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Synthetic Diamonds - Are They Worth The Value?


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I recently purchased a synthetic diamond from Quorri (their PureDiamond stone that is 100% carbon, 10mohs,  using HTHP). This diamond is graded by GIA and it is simply beautiful and the quality and sparkle is incredible. Not to be confused with their DymondIX that is a diamond coated stone (89% carbon layer). The DymondIX is also really nice (I own a pair of earrings made with these stones), but the hardness is 9.1 and these stones are considered simulants. 

 

My only thought after purchasing the PureDiamond (man-made diamond), is if it will retain its value at a similar value rate as a mined diamond?  They are still grown and quite rare in the larger sizes and colorless quality, but still not as rare when found from the earth. 

 

I am wondering if these cultured stones lose the same value as diamonds when you try to sell them? At a savings around 50% in comparison to the price of a mined diamond do you in the long run lose a large percentage of value or do they possibly hold their value better?

 

Thes stones are still fairly new to the market in the larger colorless range and I have not seen any type of informaton available. 

 

Curious to see what everyone elses thoughts are on this....

 

 

 

 

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FWIW, we've considered synthetics... I saw some beautiful colored HTHP stones last month at the big Hong Kong jewelry show.

 

However, as you say, this is a new process, and current scarcity is keeping the prices up for now.  As they ramp up production, who knows how soon the market will reach saturation point? (-- at which prices could start to tumble).

 

And as a manmade process, you are limited to comparison with all future technological developments.  They've been making synthetic diamonds for a while, and the technological improvements seem to come at about 5% a year... but actually, it's a more jagged line dependent on "breakthrough" technologies.  So it might seem your stone maintains its value for a relatively long time, and then suddenly nosedives in year 5 (because someone just came out with a better production process that blows your 2014 synthetic away).

 

So ... I would not attempt to link synthetic valuation with naturals because of the previous factors.  I have no knowledge whether synthetics will depreciate (or appreciate).  Enjoy it for what it is!

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There are several mixed issues here.   First is ‘rarity’.  Diamonds are damn hard to make, despite what Wired magazine and the like have had to say.  It gets exponentially harder as the stones get bigger and there are still only a couple of companies in the world doing it.  None are doing it by the bucketload and none are very obviously making serious money at it.  Cutting, documenting and distribution costs are about the same as with mined goods and the proverbial ‘sweet spot’ where it’s economically viable seems to be at about half a carat.  That, of course, can change but the ‘breakthrough technology’ required is significant.  They’ve been working on it since the 50’s so I disagree with the 5%/year number above by the way.  There was a giant leap forward in the late 90’s with the introduction of commercial HPHT equipment and another jump with vapor deposition in about 2003 but that’s about it.  Vapor Dep still isn’t really commercially successful by the way.   Predicting the future is tough and the engineers of the world are pretty clever but personally, I don’t see much on the horizon.  In the end, the engineers almost always win this sort of contest but they also almost always move the target to define 'winning' differently.  For example, what they're mostly growing and selling right now are fancy colors.  That's because they're both easier to grow and because the mined equivalents are crazy expensive. 20 years ago, most people didn't know diamonds even CAME in colors other than white.   It's still an exotic and decidedly specialty market. 

 

The second question is ‘value’, and by value here we’re talking about what amateur sellers can get for ‘used’ merchandise on some unknown date in the future compared to what retailers are currently charging for new.  That’s a problem with mined diamonds and always has been.  The secondary market for synthetics is basically untouched but, frankly, I expect it to be worse.  At best it's the same.  It’s not that a used synthetic is any worse than a used mined stone but the market perception of synthetics is pretty muddled by dealers selling fakes.   Most dealers won’t touch them.  When I search eBay, 100% of what I find in a search for â€˜synthetic diamond’ look to be fake.   That’ll surely change with time but it’s going to take a while and who will suffer in the meantime are the legitimate sellers.   That’s not a vote against buying them, that’s just a warning to not expect to ever see your money again if you do.  Not to worry, I issue the same warning on mined stones.  The issue of residual value pisses off nearly everyone who gets into it.  Buying diamonds at retail and selling them at below wholesale is NOT a sound financial investment and no, it doesn't matter if the retailer calls themselves a wholesaler.

