealers in synthetic diamonds, have a very different problem. The assumption that the ‘value’ of diamonds will always go up forever is clearly false, and the risk of taking back a return in the future that they will then need to sell for significantly less needs to be very carefully evaluated. That can easily turn into a corporate death sentence.
 

Rockdiamond

Ideal_Rock
Trade
Joined
Jan 7, 2009
Messages
7,988
Diamond dealers, especially dealers in synthetic diamonds, have a very different problem.
Just curious Neil- but where do you feel there's a difference between Mined and Lab grown in this aspect? I was working at Fabrikant in 1980 when the head buyer thought he'd gotten a great deal on 10 x 1ct D/IF diamonds at about $70k per stone.....the market dropped to about $15k per stone in no time at all ( if memory serves me)
 

denverappraiser

Ideal_Rock
Trade
Joined
Jul 21, 2004
Messages
8,709
The leverage is different. The fear with synthetics is that they will drop drastically, like 90%, because of some technological change. I don’t think they will, but if I had to bet my business on it, I wouldn’t be making that offer. To be fair, I wouldn’t offer it on mined stones either. Will diamonds ever drop by a factor of 2? I doubt it, but it’s happened before. Will people lose interest in diamonds entirely? I doubt it, but stranger things have happened. I would not want to bet my house on it.
 

sledge

Ideal_Rock
Premium
Joined
Apr 23, 2018
Messages
4,121
Is having a buyback policy really uncommon, at least in natural diamonds? Even the local jewelers around here have a form of it, but it's normally advertised differently. Something along the lines of, "she'll say yes, or we'll give your money back".

Offering a 90 day to 1 year buyback seems plausible. Offering lifetime seems more risky. I think of financial markets collapsing and people making a run on banks and exercising these buyback options to secure cash. The reality is those odds are pretty slim. Add to the factor that probably most people buying are also enthusiasts and it may not just be a financial decision. Lastly, taking a gadget back for a refund is one thing but taking a diamond back that represents life and love commitments is entirely different. Not to mention if financial markets were collapsing, this may be the least of our worries.

Does it mean someone won't exercise the option? Certainly not, but I'm sure some statistician nerd has done the math to determine it's a feasible option as long as $X is collected on each sale of a diamond.
 

sledge

Ideal_Rock
Premium
Joined
Apr 23, 2018
Messages
4,121
What I do ponder is how DeBeers may leverage themselves with the LightBox brand and natural diamonds.

They could target a younger and/or less financially secure audience with the LB brand. Offer some trade up value that can be crossed into the natural diamond segment. That way, it's not a competition but rather a path from synthetic to natural as your financial strength grows.

Also, it means keeping those trade up policies good for existing natural customers as you begin to create an environment where buying what you can afford now and upgrading later is the mindset vs a one and done mentality.

Granted, certain buyers/owners won't fit the model, but it's not so much about the current 100 years as the next 100 years you are trying to harvest.
 

Dancing Fire

Super_Ideal_Rock
Premium
Joined
Apr 3, 2004
Messages
30,650
I could easily imagine offering a trade up program for Lab Grown stones- as we do for natural mined diamonds. But the potential liabilities for a buy back program are worse than with mined diamonds in my opinion.
The odds of mined diamonds dropping 50% from this level are very slim, but on the other hand it is most a guarantee MMDs will drop 50% from today's level in order to stay competitive with mined diamonds. JMO
 

Rockdiamond

Ideal_Rock
Trade
Joined
Jan 7, 2009
Messages
7,988
Is having a buyback policy really uncommon, at least in natural diamonds? Even the local jewelers around here have a form of it, but it's normally advertised differently. Something along the lines of, "she'll say yes, or we'll give your money back".
There's a huge difference between a money-back guarantee ( which is relatively common) and buyback policy.
If you look at Costco, the buyback exists- but it's extremely restrictive. They don't sell loose diamonds and won't accept a return if the item has been altered in any way ( size adjusted) or damaged ( it could easily be said that a worn ring is damaged). I've never tried it- maybe others have better info on it. But we're comparing Costco to a seller of diamonds.
AS far as 90 days to a year......most small businesses will have to keep a far better handle on cash flow- a few big stones coming in the same day for buyback would put most individual diamond sellers in a very bad position......even if you look at the money back guarantees- the "big boys" offer 30 days,......few "mom and pop" sellers can even do that......
 

Wink

Ideal_Rock
Trade
Joined
May 3, 2001
Messages
7,373
@Wink, in the case of CBI stones that you sell, does CBI or HPD provide the backing for the trade up and buy back policies?

I ask because when doing research for another international user, I noticed the Belgium CBI dealer, Fortrez, offers similar things except the lifetime buyback is capped at 75% and the lifetime trade policy required a 60% price increase (in USD) for the new stone, so you could get the 100% initial value of the original stone.

As you are well aware, HPD offers 80% lifetime buyback and lifetime trade up with no restrictions (on dollars or any of the C's).

Relating this back to synthetics (I also prefer this term, btw), would it be more realistic to see such programs exist if the manufacturers offered the incentive, as opposed to the dealers/vendors? After all, with synthetics, they seem to have more control on pricing than the dealer.
Great questions.

To my knowledge I am the only Crafted by Infinity retailer that dismissed all other suppliers. I don’t take their phone calls any more, I don’t feel right selling less than CBI. And since I’m only selling CBI it permits me to provide a total upgrade and buyback blanket that is rather generous. Other CBI retailers do it at levels which make sense to their total business model.

