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Celes Ventures

What are your thoughts on the emerging labgrown market?

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Hi guys,

what are your thoughts on purchasing labgrown for your jewelry or using labgrown diamonds for your pieces as professional? Do you notice an increase of demand? Yes, I am a labgrown diamond trader, but I am currently conducting a market study to learn more from the experts in the field. I have spent quite some time sourcing from reliable suppliers for a fair price, but I notice that consumers still feel that prices are higher than expected for labgrown diamonds. To be fair, I did come across some ridiculous prices too. I see some interesting movements in The Netherlands with jewelers adapting to the trend. Curious to read your replies.

Br, Mark

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Some assorted thoughts that may or may not be relevant to your situation:

1. Yes, there is definitely more awareness and demand for synthetics compared to 5 or even just 2 years ago.

2. No, unless specifically requested by a customer we would not (knowingly) use them - natural colour is "our thing". However the number of people that want a coloured synthetic seems to be quite small (as yet).

3. Speaking personally, as a collector of jewellery rather than as a seller of the same, I don't mind as long as I like the piece and I know what I'm buying (and the price is fair). However I have yet to see something that I would like to buy "in synthetics" (at least knowing that they are synthetics).

4. The price differential - or lack thereof - is a major issue for viability. Synthetic corundum and cultivated pearls have "always" been a small fraction of the price of natural gems; synthetic diamonds for one reason or another are not. Except for natural blues which are sky-high in price vs. "same as white" for boron-doped synthetics, there is no killer difference. 10-20 or even 30% are unlikely to cause a revolution in market structure, not least because unlike (say) natural pearls which are truly rare, colourless natural diamonds are not, and supply of all shapes/sizes is plentiful.

Not sure if any of this is helpful or useful - please continue the conversation!

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Davide - Specialised Consumer Information and Assistance,
Diamonds by Lauren (http://www.diamondsbylauren.com)
davide@diamondsbylauren.com

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I get this question often, and it’s almost always from dealers not consumers. They already get it.  Consumers expect them to be a LOT cheaper. Cheaper, like the price of CZ or synthetic sapphire. I understand why this isn’t happening, but it’s a big barrier. Consumer resistance to diamonds isn’t from the environmental or social issues as much as growers wish it were. It’s the price.  That’s a reasonable enough complaint, diamond prices are nuts, but selling a substitute for half the price still doesn’t fix it. $1000/ct or $2000/ct is still a lot of money. Too much for a substitute.  


Neil Beaty

GG(GIA) ICGA(AGS) NAJA

 

There's never a crowd when you go that extra mile.

Professional Appraisals in Denver

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20 hours ago, Celes Ventures said:

I have spent quite some time sourcing from reliable suppliers for a fair price <snip>

Br, Mark

I"m curious. What do you consider to be a 'fair price'?  Based on what?


Neil Beaty

GG(GIA) ICGA(AGS) NAJA

 

There's never a crowd when you go that extra mile.

Professional Appraisals in Denver

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6 hours ago, denverappraiser said:

I"m curious. What do you consider to be a 'fair price'?  Based on what?

I get what you and @davidelevi. I notice the same here in The Benelux area. The moment prices are going up, people start referring to the diamonds as being fake and not worth the money, eventhough initially they were interested. While sourcing I came across so many different prices. Some  were as close to 50% of the prices of natural stones, and those were B2B prices. Imagine what the end consumers would have to pay with the markup of the jewelry store. However I do have to say that some of those manufacturers claimed to have exceptional quality and sold their goods to (private) buyers, and in some cases buyers who were reselling as natural stones...

You often read about labgrown diamonds being about 40% of the price of natural stones. I believe a range between 30% and 40% is fair. From what I have learned so far, consumers are not looking for a discount. They want a bargain! I deal with both private buyers as well as B2B. A jeweler once asked me to sell it to private buyers for a higher price otherwise they could not justify their prices. I didn't. Private buyers end up paying more anyways when they have the stones placed in pieces, and business end up asking more when they create beautifull pieces and thus create value. Everybody wins.

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I hear that 40% number discussed, but I don’t see much evidence to support it.  A 1.0x/G/SI1/GIA with no serious issues in a natural costs about $5000 retail.  There’s 123 of them in the database here for less than that.  The cheapest are under $4000.  Use the 'diamond finder' tool at the top of the page if you want to look up prices yourself.   

 

Synthetics are a bit harder to search in the same general marketplace but Brilliant Earth, a large internet seller of synthetics, has 18 superficially similar stones on their site at the moment. The price from $2300-$3200 depending on other details and the median is about $2800. 

 

Diamond Foundry, another fairly large seller of lab stones, is pricing about the same.  They have 4 comps and the median is slightly larger for $3027. 

 

That suggests the ‘discount’ is about 40%, not 60%, at least at the moment. This is dropping, and one of the problems in showing prices in these forums is that are locked down forever. A year from now this whole conversation may not make sense (It's May 29, 2019 today by the way).