Edited by denverappraiser
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Larger CVD grown diamonds sell at about fifth of a price of natural diamonds of the same specification. The future is unclear and it will largely depend on the demand. My opinion: It's going to be difficult to survive for CVD diamonds.

 

The technology has been there for a long time but hasn't been able to make a solid mark.

 

What it has really achieved is make confusion and put an adverse effect on the minds of the buyers. There have been reports of grown diamonds mixing with natural diamonds in large packets of small sizes.

 

CVD is most popular in small sizes like mele, star, 1/12, 1/10 etc. And we all know why that is easier to mix and cheat!

Edited by Furqan Shafi
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Furqan,

 

Huh?  Where did you get that one fifth number?  Fortunately, it’s easy to look.  Gemesis is still the only CVD manufacturer going and they publish their prices online for all to see.  I’m not sure what you mean by ‘larger’ stones but the biggest colorless stone they have right now is a 1.54/G/VVS1/round and are asking $16,671 for it.  Plus shipping.

 

www.gemesis.com

 

We don’t know much about the cutting and the lab here is IGI, which is a tiny bit harder to shop with mined stones, but looking at the diamond finder and using GIA as a comparable lab, 1.50-1.55/G/VVS1/round shows 136 stones ranging from 14,035 - $26,139.  The median is $17,292. Yes, you could spend more for a comparable mined stone, but you could also spend less.  Overall I'd call that about the same.  

 

The reason they don’t make more big ones is because they can’t.  It has nothing to do with making it easier to defraud people.  Little stones are simply easier to grow.  By the way, they’re not significantly cheaper either because they’re no easier to cut, set, etc.  In melee, that’s where the bulk of the costs are, not the mining.  

Edited by denverappraiser
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  • 1 month later...

A bit late to the party here but CVD is a difficult technology to scale up so I think denverappraiser is right in that there is a time to go yet.

There are other possibilities in plasma laser deposition (PLD, which I work in) and other techniques but all are very challenging and the research money simply isn't there when the possible returns are not easily definable.

 

HPHT might one day be able to churn out diamonds at higher rates, but as is stated above, that's a task for engineers to solve and not an easy one.

 

I agree that lab-grown diamonds seem to be roughly equal in price, perhaps a 20% discount here and there, but what shocks me is how any diamond (lab or mined) seems to lose so much in second hand resale, seeing as it's a diamond, not like it's going to get dented.

If people are looking for return on investment I doubt diamonds are a safe bet unless you're in that business already. 

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Nearly everything you buy takes a hit on resale.  Diamonds are actually pretty good in that area.  Just try and resell a cell phone, computer, a piece of clothing, food or most of anything else you buy.  That said, there are few major causes for the difference between buy and sell:
 

1) Retail.  Yes, all of those sales people are paid.  Google gets paid.  Shippers are paid.  Labs are paid.  Appraisers are paid.  Setters are paid.  The free box wasn't free.  Jewelers are doing this for a profit.  None of this comes back on resale and I assume none of that comes as a surprise.  This is true even if they call themselves wholesalers or some similar term to suggest that they're cutting out the evil middleman.  This is not a bad thing, it's the way modern economies work. 

2) Market access.  The REASON jewelers rent all of that expensive real estate, hire those sales people, pay all of those per-click and affiliate marketing fees and so on is because they get higher prices if they do so.  Most people don’t have access to that.  They sell in what amounts to a distress sale marketplace and their only selling proposition is price.  Who is surprised that prices are lower?  

