
The Elite Club That Rules the Diamond World Is Starting to Crack - howard941
https://www.bloomberg.com/news/articles/2019-07-29/the-elite-club-that-rules-the-diamond-world-is-starting-to-crack
======
irrational
>It’s a perfect storm: you have too much supply, not enough demand

My wife lost the diamond in her wedding ring and we were talking about getting
it replaced. I have two daughters in their early 20s and they were aghast at
the idea of replacing it with another diamond. They were adamant that nobody
should buy diamonds for jewelry and instead should use a synthetic stone. They
claim that "everyone" (which apparently means everyone they are in contact
with on social media) knows this. If this kind of thinking really is
widespread among the younger set then I'm not surprised that the demand is
dropping.

~~~
tdb7893
I was blown away when someone told me they wanted a natural diamond. It seemed
crazy to me, I don't get why someone would want to pay more for an identical
(except for the fact that it was likely mined unethically) stone. I don't
think any of my friends have a natural diamond but that's probably partially
the people that I hang out with.

~~~
asark
I've been poking my head in periodically and have yet to see the massive
savings of lab-created diamonds, or even moissanite. I keep expecting that the
market will have shifted—last time I expected it was when moissanite for
jewelry's patent ran out—and one or the other will be down to only a little
higher than low-quality replacements like CZ, but it's not happened. They
still seem really high to me. Cheaper, yes, but still expensive. Especially
lab-created diamond.

I mean I'm on board with not buying natural diamonds and all and it's not like
I wanna buy any of these for myself anyway, but I don't think there'll be a
full collapse in the natural diamond market until the two best alternatives
put some _serious_ price pressure on them.

[EDIT] just checked again, 0.75c and up lab diamonds of middling (by gemstone
standards) quality or better sure seem to still be like $2,000+. And 0.75c is
merely on the large side of "modest".

~~~
jdietrich
Large moissanite stones are vastly cheaper than equivalent-quality natural
diamonds at trade prices; if you can afford a decent .75ct diamond, you can
afford a 15ct moissanite. When cut correctly, moissanite is visibly superior
to diamond in fire and brilliance. That's a large part of the reason why small
synthetic stones aren't as cheap as you might hope - it takes about the same
amount of skilled labour to properly cut a natural diamond, a lab-grown
diamond or a moissanite. CZ stones are cheap and look cheap, in large part
because they're crudely cut.

~~~
asark
Yeah, I checked Moissanite again after the post and it actually has gotten
pretty cheap. Maybe $400 for a pretty good 0.75ct. That's more like it, and
yeah, probably is cheap enough that it's mostly the cut you're paying for.

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bluedevil2k
The breakup has been on going for about 7 years now. As the article says, the
old way of buying diamonds was a take it or leave it proposition. About 7
years ago though, some of the smaller players in the field (Dominion, Rio
Tinto, Okavango) decided to start auctioning their rough stone every couple of
months. They invited dozens, up to 100 bidders for each auction. This was the
first time buyers could get a real market price for the rough stone, and there
were no repercussionsn if they were outbid. It’s become the industry practice
now to sell a portion of the rough using auction software and using that
market price to set the prices for these sight holders, who still buy a large
proportion of the rough. Even DeBeers and Alrosa use auctions to set prices.
The sales of diamonds has changed more in the last decade than it did the
previous 100. (Disclosure, my company supplies software for these auctions).

~~~
bluedevil2k
To add to my comment a little, and this was touched up in the article. The
vast majority of rough diamonds are sent to India for cutting/polishing,
before being sold to the retail channels (Tiffany, Zales, Wal-Mart, etc). The
profit margin for the miners is rather small, the profit margin for the
cutters/polishers is razor thin, and the profit margin for the retailers is
HUGE.

~~~
Invictus0
Is it at all possible to buy direct from the cutters and polishers?

~~~
bluedevil2k
Just speculating here, maybe if you fly to India and visit their cutting shops
in Surat.

The fairest prices as I understand it are on BlueNile, which charges about
10-15% above cut price, which is much better than the 100+% you'll find in
retail.