Indeed, yes. I have chosen to allow my clients unlimited upgrades so long as at least $1.00 more is spent. That’s not a figure I would base total business upon, but I wanted to make a crystal clear difference from stores that require you to spend 100% more than the original purchase to qualify. Programs which force 2X the spend or 2X the carat-weight to “upgrade” are not really upgrading that initial purchase, so much as they are creating a brand new sales amount equal-or-better than the first amount, thus making that original item only represent 50% or less of the new purchase.

Something you may not know (?) Due to an unusual request from a client, we added in upgrading a stone for two or more smaller CBI diamonds so long as the total upgrade is more than the original cost by at least $1.00.

The buyback policy is also maxed out in favor of our clientele, for a reason. I like to sleep at night. It is rare that we need to do a buyback, but when we do, it is nearly always because the client really needs us to help them. May it never happen to you, or any reader here, but it happens. When someone has a wife or child with a serious illness and get only twenty or thirty percent of what they paid for a diamond, to me that is just wrong.

Oh, and while we are discussing things of interest. The ISO (in some ways the international version of our FTC) is doing a MUCH better job with this whole standardization of diamond descriptive terms than the FTC.

Here is a link to a blog article published on our site all the way back in August of 2015 that might be interesting.

https://www.hpdiamonds.com/en-us/blog/blog-article/14

It is a good read and clearly shows how the international standards are much more consumer friendly and legislate a much higher degree of clear disclosure from sellers.

Wink
 

Rockdiamond

Ideal_Rock
Trade
Joined
Jan 7, 2009
Messages
7,988
It is a very generous policy Wink - to be sure.
Those of us who do offer such policies need to find ways to make them work- for example- we're one of those sellers offering trade up who require spending double to trade up....but in many cases, we buy back the diamond and ring, which I don't think is common.

Also, it's super cool for consumers that you offer buyback.
I always worried that if we offered buyback, and multiple clients wanted to sell back in a short period of time.....or in the case of price decreases.....
 

Batgirl76

Shiny_Rock
Joined
Aug 7, 2018
Messages
202
Leibish’s comments in the above-linked JCKonline article really turned me off to EVER buying from him or recommending him to others. I could now never trust anything he says.
 

Batgirl76

Shiny_Rock
Joined
Aug 7, 2018
Messages
202
I find it telling that, of amoline’s 5 friends who just got engaged, only one of them bought a diamond...
 

Lessics

Shiny_Rock
Joined
Jan 6, 2019
Messages
227
@Wink This maybe sounds harsch. But if somebody buys a diamond and later on they get in financial trouble that they even have to sell the diamond makes me think they shouldn't have purchased a diamond of that price in the first place. If they just had bought an MMD imagine what money they would have saved for their emergency fund.
Nobody should buy a diamond if they need to maybe sell it down the road for financial reasons. Especially if they didn't purchcase it from such a generous vendor like HPD!

I also would love to know if you see lab diamonds compromising sales of mined diamonds? Because if not I don't understand why everybody harps on the "value" aspect of mined diamonds. Because the value of a mined diamond is most of the part emotional (nonetheless beautiful emotion). A mined diamond isn't like gold where you could really liquidate it in a matter of hours or a day.

The wholesale price for jewellers and retailers for lab diamonds is about 25-15% of that of a mined diamond now. What would be a fair price?
 
Last edited:

Tekate

Ideal_Rock
Premium
Joined
May 11, 2013
Messages
5,915
Well, one thought was YET, now good buybacks yet.. but I mostly feel that perhaps the synthetics are fairly easy to produce and therefore not really an upgradeable product.
 

Rockdiamond

Ideal_Rock
Trade
Joined
Jan 7, 2009
Messages
7,988
But if somebody buys a diamond and later on they get in financial trouble that they even have to sell the diamond makes me think they shouldn't have purchased a diamond of that price in the first place.
I totally agree.....in fact, over the years I can't count the number of times I've had a discussion like this:
Customer- do you offer financing on your diamonds and jewelry?
Me- are you sure you want to go into debt to buy a diamond ring? We would rather work with whatever liquid funds you have to find something that works so you don't end up paying for the ring for the next 20 years....
Once we speak for a while it almost always turns out to be a younger person- and I can't stand the thought of seeing that young person sign a deal that will have them paying 30% interest for years......
Probably silly from a business standpoint- heck, many will just take the money and run....but I feel that morals and business are inexorably intertwined.
 

Rockdiamond

Ideal_Rock
Trade
Joined
Jan 7, 2009
Messages
7,988
Update.....I just carefully examined some lab grown pink and blue diamonds- they were RBC, average size .20cts ( 1/5's)
They looked NOTHING like natural pink and blue diamonds in terms of color.
There was also a 5ct emerald cut.
It was so horribly cut that I would not want to use it as an example.....but I don't think a natural mined diamond would ever hit the market looking like that nowadays.....it would be recut.
 

Tekate

Ideal_Rock
Premium
Joined
May 11, 2013
Messages
5,915
Well that goes to show WHY I shouldn't try to make pizza and read PS what I meant was, no one offers them yet on MM diamonds (or synthetic whatever). Perhaps the MM diamonds just aren't good enough but I suspect it has more to do with price. Wink, you are a rare breed as is David. :)


Well, one thought was YET, now good buybacks yet.. but I mostly feel that perhaps the synthetics are fairly easy to produce and therefore not really an upgradeable product.
 
Be a part of the community It's free, join today!

Need Something Special?

Get a quote from multiple trusted and vetted jewelers.

Holloway Cut Advisor



Diamond Eye Candy

Click to view full-size image.
Top