 

In any case, the heart of the issue is deciding what is ‘comparable’.  The growers are devoting huge effort to saying that their stones are the same and therefore should be graded and sold on the same scales that miners have been using for decades, even though this is obviously not true. Just TRY and buy a synthetic I2 or a color below M.  What about fluorescence? Try and find a synthetic with strong fluoro.  If they don’t exist, why are these on the scales that the growers insist on using? Look at the growing market price disparity between CVD and HPHT.  HPHTs cost more at the moment. Is it worth it?  Who knows, but this is an issue that ONLY exists in synthetics. Look at the premium for Canadian origin, an attribute that applies ONLY to mined stones.  This is not about chemistry or crystal structure, it’s about what people consider to be valuable, and they obviously consider these things to have value.  Canadian stones are not ‘better’ in any technical sense, but there are sellers who charge more for it and willing and knowing buyers who happily pay it.  Isn’t that the heart of value?


Neil Beaty

GG(GIA) ICGA(AGS) NAJA

 

There's never a crowd when you go that extra mile.

Professional Appraisals in Denver

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So your basis of ‘fair’ is in relation to the price of similar mined goods.  That’s the typical way growers do it, but it’s absolutely not the way miners do it for example. It’s not the way Lightbox does it.  They don’t sell the stones I’m discussing above but they sell lots of little ones.  They don’t grade them AT ALL, and they’re the largest grower in the world.  They consider them to be fungible. They won’t even give real weights, much less grades. 0.9-1.0cts. total weight earrings - $900.  Yellow or white metal in a couple of styles, your choice.  That’s all you get out of them.  It seems to be a popular pitch. 

 

Edited by denverappraiser
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Neil Beaty

GG(GIA) ICGA(AGS) NAJA

 

There's never a crowd when you go that extra mile.

Professional Appraisals in Denver

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20 minutes ago, denverappraiser said:

So your basis of ‘fair’ is in relation to the price of similar mined goods.  That’s the typical way growers do it, but it’s absolutely not the way miners do it for example. It’s not the way Lightbox does it.  They don’t sell the stones I’m discussing above but they sell lots of little ones.  They don’t grade them AT ALL, and they’re the largest grower in the world.  They consider them to be fungible. They won’t even give real weights, much less grades. 0.9-1.0cts. total weight earrings - $900.  Yellow or white metal in a couple of styles, your choice.  That’s all you get out of them.  It seems to be a popular pitch. 

 

I am not the conspiracy theory type, but I do believe that Lightbox is nothing more than an attempt to destroy the lab grown diamond market. A simple mean to devaluate the stones that could form a threat to natural diamonds in the future. Your description of their service says it all. It comes accross as something that should not be taken seriously by consumers. Just a shiny stone with a ring for a cheap price, here you go, good luck, do not complain, hope she says yes. 

Who is it to blame that prices for labgrowns are still considered high? I believe to know the % of diamond price in the RAP that my suppliers charge me. Obviously I have a markup. I know jewelers in The Netherlands have a markup of about 2.4 times purchasing price for jewelry in general. If the same goes for organisations such as Brilliant Earth, then we have a long way to go to convince consumers. For me as a trader, value is nothing more than what the consumer is willing to pay for it. I have seen prices drop by almost 50% in two years times, but this seem to have opened the market. That is why I am convinced that people are looking for a bargain, but preferably with the service of a high end jewelry store. 

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I am sort of the conspiracy sort, and I agree that Lightbox has some suspicious and conflicting motives.  That said, customers definitely take them seriously and it’s a mistake to dismiss them.  Again, they are the biggest grower on the planet with a billion dollar 'war chest'.  It's like the luxury watch people 10 years ago who dismissed Apple as a toy.  

Rap has never claimed they have anything at all to do with synthetics (by the way, I have conspiratorial thoughts about them too).  The conversion of prices in the style of a discount from Rap has no basis other than that that’s the way growers want it to be.  That’s ok, each store can price their stuff however they want, but Rap discounting against naturals is not some sort of carved-in-stone pricing model. Realistically, it doesn’t even really make much sense.  I have no problem at all that dealers are making a profit.  Actually, the problem is with dealers who claim they aren't.  That's obviously a lie, and if they're going to lie about that, how can you trust the other things they say?

We agree, people are looking for a bargain.  I think it needs to be WAY less than it is to get them to feel the joy. Look at the trajectory of synthetic ruby and emeralds. 

Edited by denverappraiser

Neil Beaty

GG(GIA) ICGA(AGS) NAJA

 

There's never a crowd when you go that extra mile.

Professional Appraisals in Denver

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I’ve seen quite a few Lightbox stones that people have bought because of the perception of a bargain that they've wanted to reset into other things.  They have all been pretty good, although not especially cheap when comparing to aggressive shopping elsewhere.  They were clean, white, and decently enough cut.  Just like they say.  If you want a pair of forty-something rounds and you're not too picky about the details, you could definitely do worse. 


Neil Beaty

GG(GIA) ICGA(AGS) NAJA

 

There's never a crowd when you go that extra mile.

Professional Appraisals in Denver

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