Synthetic diamonds have driven down the value of naturals

This 2024, all industries adhering to the luxury system have faced significant financial upheavals. All, including the watchmaking and diamond sectors. Following the market launch of lab-grown diamonds, precious stones naturally produced but by human hands, the jewelry sector, famously described by Marilyn Monroe as «a girl's best friend», has changed significantly. The impact on sales and exports has not only come from the success of lab-grown diamonds—such as those used by Prada in the Eternal Gold collection—but also from regulations like the European ban on Russian diamonds, implemented last January to encourage the country to end its attacks on Ukraine.

We already reported last May on the decline in diamond sales, but now new reports emphasize how the rise of lab-grown stones is influencing the crisis of "real" ones. According to the Diamond Standard Index, the average price of diamonds has plummeted by about 24%, and De Beers, one of the main market players, has had to cut its prices by 15%. Despite the pandemic (and the resulting cancellation of many weddings), diamond demand had continued to grow in recent years, causing price increases, but now the industry is truly facing a downturn. Moreover, lab-grown diamonds are significantly cheaper, with price differences ranging from 60% to 85% compared to natural ones. Is it time for diamond sellers to reassess their beliefs and welcome the sustainability of synthetic stones? 

«Lab-grown diamonds do not merely replicate what nature can achieve in a short time,» said Timothy Iwata, Prada's jewelry director, in an interview with the Washington Post. «In fact, they are pushing the boundaries of cutting [a stone] and the concept of luxury materials. It’s not just about customizing an existing material. We actually grow that material for the client». Until recently, lab-grown diamonds were mainly used on drill bits and other cutting and polishing tools, but current conflicts in Ukraine, the luxury crisis, and growing consumer attention to savings and sustainability have turned synthetic stones into a goldmine for jewelry maisons. Besides being created with respect for workers and the environment (as they are not mined), lab-grown diamonds have high levels of traceability and transparency, qualities that make them even more appealing for the luxury market—which will have to sell only items equipped with a Digital Passport by 2030.

Brands like Tiffany and Prada have already debuted their unique takes on the trend, and while natural diamonds' main trading hubs were Russia and Belgium, some of the largest centers for lab-grown stones are located in Saudi Arabia, India, and China (although the latter two mainly dedicate their production to the metallurgical sector). In terms of composition, there is no difference between synthetic and natural diamonds: both are produced using natural agents like pressure, heat, and gas, which work with hydrogen, methane, oxygen, and argon. The final value of lab-grown stones varies based on the amount of time spent creating them. The only current criticism of lab-grown diamonds is that, compared to natural diamonds, they have a lower resale price, so they cannot be considered a "safe haven" asset. Despite this, they appear to have dethroned the dominance of Blood Diamonds in the luxury market. So much for those who still claim that «diamonds are forever».