Imagine a scenario. It’s Valentine’s Day. You’re contemplating popping the question to the partner of your dreams, and you want to do it traditionally, with all the bells and whistles.
But you’re also a very budget-conscious individual – note how diplomatically I avoided the word ‘cheapskate’ – and the prices of diamond rings in the windows of High Street jewellers make your knees go all wobbly.
You’re currently nursing a coffee in Greggs (Starbucks being too pricey) and ripping your paper napkin into shreds as you ponder the situation.
Is there a way to make your Significant Other feel valued while also getting value for money?
Diamonds are forever
One option is to go vintage, buying a pre-loved (or pre-divorced) engagement ring from a pawn shop or a private seller.
Or if you’re really lucky maybe there’s an old family ring you could use.
Both are good options – but as with any second-hand purchases, it’s a ‘caveat emptor’ situation.
Vintage rings may be difficult to resize. Typically you can only make a ring two sizes bigger without causing problems with the set of the stone. And people today have chunkier fingers than they did a hundred years ago. So usually you will have to resize an old ring.
Older diamond rings may have cloudy stones, too. They tend to be less sparkly anyway because yesteryear’s cuts had fewer facets. That doesn’t always fit with modern tastes.
Also old diamonds rarely come with a certificate of authenticity. You have to know what you’re doing – or have access to some pretty sound advice – so that you don’t get sold an imitation.
Bear in mind, too, that your spouse-to-be may not actually like Great-Aunt Edna’s 1970’s bling. Check before you pass on that heirloom!
But what if you don’t have a family safety deposit box stuffed with precious stones, and you don’t fancy your chances on the second-hand market?
Well, leaping into that gap in the market with a grand “tah-dah!” have come lab-grown diamonds.
What is a lab-grown diamond?
If you don’t know about lab-grown diamonds (sometimes called ‘created diamonds’) then you’re not alone.
Nobody in my little corner of the world seems to have come across them yet. But in other places they’re already ubiquitous.
Lab-grown diamonds offer an alternative to mined diamonds, and it’s an alternative that has taken off in recent years. The result has been an unprecedented shake-up of the diamond industry.
You see, a lab-grown diamond is literally indistinguishable from a traditional diamond by anyone but a jeweller with the specialist equipment needed to read the tiny ‘LG’ symbol inscribed on its base.
Lab-grown diamonds are classified in the same way as mined diamonds. They’re graded in the same way. They offer the same cuts and level of sparkle.
That’s all because lab-grown diamonds are diamonds.
As Sherwood reports:
If you buy a knock-off Rolex on Canal Street in New York, it’s not really a Rolex. It’s lighter, the materials are cheap, and anyone with a Rolex can instantly tell it’s fake.
But a lab-grown diamond has the same chemical composition, physical properties, and optical properties of ‘natural’ diamonds. The only difference is their source.
Basically, the only force keeping so-called natural diamonds’ prices up is consumer perception…
Best of all – and crucially for our hypothetical cheapskate – lab-grown diamonds are a lot less pricey.
No pressure, no lab-grown diamonds
Lab-grown diamonds are cheaper because they’ve passed through fewer hands than mined diamonds – and perhaps because fewer people have been killed to get them out of the ground. Which is nice.
Marketing materials sometimes refer to them as conflict-free diamonds or ethical diamonds. That’s because unlike many mined diamonds, they don’t come from a war zone and haven’t been used to finance armed conflicts.
You can therefore feel good about buying a lab-grown diamond, if that’s the sort of thing that matters to you.
Don’t get carried away with the idealism, though. Lab-grown diamonds are made in factories which consume an awful lot of power. It doesn’t always come from sustainable sources.
Indeed that word ‘ethical’ starts to look a bit flimsy if you examine it too closely.
(Affordable) diamonds are a girl’s best friend
And now the money shot… lab diamonds typically cost less than a quarter of the retail price of mined diamonds (in the UK at least).
Great! Where do you go to get one?
Well, try the Internet for starters.
There’s been a boom over the last couple of years in online retailers selling the things. They’ll enable you to custom make your diamond ring down to the style of setting, the type of metal, the shape of the stone, and lots of other elements. You can tinker around with an online ring designer tool, adjust carat size, diamond colour, width of band, and do all sorts of other fiddling until you have something that matches your budget and the style that you and your partner favour.
Some of these retailers even have high street storefronts. There you can make an appointment to check out your chosen styles in person.
And it’s worth checking in with these branches anyway – because sometimes they’ll have a heavily discounted ring that someone ordered but then brought back.