~~~
jquery
+1 for BlueNile, you can do better than them but they are a huge improvement
over the mall stores.

------
dguo
I recently purchased a moissanite[1] ring and was very happy that it was a
choice. My disillusionment with diamonds started when I read this article[2]
on how the industry manufactured demand. The argument against diamonds and for
moissanite is succinctly made by
[http://diamondssuck.com/](http://diamondssuck.com/) (I have no affiliation. I
am just grateful that the author made it, and I try to share it as much as
possible.)

[1]:
[https://en.wikipedia.org/wiki/Moissanite](https://en.wikipedia.org/wiki/Moissanite)

[2]:
[https://www.theatlantic.com/international/archive/2015/02/ho...](https://www.theatlantic.com/international/archive/2015/02/how-
an-ad-campaign-invented-the-diamond-engagement-ring/385376/)

~~~
loydb
Moissanite makes a beautiful stone.

~~~
01100011
They're pretty, but they're not diamonds. They refract the light differently.
They're more colorful. I can spot one from several feet away. We went with a
man made diamond and love it. Less than half the price of an equivalent
natural stone.

~~~
StavrosK
What's a man-made diamond?

~~~
lccarrasco
A diamond made in a laboratory

------
loydb
I'm an amateur gem faceter -- if you want something that's actually _rare_ ,
choose a non-diamond colored stone. A ruby or sapphire is far more rare.

Personally, I advocate for lab created stones. It is flawless, you can get the
exact color you want (I have something like 20 different colors of sapphire),
and won't break the bank. You can spend your money where it counts -- paying
for the skills of the cutter -- rather than on a chunk of rough that has been
cut sub-optimally to maximize preserving the weight of the stone rather than
the brilliance of the cut.

~~~
tinco
How do you find a good jeweler/faceter that works with synthetic stones? All
the downtown big name jewelers seem to work with natural.

------
Someone1234
Good.

We purchased a lab grown/man-made diamond on purpose. Even "non-conflict"
diamonds are mined in immoral ways. And while in theory it is great to bring
outside money into some of the poorest areas of the world, the work conditions
and atrocities cannot be ignored[0][1][2].

Ideally people should move beyond diamonds entirely. There's plenty of
precious stones. But in the meantime lab grown diamonds are the most moral way
to buy a diamond.

[0]
[http://www.nbcnews.com/id/15842524/ns/world_news/t/diamonds-...](http://www.nbcnews.com/id/15842524/ns/world_news/t/diamonds-
journey-grim-reality-tarnishes-glitter/#.XT86ruhKhPY)

[1]
[https://en.wikipedia.org/wiki/Child_labour_in_the_diamond_in...](https://en.wikipedia.org/wiki/Child_labour_in_the_diamond_industry)

[2] [https://www.huffpost.com/entry/all-diamonds-out-of-
afric_b_2...](https://www.huffpost.com/entry/all-diamonds-out-of-
afric_b_2628013)

~~~
DrAwdeOccarim
Where did you purchase the lab grown diamond?

~~~
Someone1234
There's a number of stores on the internet that offer them. You just buy the
diamond then have them set into a band of your choice.

I don't think large jewelry chains commonly offer them.

~~~
deogeo
I wouldn't be surprised if their supply or natural diamonds was contingent on
them not selling artificial ones.

~~~
bradknowles
Or maybe they're owned by the companies selling natural stones?

Wouldn't be the first time that someone tried to own the whole market from end
to end.

------
aggie
It seems some posters here are missing an important point about engagement
rings: they are a gesture of financial commitment. The expensive price tag is
a feature, not a bug that can be solved by creating chemically-identical but
inexpensive alternatives.

If lab-grown stones become the norm for ethical reasons, but they are priced
too low, I can see culture shifting to new gestures of commitment.

~~~
MisterTea
> It seems some posters here are missing an important point about engagement
> rings: they are a gesture of financial commitment.

