LAB GROWN VS NATURAL DIAMOND: ONE HAS RESALE VALUE, THE OTHER DOES NOT
Demand for lab-grown diamonds has rapidly risen in the past five years, as consumers drawn to the idea of getting a bigger, better quality diamond for their budget are buying into a product that has the same chemical and optical properties as a natural diamond.
Claims by lab-grown diamond producers and sellers suggest that a diamond is a diamond no matter its origin — implying that lab-made and naturally occurring diamonds are equal in all respects, including market value. What many consumers don't know is that if they decide to sell a lab-grown diamond back into the market, they will likely get virtually nothing in return.
THE RESALE REALITY
WHAT THE EXPERTS SAY
Diamond market analyst Paul Zimnisky, founder of Diamond Analytics, wrote that the essential thing setting a natural diamond apart from its lab-created counterpart is that it's a non-renewable resource. "The supply of natural diamonds is limited by nature and there is a value that the theory of economics ascribes to that," writes Zimnisky. "This value is apparent in the secondary market for natural diamonds, and is why most prominent buyers in the secondhand market only buy natural diamonds."
WHITE PINE'S POSITION
White Pine is a leading buyer and seller of recycled diamonds. CEO Benjamin Burne is direct on the matter: "The reality is there is no resale market with genuine players for lab grown diamonds. At this point in time, natural diamonds are the only diamonds that embody lasting, verifiable market value."
DECLINING PRICES FOR LAB DIAMONDS
Despite increasing demand for lab-grown diamond jewelry, relative prices have steadily declined due to increases in supply and improvements in production quality. The numbers tell a stark story.
THE PRICE COLLAPSE
In mid-2018, a generic 1-carat VS1-clarity, G-color lab diamond retailed for $3,625 while a natural equivalent retailed for $6,600. The same quality lab diamond now sells for around $1,615 — while the natural equivalent has held steady at $6,705. Lab-grown diamond prices have more than halved while natural prices have remained stable.
WHY PRICES KEEP FALLING
Lab-grown diamonds are produced in factories in two to three weeks using HPHT or CVD methods. As technology improves, production costs decline — and so does the value of the product. Analyst Edahn Golan of Diamond Research & Data notes that in 2019, traders spoke of an 84% discount from the Rapaport price list. Today a 95–97% discount is far more common.
NO FLOOR IN SIGHT
Burne sees the same trend in the telesales calls White Pine receives from lab-grown diamond sellers. "The prices keep going down. We now see un-negotiated prices of 94% back of Rapaport — down another 30% from before. Where will it end?" There is no supply cap on lab-grown diamonds, meaning production will continue to rise and prices will continue to fall.
LIMITED BY NATURE
Consumers buy diamonds partly because they perceive them as a store of value — something valuable, something generational. That perception is only valid for natural diamonds.
BILLIONS OF YEARS IN THE MAKING
For thousands of years we have been fascinated with diamonds. It took billions of years and extreme conditions of heat and pressure more than 100 miles below the earth's surface to crystallize carbon atoms into diamonds — the hardest substance on the planet.
SUPPLY IS THE DIFFERENCE
Lab-grown diamond suppliers have no rules on how many diamonds can be produced and put on the wholesale market. Unlike lab-grown diamonds, natural diamonds have lasting value because supply is genuinely limited. The bulk of the cost of a natural diamond is intrinsic natural value — not production margin.
NATURAL DIAMONDS APPRECIATE
In most cases, natural diamonds retain 50% or more of their initial retail value in the resale market. The market price for natural diamonds has increased tenfold since 1960. The supply of newly mined diamonds has peaked with no new major mines uncovered — while lab-grown production continues to rise and prices continue to fall.
"Time has an impact in an inflationary environment. If prices appreciate at 10% a year over time you'll be ahead in just a few years." — Benjamin Burne, CEO, White Pine
WHAT THE FUTURE HOLDS
CONSUMER RECKONING AHEAD
Burne raises the question directly: "Will consumers realize en mass that they are being sold something that is worth very little? Will they care? Will there be outrage? When consumers start to re-evaluate the value of lab-grown diamonds, retailers will have to as well." Lab-grown diamonds may have the same chemical and optical properties as natural, but a lab-grown diamond purchased today will be worth pennies on the dollar a year from now.
THE CASE FOR A ROBUST RESALE MARKET
Zimnisky supports a robust resale market for consumers as one of the best ways for the natural diamond industry to demonstrate the value of its product. He believes "a more readily available, competitive, and active diamond resale market would increase the secondary market liquidity for previously owned natural diamonds, which would support the market price of all natural diamonds, primary and secondary."
SELL YOUR NATURAL DIAMOND WITH CONFIDENCE
If you own a natural diamond and are considering selling, White Pine is here to help. As a leading buyer in the recycled diamond market, we offer transparent, competitive valuations backed by decades of industry expertise.