3) Obsolescence. How could a million year old rock be obsolete?  People don’t care for ‘used’ engagement rings.  A used ring simply is not the same thing as a new one any more than a used matress is the same thing.  The mounting component is usually scrap metal when it comes to resale time.  Sorry about that.  Occasionally people do better but don’t bet on it.  There’s also a fashion component.  Diamonds are fundamentally a fashion product after all.  Marquise cuts, for example, were hot 20 years ago and sold for a premium.  Not so much now.  It’s not that they’re any less beautiful now than they were when they were new and the stone hasn't changed.  The market did.  It’s hard to find buyers now.  The dealer is going to have to discount to sell it and so they’re going to discount to buy it.   20 years ago, GIA had no cut grade and AGS’s was completely different.  In 20 years the rules will be different again.  Bet on it.  Hearts and arrows are hot right now.  Who knows what will be hot for your grandkids but it’s sure to be different.  That’s the way the world works.

4) Condition.  Damage is a problem.  Sometimes a severe one.  Yes, diamonds can chip.  'nuf said. 

5) Misrepresentation.  I can’t tell you how many times a client has told me that a stone is D/SI1 because it is ‘certified’ as such.   That’s just not the way it goes.  There’s misrepresentation on both the buy and sell sides of the deal but I would have to say it’s TYPICAL that it’s not comparing apples to apples.

6) Financing.  Normally, new purchases involve a financing arrangement among the dealers called ‘memorandum’.  It’s basically a consignment.  When customers sell things, they normally want cash with no returns.  Not surprisingly, dealers prefer the memo path because it gives them access to a lot more inventory without screwing up their cash flow. 

7) Misunderstanding value.  This is best described with an example.  A consumer buys a ring from a dealer with a diamond for $10,000 (dealer’s cost $8,000) and a mounting for $4,000.  Plus tax the deal is $15,400.  The dealer issues an appraisal that says it’s ‘worth’ $25k.  Bargain, right?  Wait for 5 years and then the bride goes to resale after she dumps the guy.  She's got that appraisal in hand. The mounting is scrap metal and the dealer could get a stone like that on consignment from his supplier now for $9k.  If he buys this one he’s going to have to tie up his money for an unknown amount of time and he doesn’t have that much cash in the checking account anyway.  Jewelers are mostly small businesses after all. He’s going to flip it back to his supplier who will sell it to someone else with the above mentioned memo/consignment system.  The supplier is doing this for profit so he’ll give, say $8k for it.  The jeweler wants to make money on this deal too so he offers $7k.   So now the customer is thinking ‘it was worth $25 Grand 5 years ago, it must be worth more than that now.  What’s with the $7k offer?  This guy’s a ripoff.  Diamonds are a ripoff.  I’ve been screwed’.   We don’t actually have a clue if the deal is ripoff on either end or not, but the bulk of the problem here is a misunderstanding of BOTH transactions as well as the 'appraisal' in the middle.

Edited by denverappraiser
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Denverappraiser just posted one of the best explanations on the resale topic. And I'm going to learn all these points word by word.

 

Suddenly everybody wanna make money on diamonds.

 

There's a supply chain much like in everything. You buy at retail and sell back at wholesale minus 25%. If there's an steady increase over the last decade you might breakeven.

 

If you want something to make money on buy stocks. You don't get to show off (and earn satisfaction socially) for free. If I retail diamonds I would like to make money as well much like anyone else.

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  • 3 weeks later...

Synthetic diamond is good for color and jewelry item. There is one more option of roman glass jewelry we can get all colors in this glass and it is in vogue now.  So you can try Roman glass also.

Carrots also come in a variety of colours. Orange, white and purple. They are also much better for your health and wealth than diamonds. Buy carrots!!!

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  • 1 month later...

Question: I have recently seen synthetic diamonds on Etsy for as little as $300 for 2 carats.  Granted they are gold/platinum plated, but surely that wouldn't make the difference of so much money.  Buyer says they are either carbon or vapor method created.  Can someone explain?