And all this time I thought it was to indicate a commitment to marriage.

> The expensive price tag is a feature, not a bug...

Feature? For who? The diamond industry?

~~~
NickBusey
Yea, not sure how this is a feature. I want to prove my loyalty so I'll waste
a bunch of what will soon be your money buying you a temporary ring?

I made an engagement ring from a coconut husk in about ten seconds and it did
the trick just fine. No need to spend any money really, let alone the "three
month's pay" rule of thumb that gets tossed around.

~~~
seventhtiger
In many cultures the purpose of jewelry is to give the woman wealth
independent of the husband. When she is a housewife with much less earning
potential she will be completely dependent, and so the gifts of gold mitigate
that.

Diamond though are a terrible way to store wealth. As soon as you walk out of
the store they lose significant value, and they will only depreciate.

------
Konnstann
Diamonds have had their supply artificially restricted for decades, inflating
their prices. That, combined with the ethical dilemmas (blood diamonds, etc.)
associated with the stones, it doesn't make sense to me to get them. They
don't even look prettier than an emerald or sapphire either, there's just too
much hype.

~~~
irrational
My wife doesn't like colored stones, so emeralds and sapphires are right out.
We are looking at Moissanite stones. Not synthetic, but significantly cheaper
than diamonds.

~~~
jtaillon
Moissanite is also synthetic (typically grown via a chemical vapor deposition
process). It's not carbon (like diamonds), but made of SiC, a material long
used for abrasives and more recently for high-power electronics and LEDs. The
4H-SiC polymorph is actually extraordinarily rare in nature, even moreso than
diamonds!

We chose moissanites as the primary stones in my wife's engagement rings and
everyone talks about how pretty it is. It's a bit more "firey" or "sparkly"
than a regular diamond (because of more birefringence), but I guarantee no one
outside a very highly trained jeweler would know the difference (if that's
important to you). It's worth it to spend the money on the higher quality ones
though, since just like diamonds, the inexpensive ones will have yellowish or
greenish tints. Even still, they're at least an order of magnitude cheaper
than similar diamonds ($600 vs. $6,500 at my quick search for ~1 carat).

------
cosmodisk
Some years ago I went to Tate modern in London and saw a massive queue in the
engine room,where was a medium size black sort of a kiosk. Having no idea
what's inside the booth,yet too curious to ignore it, I join the queue and
after 10-15 min. I get to go inside.I walk in and there's 'For the Love of
God',which essentially a skull covered in diamonds. The room was black and had
some special lightning to make the skull shine.The whole thing looked so
ridiculous and was on the same level as something made in China for $10,the
ultimate bling bling.I didn't even stop to observe it and left the booth.
Diamonds nowadays are like Gucci or louis vuitton products: even if what you
are wearing is original,you still look ridiculous..

~~~
tempguy9999
This I think
[https://en.wikipedia.org/wiki/For_the_Love_of_God](https://en.wikipedia.org/wiki/For_the_Love_of_God)

I agree with you.

~~~
stordoff
I do have to wonder if it wasn't made by Damien Hirst[1] whether we'd even be
discussing it. Even setting aside my perceived vulgarity (a criticism I would
apply to much of Hirst's work), it doesn't seem particularly new or
interesting.

[https://en.wikipedia.org/wiki/Damien_Hirst](https://en.wikipedia.org/wiki/Damien_Hirst)

~~~
tempguy9999
Where _art_ is concerned, vapid peacocks flock.

------
_bxg1
Natural diamonds have been the most shamelessly wealth-signaling purchase a
person can make, ever since the artificial process was perfected. As far as I
know there is literally no difference between an artificial and a natural
diamond except the fact that the latter is more scarce and harder to get, and
therefore more expensive. Unlike other traditional wealth-signal purchases,
there is no pretense of utility or even pleasure or fashion. It's purely to
say, "I can afford this."

