Real. Pure. Beautiful. Affordable. Precious. Synthetic diamonds have all the qualities that consumers want in their diamonds. And above all, synthetic diamonds cost less than mined diamonds. Does that mean they are less precious than mined diamonds? Certainly not! According to experts, the emotional value that mined diamonds have come to hold is all man-made. Diamonds weren’t part of any tradition. The marketing tactics of certain diamond brands created the hype about making diamonds an integral part of engagements and traditions around the 1940s. Neither does a mined diamond’s value appreciate nor bring high resell values. Market experts suggest that investing in diamonds is a myth in itself.
But diamonds are definitely precious stones that carry beauty and make for beautiful jewelry pieces. The purpose of diamonds is to be beautiful and real; lab-created diamonds meet both of these requirements. Lab-grown diamonds are as real as mined diamonds, with the same physical, visual, and chemical properties. They are as beautiful, as sparkly, and of the same quality as mined diamonds. One of the main differences between mined and real synthetic diamonds is the price.
In general, real synthetic diamonds are 20 to 30% cheaper than mined diamonds. Why is that so? There are several reasons for the high price of mined diamonds.
There are around 20 large diamond mines in the world that produce the maximum number of diamonds. Only around 11 mines make up 60 to 70 percent of the world’s production of diamonds by carat. Diamonds are getting even rarer; hence, the hype and market create high prices for mined diamonds. (Source: www.cnbc.com)
It requires heavy machinery, tools, manpower, and time. A lot of time and money is consumed in mining out just 1.4 carats of rough diamonds. All these expenses make the mined diamonds much more expensive than lab-created diamonds.
Diamond producers and marketers have created myths and hype about the emotional and monetary value of mined diamonds, which consumers have bought into. The prices of mined diamonds are much higher than those of lab-created diamonds because of market strategies where producers have a high-profit margin.
Miners and producers who mine rough diamonds, merchants, cutters, and polishers who buy rough diamonds and then polish them; jewelry manufacturers and retailers who sell the jewelry to the consumers. Such a long value chain automatically increases the prices of mined diamonds. A number of synthetic diamond manufacturers have made it possible to reduce this value chain and hence are able to cut down on the final market price of lab-grown diamonds.
Demand for diamonds is also dictated by economic trends. Economic booms and recessions affect the prices of diamonds. Diamonds are a luxury item, and hence their demand growth is generally expected to be parallel to GDP growth. Slower GDP growth is not favorable to the mined-diamonds industry.
Man-made diamonds are created with technological processes. Unlike the process of mining out rough diamonds, which requires a large amount of financial investment, the process of growing diamonds in labs is comparatively cost-effective. Lab-created diamonds are created inside growing chambers in machines in the labs. Each machine can produce a large number of diamonds multiple times, which makes diamond production cost-effective.
Moreover, experts have constantly been innovating and introducing more efficient machinery and technology to produce diamonds in labs. Even diamond cutters are now using sophisticated computer technology to cut diamonds efficiently. High-tech laser cutting machines are used to cut and polish diamonds with the highest quality results, which is more cost-effective.
Synthetic lab-created diamonds are man-made by technology and machinery. They are produced at great speed. Real synthetic diamonds take about two to three months to get ready in the labs. Compare this with the time it takes for diamonds to form under the earth. Mined diamonds take millions of years to form. What does that mean for the demand and supply of mined diamonds? Mined diamonds cannot meet the high market demands.
On the other hand, the supply of high-quality lab-created diamonds can be controlled according to the demands, because they are produced faster by machinery. Experts suggest that the demand for mined diamonds will soon outperform its supply, which will cause an imbalance in the demand-supply ratio that affects the prices of commodities. This is not the case with lab-created diamonds; hence, these diamonds can maintain stability and affordability.
A report by the Better Diamond Initiative shows that global annual production of lab-grown diamonds has soared to 4.2 million carats from around 350000 carats two years ago. (Source: www.betterdiamondinitiative.org, September 2017)
An article in Forbes by Pamela Danzinger titled Diamonds Disrupted: How Man-Made Diamonds Will Disrupt the Mined-Diamond Industry suggests that the $80 billion global diamond-mining industry is concerned and threatened by the rapidly growing man-made diamond industry. The report further elaborates on price being one of the top three considerations that drive consumers’ purchasing decisions.
The report is backed by an analysis of a survey conducted by Stax Inc., where the strategy consultancy firm surveyed over 40,000 consumers. The report concludes, “Sales of lab-created diamonds, now estimated at $150 million, are expected to increase to $1 billion by 2020 and outpace mined diamonds, which have been in decline.” (Forbes.com, September 2017)
Mined diamonds are a status symbol for a large, affluent population. They have the buying capacity for mined diamonds that are 20 to 30 percent more expensive than lab-created diamonds. Whereas, on the rise is a growing middle class with an increased buying capacity and the millennial population, who are, by nature, conscious and prefer buying lab-made diamonds for all the right reasons that these diamonds stand for. Lab-generated diamonds are conflict-free, environmentally conscious, and cost-effective. For a large number of populations, these are prerequisites and deciding factors for purchasing diamonds.
While producers in the mined diamond market are stressing that “real is rare”, real synthetic diamonds are already winning the hearts of a growing young population that is taking a liking to man-made sparklers. It is only a matter of time before synthetic diamonds will become more valuable than their mined counterparts.
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