Thanks.

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Sure.  The seller is lying.  You cannot buy synthetic diamonds on Etsy or anywhere else for $300.  Actually, you would be hard pressed to buy a 2 carat colorless synthetic diamond at any price.   On the other hand, you can easily buy some synthetic things that look a lot like diamonds for 1/10 of that budget.  

Edited by denverappraiser
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Hi Neil -- I know you didn't see this, but it ran in the JCK newsletter a few days ago.  (Note their diamond grading is from IGI, though) --

 

3 Carat Synthetic Colorless Diamond Produced—Largest-Ever Grown Gem
By Rob Bates, Senior Editor / Posted on July 24, 2014
7-23-14%203ct%20side%202.jpeg
Courtesy: Pure Grown /3 ct. K SI lab-grown diamond
 

Pure Grown, the man-made diamond company formerly known as Gemesis, is selling a 3 ct. K SI stone­—which it calls the largest colorless diamond ever produced by nonnatural means.

 

Lisa Bissell, the Fabrikant veteran recently appointed president and CEO of the company, says that she has every intention of selling the gem, which has a report from the International Gemological Institute. “I don’t run a museum,†she says.  She predicts it may fetch $21,000.

 

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Yeah, I saw the article, which is why I said said 'hard pressed' rather than a more absolute statement.  The biggest stone that Gemesis/Pure Grown  actually has for sale at the moment is a 1.61, for which they're asking $16,000.  A weird outlier about which they had a press release and for which they are going to try and get $21k for when they finally bring it to market doesn't change much. 

 

Here's their entire inventory. 

 

http://gemesis.com/diamonds/single/?base_color=421

Edited by denverappraiser
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Yeah, I saw the article, ... A weird outlier about which they had a press release and for which they are going to try and get $21k for when they finally bring it to market doesn't change much. 

 

It cost a bit more than $21K to succeed in the 9 month production on this, so: definitely a showpiece.

 

K and SI from IGI could be M-N and I-3 by the time GIA gets to look at it.  Nevertheless, it's a bold statement of where the market may evolve to in our lifetimes, and it means Gemesis is willing to keep pushing the R&D envelope.

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Update -- As of Monday morning, they've posted the 3-carat on their website for $20,475:

 

http://gemesis.com/3-ct-round-si1-k/

 

I only know because I went back to their website to look at some "fancy yellow" stones, the idea being that a startling different fluorescence could be an occasional random sub in our "Pi earring" set.  I mean, if you're going to have Fake, you need to go all the way out there and make it Super Fake, like orange glow instead of blue.

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There's (rare) natural orange fluorescence in diamonds... I have one - Fancy Intense Yellow, but it looks like a Vivid in sunlight.

 

Of course you would have one. :)

 

I was looking at manmade ones -- and I credit you for not rising to the bait of me calling them Fake! -- simply because of price and general availability of the off-color fluorescence.  The idea being that we have three earring stones that are Strong Blue FL, yet the Asscher is ordinary / normal / plain.  But for that matter, Gemesis even has relatively affordable pinks, so that could be another way to go too.

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Of course you would have one. :)

No, no, not for sale. It's a small (8 - 12 points) one in one of my wife's rings!

 

If I could find a decent synthetic pink, I'd be tempted too. So far, the ones I have seen are either garish or brownish, and mostly too small for what I have in mind.

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If I could find a decent synthetic pink, I'd be tempted too. So far, the ones I have seen are either garish or brownish, and mostly too small for what I have in mind.

 

On the gemesis website there's a .9 carat "brilliant pink" only 4x as expensive as an equivalent fancy yellow... $6600 USD.  The fluorescence is "strong orange".

 

I'll look closely next time there's a trade show I can get to.  Right now, the IGI certification and actual hue outweigh my interest, but not by much.  Of course, anyone who knows me will know I'm not going to have a natural 90-point pink just for show! :)

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