“Usually”, I was told by a salesperson in a hushed voice, looking round to make sure there were no fragile-looking chaps behind her, “it’s because she said ‘no’.”
Diamond in the rough
I found the lab-grown salespeople to be great, probably because they understand that their customers are working to a budget. They’ll clue you in on all the corners you can legitimately cut.
For instance, you’ll pay more for a diamond with a colour graded towards the start of the alphabet – but there are diminishing returns:
- D is the most prized colourless diamond grade. It’s also the most expensive.
- Anything around F or G is almost imperceptibly coloured, so for most people there’s no point paying extra for a D or even an E.
- Diamonds graded around I or J are noticeably yellower. But increasingly that’s becoming quite fashionable, so you can bag a bargain if you like coloured stones.
The same goes for clarity. There’s no need to pay extra for the top level of clarity unless you’re going to be looking at your ring under a microscope.
Be careful cutting corners on the metal though.
You can save a lot by choosing a 9k gold band (rather than 18k or platinum) but be aware the white gold variants tend to be rhodium-plated to make the ring extra shiny. When the rhodium wears off – in blotches – you’ll have to send away the ring to be re-plated. That’s likely to be at least once a year, at around £50-£70 a time.
Over a lifetime, it’ll mount up. This is one saving that could prove to be false economy.
Should you become an investor in diamonds?
No. Please don’t.
I come from a town where ‘investment jewellery’ is alive and well as an asset class. Plenty of folks around here are still sporting sovereign rings – which, incidentally, offer both a portable investment and an edge in a fist fight.
So it goes against my upbringing to say this – but don’t invest in diamonds unless you really know what you’re doing. They are a notoriously tricky investment, for all kinds of reasons.
One reason is that diamonds are fundamentally non-fungible. Diamonds come in a bewildering variety of grades, colours, inclusions and shapes, and the labs which categorise them use different standards. Hence it’s necessary to value every stone on its own merits.
Some people compare diamond buying to property buying, with similar risks and difficulties, rather than to investing in gold, say, which can be traded more easily.
An insider speaking to the Robb Report put it well:
“Go buy a natural diamond engagement ring on 47th Street,” Ryan Shearman, of Aether Diamonds, says.
“Walk across the street and try and sell it. Tell me how much value you recoup. It’s not very far off from an automobile in that case. So if you’re not looking at your car as an investment, you shouldn’t look at your engagement ring as an investment. The value is what you make of it.”
Diamond hard
Diamond rings lose value over time, unless you’ve managed to get an outstanding deal. This has been true of mined diamonds for a long time and it’s certainly true of lab-grown diamonds now. They’re not a smart long-term investment.
The exception is extremely expensive or extremely rare stones. They are apparently a fairly decent place for the super-rich to park their money. But I don’t know the ins and outs myself, since I haven’t been able to find a billionaire willing to chat to me about his diamond stash.
For regular folks though, diamonds won’t rattle the capital gains tax cage anytime soon.
The diamond market is particularly unpredictable right now. Prices have dropped across the board, mostly thanks to the rise of the lab-grown diamond. Nobody knows how it’s going to shake out.
Maybe lab-grown will be a fad that fades? Perhaps the value of mined diamonds will plummet permanently? Or it could be that everything will stabilise and there’ll be a comfortable co-existence.
I don’t know. And neither, it seems, does anybody else.
Is diamond jewellery still valuable?
The manufacturing of diamonds opens up questions as to where the value of a diamond really lies.
Is it in the chemical composition? In the millions of years the diamond has spent beneath the ground, or in the labour involved in finding it? Is it in the rarity?
Or – my personal view – is a diamond’s value determined by its twinkliness?
Different people will give you different answers, depending on what they care about – and on how much they’ve invested in the diamond industry. An unbiased viewpoint is even rarer than a real diamond.
The interesting thing is that customers are now getting to decide where they want to assign the value for themselves. And I think that’s quite good fun.
But to answer the question – yes, diamonds are still valuable, for the time being anyway. That’s because their value as jewellery isn’t necessarily intrinsic to the actual properties of a given stone.
A lab-grown diamond in a rhinestone world
I mean, I’ve known a few people who buy themselves diamonds – but not many.
Diamonds are far more often a special gift to a special person for a special occasion, usually tied to a major life event.
And I’m not just talking about engagements. Diamonds are traditionally a milestone marker. Anniversaries, births, important birthdays, graduations – even deaths (don’t look up ‘cremation diamonds’ unless you definitely want to know).
