Martin Rapaport hosted a town-hall
discussion the subject of synthetic diamonds at JCK on the Monday morning. Being so late in the calendar of events (not
to mention, the morning after JCK Rocks the Beach with Train,) the turn-out was pretty good. Mr. Rapaport respectfully gave a lot of time
to synthetic diamond promoters to state their case for the industry to embrace
their product. As that time was drawing
to a close, Martin predictably attempted to turn the tables on their arguments;
using phrases like “bullshit” and “parasitic leeches.” It wasn’t all acrimony, and there were plenty
of industry members who were there to advocate for the traditional natural
diamond market.
Here are a few things you should think
about when contemplating the roll of synthetic diamonds in our industry:
What do we call them?
·
Much has been made about the
use of words and phrases like artisan
created, foundry diamonds, lab-grown, cultured, mined diamonds, synthetic, etc.
o
Rapaport maintains that the proper
gemological classification is “synthetic diamond.”
o
Synthetic producers will
attempt to use whatever euphemisms to romance and market their own
product.
How should we view synthetic diamonds?
·
Their product is only relevant
in the jewellery industry because jewellers and the Diamond Promotion Service
spent countless millions of dollars over decades, convincing the world to buy
diamonds.
o
They’re not going away. Producing flawless diamonds could be the
“holy grail” to producing Qubit or quantum computers that can store
exponentially more information than current technology.
o
After a period of adjustment,
they might well prove to validate the worth and desirability of natural
diamonds.
o
In the same way that we cannot
identify and certificate small Canadian diamonds, synthetic producers
acknowledge that synthetic melee will likely never be identifiable. Currently there are synthetic melee on
alibaba.com for a fraction of the price of natural ones. How long before those allow an unscrupulous
manufacturer who doesn’t disclose their origin to gain an unfair price
advantage?
Will you sell synthetic diamonds, only to
risk what you sold for $7,000 becoming available for $2,000 in a few years when
their prices come down?
·
Dissenters believe that as
technology and the number of growers increases, the value of synthetic diamonds
will drop precipitously. What now costs
30% less than a natural diamond could devalue to 80 or 90% less than natural. Maybe even to $100 or $200 per carat.
o
Synthetic diamond proponents
could not quantify how many labs and/or foundries are currently competing to
produce lab-grown diamonds. Further, they
attempted to convince the gallery that due to the energy required, time-frame
and percentage of failure, that prices cannot drop to nominal levels.
Can you endorse a product that Rapaport
calls a “parasitic leech” to the natural diamond industry?
·
Natural diamond proponents
maintain that those promoting synthetic diamonds are unfairly benefitting from
decades of promotion and investment by the natural diamond industry. Lab grown diamonds did not create a market
for their product, they’re riding on the coat-tails of the natural diamond
industry.
o
Synthetic diamond producers
claim that they are simply filling a demand in the marketplace. “If The Signet Group needed 1,000 one carat
SI/G-H colored diamonds and the traditional (natural) diamond market can’t
supply those, then lab-grown diamonds can fill that order.”
·
Sceptics accuse synthetic
diamond producers for taking advantage of the value of natural diamonds to make
unfair profits
o
Synthetic producers admit that
they are charging what they believe “the market will bear,” and couldn’t deny
that the prices they charge are linked more to natural diamond pricing than a
“cost-plus” value.
o
A common sentiment was that
getting down to cost-plus value will
inevitably happen when competition and better technology increase.
Are synthetic diamonds an answer to
Millennials desire for ethical and environmental products?
·
Lab growers assert that their
diamonds avoid harmful mining practices and that there are no synthetic “blood
diamonds.”
o
Rapaport emphatically defends
the estimated one million artisanal miners in Africa whose entire livelihoods
depend on first-world consumption of natural diamonds.
o
Nobody asked what kind of
environmental impact is required to produce synthetic diamonds, but nuclear
reactors were mentioned as part of the process.
If anyone knows whether that’s just to produce power, or if it’s part of
the crystal formation process, please post your comment below.
Are synthetic diamonds going to become as
inconsequential to natural diamonds as other synthetic gemstones?
·
Synthetic emeralds, and
sapphires haven’t eliminated the demand for natural ones; rather they have
arguably created more reverence for the natural ones
o
A speaker against synthetic
diamonds pointed out that retailers still deal with confusion over Grandma’s
ruby which the inheritor believed was real, because “Grandma had money, and she
never would have bought something imitation.”
Then they assume a jeweller must have switched the ruby. Most of us in the industry can spot a
synthetic ruby from across the room, but diamonds take laboratory scrutiny to
identify. Synthetics will cause massive
errors in identification, and with a growing disparity in value these errors
will cause front-line jewellers big problems in the future – unless they are
indelibly marked.
Just imagine these scenarios, not too far
in our future:
Buddy goes out to buy a diamond engagement
ring for his sweetheart. He wants to buy
her a one carat diamond, but his budget affords a 3/4ct diamond. The jeweller offers him a 1ct synthetic to
accomodate his budget. He buys it, and
gives it to the girl without telling her it’s synthetic. They tragically part. She goes into a pawn shop and sells the
diamond. The pawn broker says, “I’ll
give you $1,000 for the diamond because it might be synthetic.” The pawn broker now owns a diamond that he’s
not sure about. Is he going to sell it
as “possibly synthetic?” Will he identify
it by the laser inscription as synthetic?
If he knows it’s synthetic will he have the laser inscription rubbed
off? Will he sell it to a retail
jeweller who resells it as natural?
It’s a lot to think about!