~~~
bluedevil2k
Natural diamonds are far more plentiful than lab grown diamonds.

~~~
_bxg1
I mean, technically, since lab grown ones are made on-demand and haven't been
an option for nearly as long. Let's not get pedantic. The point is they're
much cheaper to "produce".

------
ggm
Simple test about diamonds: Putting so-called "investment diamonds" and
heritage pieces to one side, has anyone who bought an item of diamond
jewellery here ever experienced selling it for remotely close to what they
bought it for?

Investment diamonds are a semi self-regulated shell-game of hedging which
tries to be like gold, but basically isn't. Gold is equally irrational in some
ways, but it is used by the state banks as part of their hedge. I believe only
diamond producing nations use diamonds as their financial strategic reserve.
Nobody else seems to regard them as a viable mechanism for national financial
resilience.

Consumer grade diamond is a propped up market where the cost and price
disfunction is about as big as it can be.

Pink diamonds, now thats a scarce resource. As long as small girls are
obsessed with the colour pink, and the Argyll mine in Australia has reserves
(the pipe is exhausted but they banked huge numbers of stones) there is value
in scarcity.

Buy shares in bort: industrial construction needs diamond grit

~~~
elliekelly
> Consumer grade diamond is a propped up market where the cost and price
> disfunction is about as big as it can be.

A few years ago I purchased a pair of diamond earrings for myself at one of
the big chains. Kay I think it was. When I paid I was prompted to get a paper
receipt or have a receipt emailed to me. I hit paper and then decided I
probably should have gone with email in case I needed to get them serviced or
anything so I asked the woman helping me if I could change my selection. The
two women working spent quite a bit of time at the computer trying to figure
it out before one of them said "I'm just going to do this and be done with
it."

I should have known that wasn't a good sign. They must have added my email
address as some sort of corporate/store account because I was emailed a copy
of every receipt for every. single. purchase. made at that location from then
on.

I called the location, I called their headquarters, I talked to someone in IT
at HQ. The receipts kept coming and no one at Kay knew why nor did they seem
to care. I finally just gave up and abandoned the gmail address but I've often
wondered if I'm sitting on one of the most comprehensive consumer diamond data
sets of "retail price" vs "purchase price" in the world.

~~~
alteria
You should take a look at the data, or share it! Either way I'm super curious.

~~~
ggm
if the invoices count caret you can plot $/caret over time.

if the invoices don't count caret, you can count $/purchase over time, and
then do text analysis to group the purchases.

------
hangonhn
As a nerd, once I found out that lab grown diamonds and other gems are
chemically and physically the same as their natural counterparts for a
fraction of the price, it became VERY difficult for me to buy natural gems.
It's hard for me to justify being stupid. Thankfully my fiancee was on the
same page.

~~~
stagger87
Why do you want a diamond (natural or otherwise) on your finger at all?

~~~
opportune
Unfortunately even if you might feel a certain way, there might be someone
else important in your life expecting a Real Diamond Ring whose opinion of you
is more important than a few thousands of dollars

~~~
optimusclimb
If their opinion of you is dependent upon that, that fact just might be worth
its weight in gold.

------
Havoc
>He argues that demand remains robust, and millennials will covet diamonds the
same way their parents and grandparents did.

RIP diamond industry.

------
julius_set
Well if this is based on old traditions indicating a gesture of financial
commitments then we should expect more to be buying engagement rings now:

Apparently some women are earning more than men, why should I spend my hard
earned cash to impress your friends family over a rock? Why not invest the
money into something productive.

An idiotic tradition.

[https://www.google.com/amp/s/techcrunch.com/2019/03/04/googl...](https://www.google.com/amp/s/techcrunch.com/2019/03/04/google-
found-it-paid-men-less-than-women-for-the-same-job/amp/)

~~~
FreeFull
The whole diamond ring thing is basically the result of a really effective
advertising campaign. It's definitely dumb to get a diamond ring when you can
get a much more beautiful, intricate ring for significantly cheaper.