Sure, with my practical hat on there are more sensible things you could do with your money to celebrate a special occasion.
You could buy shares for your loved one or contribute to their pension. You could buy them a stack of premium bonds and cross your fingers.
But I’m not wearing my practical hat right now.
I’m wearing an engagement ring.
And when my new fiancé and I walked past the window of a traditional high street jeweller’s shop yesterday, we saw an almost identical ring to mine going for an eye-watering 15-times the price.
So now we’re smug as well as happy!
An interesting, left-field article with a lovely and emotional ending. Congratulations to the both of you, may your future be brilliant cut.
Many congratulation, Squirrel, and love the research into your major life event ‘investment’.
I wouldn’t willingly walk in to any high street jewellers these days. Mark up something like 300%. I watch online auctions and buy from these. Entertaining too. If you want jewellery I would try these first ( eg Sworders, Cheffins etc).
Very nice twist at the end. Congrats to you both!
Indeed , congratulations to you both.
I’ve never owned, received, or given any diamonds. I have though owned a knock-off Rolex Oyster for 40+ years, purchased on a Thai beach for the equivalent of about $30. At the time, I could easily have afforded the real thing, but mostly viewed them as bling. Whereas, my Bolex fulfilled the same role for me as subversive spoof ads. These days it sits in a drawer, and I choose between my Casio W217 and Citizens Eco solar. Right on.
I see that Anglo American is desperate to offload its De Beers subsidiary. The march of lab-grown taking its toll…
Yes, nice bit of subterfuge. Deft misdirection, stylish writing. Many congratulations.
Mistake though, Veblen goods are to be avoided. Diamond are the perfect example.
Another more general rule is never concentrate a huge amount of value into something tiny and eminently lose-able. With the possible exception of children.
Of course, I bought one once, so what do I know?
(Edit – realise that may sound like I bought a child, to clarify, I meant a diamond)
Congratulations to you both, Squirrel!
That reminds me, I must find my old engagement ring which is gathering dust in a drawer somewhere and see how much I can get for it at a pawn shop… may as well put that cash into a useful investment!
Congrats to your fella and felicitations to you.
There was a case, based on desperation, for investing in diamonds ninety years ago. If you thought you might have to flee the Nazis (or the Commies or whomever) gold had two disadvantages. (i) It was heavy and therefore easily found if you and your luggage were searched. (ii) It was heavy and therefore, under unkind circumstances, it might drag you down to the sea bed.
What is there now that would be a better bet than either diamonds or gold? There’s always rhodium but the price is rather erratic.
https://www.statista.com/statistics/1090402/price-for-an-ounce-of-rhodium-in-london-morning-fixing/
Only one thing to say here. Congratulations.
A fun read and some interesting tips.
Congratulations on the engagement and smug feeling 🙂
Congratulations!!! Wonderful news 🙂
Strange to think that this allotrope of carbon has attracted such fascination and resulted in such suffering and exploitation (South Africa, Namibia and Sierra Leone in particular, but more recently too in Zimbabwe). Of course the same and more is true of gold and (thinking of the people of the Delta in Nigeria) oil.
It’s good, on balance, that this desirable object can now be made artificially commercially. Mining uses lots of energy too – perhaps more overall – and is very polluting.
I wouldn’t personally touch diamonds as an investment.
If and when fullerenes/ graphene/ carbon nanotubes scale up production the industrial uses for diamonds will wither and Gen X, Millennials and Gen Z are increasingly less enamoured for the aesthetic.
And De Beers’ former near monopoly to keep diamonds off the market has been failing for a long time, so I’d guess that real terms prices will reduce in the longest term closer to the cost of artificial production, and also that the volume of all production (especially for natural diamonds) may also reduce in line with a contracting demand.
Investing in companies making the machine tools to make the presses for artificial diamonds might not be a bad idea though as they should see a demand surge with artificial stones taking an increasing share, albeit of what I’d predict will ultimately be a shrinking diamond market overall (i.e. owning the specialist parts’ supplier to the shovel maker during a gold rush, rather than prospecting for the metal if you will – or buying ASML rather than TSMC or NVDA).
Of course, the new middle classes of India and China might prop up overall demand for a few generations to come.
“Lab-grown diamonds are cheaper because they’ve passed through fewer hands than mined diamonds – and perhaps because fewer people have been killed to get them out of the ground.”
I think I’m happy to pay more for goods that people have died to obtain, for the same reason that I might pay more for organic produce.
There more authenticity and intrinsic value in such a high-cost product that workers are willing to risk their lives for.
