Do Lab-Grown Diamonds Hold Their Value?

There’s no question about the look and feel of a lab-grown diamond. It is chemically identical to
a mined diamond, and a high-quality, expertly cut lab-grown diamond is just as lovely as its
mined counterpart. That’s not up for debate anymore. But one category in which lab-grown and
mined diamonds differ is in value, particularly in resale value. Lab-grown diamonds already cost
less than mined diamonds; the question is, will they hold their value like mined diamonds?
Some jewelers, specifically those interested in selling only mined diamonds, will say no,
lab-grown diamonds do not hold their value. They will tell you that lab-grown diamonds are
becoming more affordable every day, and because more can be made at any time—they’re not
a scarce, finite resource like diamonds that come from the ground—they will be worthless in the
future. Lab-grown diamonds, according to this claim, are poor investments that have no resale
value.

But the truth, as always, is more complex than this. First of all, the claim that lab-grown
diamonds won’t hold their value contains the assumption that mined diamonds will. There are
many people who look at diamonds as a commodity investment, like precious metals such as
gold and platinum. But the diamond market doesn’t work this way, and saying “lab-grown
diamonds don’t hold their value” only tells half the story, because mined diamonds don’t, either.
Mined diamonds values have always fluctuated, they cannot be traded as financial instruments,
and nobody can predict what the value of a mined diamond will be in the future.

Diamonds Are Not Investments Like Gold

Diamonds are not comparable to precious metals. Throughout human history and across
cultures, gold has been used as a store of value. It was relatively useless to toolmakers, but the
malleability that made it useless also made it easy to shape into coins and bars of specific
weights and values. Pure gold also doesn’t rust, tarnish, or corrode over time, so those bars can
be easily and safely stored. But most of all, gold is valuable because we have agreed implicitly
that it is valuable, and even as (and sometimes, because) the relative values of currencies
fluctuate, gold remains valuable and comparatively stable. In difficult economic times, people
trade their dollars for gold, knowing that it will hold its value regardless of what the dollar is
worth. So in this sense, even gold isn’t so much an “investment” as a relatively safe and stable
way to park your wealth. And remember - gold cannot be traded as a financial instrument either!
While diamonds are valuable, they are not the historical, socially agreed-upon universal marker
of value that is gold. They are a much more volatile commodity. This goes for both the lab-grown
and mined varieties. When jewelers are reluctant to hold a large stock of lab-grown diamonds
for fear that the price they purchased them at will be “too high” by the time they sell, their fears
are not totally unfounded. Holding a large stock of mined diamonds is already a bit of a risk.
With the way prices for lab-grown diamonds have dropped over the last few years, it would be a
bigger risk to keep inventory that you don’t expect to sell for another year.

This is not a problem that mined diamonds typically have, because their price fluctuations have
been slower over time, so it’s always safe to keep some diamond inventory in your vault. But
during this time of adjustment, as the market gets used to lab-grown diamonds, we don’t
recommend buying and holding a lot of lab-grown inventory. And Primo Diamonds is happy to
create memo and sales programs for our retail partners to buffer your inventory investment risk.

Lab-Grown Diamonds: An Infinite Supply?

It is true that the total number of mined diamonds is limited by how much gemstone-quality
rough can be extracted from the world’s mines. And it is true that, theoretically, there is no limit
to the number of lab-grown diamonds that can be created. But it still takes time, effort,
equipment, and expertise to create a gemstone-quality lab-grown diamond. Even lab-grown
diamonds vary in quality, with the very highest quality diamonds still being rare. On top of that,
it’s not just the quality of the rough that determines a diamond’s value; it is the quality of the cut,
and expert lapidarists are a limited commodity. It’s not like there are factories pumping out
thousands of diamonds every day. The process may take weeks or months rather than millions
of years, but there is still a limit to how many diamonds can realistically be produced.

The Resale Market

Beyond the questions about investment value, there are also the realities of the resale market to
consider. Right now, there is not much of a resale market for lab-grown diamonds. This is
because the technology hasn’t been around long enough to sustain one. But people buying
mined diamonds thinking they can make a profit or even just recoup their costs in the resale
market are going to be disappointed, as well. Jewelers buy diamonds from wholesalers, who
can offer better prices than any individual consumer looking to sell their diamond ring.
Furthermore, that individual seller will never get anything close to the full price of their diamond
because jewelers need to make a profit, too. So again, neither lab-grown nor mined diamonds
really hold their value.

A Meaningful Luxury, Not a Financial Investment

While gold is both a luxury purchase and a safe haven, diamonds should be seen as just a
luxury purchase, like an expensive sports car. No one buys a new car with the expectation that it
is going to hold its value. Maybe you’ll be able to trade it in a few years down the line, but you
know that it’s going to be worth a fraction of the original price. You buy a new car for what it can
do for you now, for what it means to you and how it will make you feel, not with the expectation
that it’s going to make you money later or even maintain its value. We need to start looking at
diamonds the same way.

The true value of a diamond, or any piece of jewelry, is in what it means for the buyer. What a
diamond is: a symbol of everlasting commitment, the celebration of the birth of a child, a reward
for a great accomplishment—or simply a way to add a little glamor to your life. What a
diamond—any type of diamond—is not: an investment.