------
kashyapmehta
The article does a good job of pointing out issues with the diamond industry
including margins getting smaller due to consolidation in the space and lack
of financing.

However, a couple of points are just old and mute at this point: 1\. De Beers'
monopoly in the diamond world has long been over. It now supplies only about
20 percent of the world's rough diamonds. 2\. Demand of diamonds is creeping
up whereas supply is limited:
[https://www.bain.com/contentassets/7b9f04068ca64542a17b71713...](https://www.bain.com/contentassets/7b9f04068ca64542a17b7171365277cb/bain-
diamond-report-2018-fig31_1440x810.gif?width=1440&height=810&mode=crop)

Disclaimer: We, at Liquid Diamonds, are building an online exchange for
naturally mined diamonds; think Nasdaq for diamonds.
[https://liquid.diamonds/](https://liquid.diamonds/)

------
jquery
Something I've noticed over the years: on websites that have a female majority
demographic, diamonds are generally talked about in revered terms, but the
polar opposite sentiment is seen on male dominated websites.

Pinterest: effusive towards diamonds. Popular articles include "What diamond
shape fits your personality type?"

Reddit: hates diamonds. Popular articles include "Diamonds are a myth created
by corporations."

------
mxuribe
Beyond the horrific conflict-side of things surrounding this industry, it is
this artificial market inflation and artificial scarcity that really bugs me.
If there's anything that i think should go the way of the dodo bird, its this
industry. Bleh.

------
dreamcompiler
Diamonds are industrially useful but calling them "precious stones" or
"permanent" has always seemed silly to me. They literally burn up if you heat
them in an oxygen atmosphere. Most rocks don't do that.

~~~
Arbalest
They do burn, but not easily. They only seem to char slightly with an oxy
acetylene torch (I assume that's what is being used here)
[https://www.youtube.com/watch?v=hF_yqriai7E](https://www.youtube.com/watch?v=hF_yqriai7E)

It might be a heatsinking thing, as diamond does transfer heat well, and the
metal underneath would continue to carry it away.

------
jquery
This thread is kind of funny on a meta-level.

People are saying things roughly equivalent to: "I purchased cheese for my
wife because she wanted it" and others are countering with "cheese isn't rare,
lab-grown cheese is superior, my wife doesn't even like cheese, my wife likes
nuts more than cheese, acktshually nuts are superior to cheese, cows are
mistreated, I'm not purchasing cheese for my future wife, your wife should
have bought you cheese, check out these cheese-alternatives that are even
better than cheese, there are secret vaults full of uneaten cheese, eating is
bad for your health, etc. etc."

There's still a lot of emotion tied to diamonds. Diamonds will truly be on
their way out when a thread about diamonds is mostly ignored instead of
becoming a bizarre flame war.

------
jdkee
To see the actual market in action, try selling off your spouse's engagement
ring and see the value it brings on the secondary market.

~~~
khazhou
Is the answer: almost nothing?

------
mothsonasloth
When I become lucky to propose to someone, I am not going to go down the route
of a diamond that everyone else has. Something more precious like Morganite or
Alexandrite (unless they can be lab grown too?)

~~~
moate
Why is that? Just curious.

When I proposed to my wife I went with a Sapphire as the main stone, mostly
because I personally find clear rocks boring to look at (and my wife generally
agrees).

~~~
mothsonasloth
Same reason as you just stated. Why give a loved one something that a lot of
other people will have, try and be more unique.

~~~
cremp
Careful with that. I had the same thought, but was proven 'wrong' because my
SO did not want anything but diamond, just because of the 'tradition.'

No amount of reading online would get her to change her mind.

She was worth it though.

------
SE_Student
Links from bloomberg.com are always behind a soft-paywall. or is this just
happening to me?

~~~
cbsks
I'm able to see it, but this banner is on the bottom of the page "This is your
last free article." I wonder if it the number of articles resets monthly, or
if this is my last one until I clear my cookies.

~~~
Digit-Al
Open in a private window or use outline.com