Congratulations!
Diamonds have been an artificially inflated “luxury” for c.100 years courtesy of a clever near-monopoly coupled with expensive and clever marketing.
Draping stars in diamonds, “diamonds are forever”, “diamonds are a girls best friend”, “isn’t she worth x months salary” – all aimed at creating desire among the ladies and guilt/pressure for fellas to shell out mega-money to the monopoly for a lump of pressed coal.
“A diamond is forever” is a particularly cynical one as it was designed to suppress appetites for second hand diamonds on the basis that the stone is linked to one relationship and is tainted so as not to be recycled/reused.
Lab diamonds are just the very same thing and are generally better in quality, clarity, colour, etc. so definitely choose these as the better and better value option.
To counter the challenge of lab diamonds, and other diamonds from outside their monopoly (Canada, Russia, conflict zones, etc.), De Beers started etching identity markings onto their natural diamonds with the implication that anything else isn’t as good as their etched product. The truth is that lab diamonds are better, cheaper and don’t have some tacky micro-markings marring them.
This might well be the longest running con … shifting enormous amounts of money from hard-working young men to the pockets of the Oppenheimers and De Beers (Anglo American) shareholders.
Congratulations Squirrel!
The desperate attempts by diamond miners and jewellers to brand lab-grown diamonds as “not the real thing” show how much of a threat they are to mined diamonds. It is basically now purely a snob thing. Like cultured vs natural pearls.
Back in the day, when I was an active researcher, we used to buy synthetic sapphire and diamond windows for our optics equipment. Super materials for the job. Superior to natural stones (fewer impurities) and available in nice big flat pieces.
For whom are diamonds particularly decorative? I ask because I once had an epiphany: I saw an Indian girl whose skin tone was a perfect setting for her gold jewellery – she looked “like a million dollars”. Then it occurred to me that some white girls have a skin tone that perfectly sets off pearls.
So: who particularly suits diamonds?
I’ll second all of that @Graham #13.
There’s a lot not like about the natural diamond industry and lab grown are not only more ethical and cheaper in a Greggs’ vegan sausage roll kinda way but, as @old_eyes rightly points out, they’re also objectively a better product.
Better for less and with fewer pangs on conscience to boot. What’s not to like?
Suspect that the natural diamond industry is facing a near existential crisis.
Displacement of the demand base into the artificial stuff, and a veritable flood of lab grown supply pushing down on prices through sheer volumes coming onto market through so many different channels.
And – frankly – those born in the West after about the mid 1980s tend to value experiences over things and are less susceptible than their parents’ and their grandparents’ generations to emotionally blackmailing advertising.
Whatever the truth of it, these people (link below) think that harder times are in the offing for the industry:
https://rapaport.com/magazine-article/the-2024-diamond-crisis-an-industry-at-its-breaking-point/
Congratulations!
As to diamonds, unfortunately they are not forever. If you torch a diamond with a blow torch, it literally goes up in smoke turning into carbon dioxide!
It is looking like artificial diamonds are a serious existential threat to the natural diamond industry. In this regard, gold has a tremendous natural moat: we are definitely a long way from being able to make gold in a laboratory as the alchemists dreamed about. We are struggling even to achieve nuclear fusion of the simplest of all elements, Hydrogen, to generate the second simplest element, Helium. To make gold atoms, you need a massive star exploding as a supernova.
Of course, we can always try to find some asteroids containing gold. But prospecting and mining gold in space and then bringing it to Earth won’t be cheap 😉
“@T-BDW, #17: To make gold atoms, you need a massive star exploding as a supernova”: or a neutron star pair collision:
https://youtu.be/MmgMboWunkI
Congratulations on your engagement Squirrel, and on another interesting article.
Interesting piece, love the spirit.
Similarly, the Economist wrote “Don’t propose with a diamond” (https://econ.st/4hGW9n2). The cost of making synthetic diamonds has dropped like a rock (ha) recently, and better technology may make them cheaper yet. Retail margins on lab-grown diamonds have climbed to nearly 90% for three-carat rocks, up from 30% five years ago. Margins on mined stones are still about 30%.
With such fat sales margins, plus 20% VAT lost on purchase, neither synthetic nor mined diamonds work as an investment.
As long as we live in a materialist society, I suppose there will be a cultural need for some costly signal in the mating process. (Romantic, right…)
When the cost of synthetic diamonds drops ever lower, I’d wager something else will replace diamonds. It could be anything small and expensive – another gemstone that cannot yet be synthesized? Designer watches? Feathers of rare birds?