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The current positive trend of lab grown diamonds as an alternative to its classic earth mined counterpart seemingly looks unstoppable. There is very strong demand for all fine jewellery, especially engagement rings, sold with lab grown diamonds in the USA.
Many customers come in and ask us – Is there any intrinsic value in lab grown diamonds? Will it depreciate in value over time? Is it better to purchase a smaller lower quality earth mined diamond rather than the new lab grown option? Are lab grown diamonds carbon neutral? Are they real diamonds?
We will try and answer these questions with transparency as of how things in the industry stand today, although we believe a diamond should be bought out of love, with maths finances and intrinsic values being a small part of any purchase.
Companies like Pandora and Light Box from DeBeers are now very seriously producing and marketing diamond rings made with lab grown diamonds exclusively. Some top end luxury jewellers are also contemplating moving production to lab grown diamonds in the medium to long run. Most online companies and jewellers offer this as an option to all customers.
Lab grown diamonds are 100% real diamonds as they are grown from real earth mined diamond seeds using techniques called the Carbon Vapour Deposition and High Pressure High Temperature processes. The seed of the real diamond produces a larger real diamond in the rough which is then cut and polished as usual. As there is human input in the rough diamond, most lab grown diamonds come with Ideal proportions and no fluorescence, unlike its earth mined counterpart. It’s like humans picking the best quality seeds to plant (polish) the best quality (diamond) trees.
These techniques use electricity hence as of today most lab grown diamonds are not carbon neutral although they use less energy than earth mined diamonds. Mining larger rough diamonds from the earth produce vast quantities of carbon emissions thus it is safe to conclude that lab grown diamonds are more environment friendly than the earth mined ones, although not carbon neutral.
The value of both the diamonds can be confusing to understand for customers who are deciding between the two. The vastly varying online opinions on diamond engagement rings does not help either.
Simple economics dictate price of any product depends on demand and supply. Currently, supply of lab grown diamonds are lower than earth mined and demand for lab grown diamonds are growing at a much faster pace than earth mined ones. Over 80% of the industry still work on the supply of earth mined diamonds, hence demand for lab grown diamonds is currently outpacing supply, although production is catching up.
Coming on to the maths, let’s take an example of a 1ct round diamond which is a good size for comparison purposes with an average price of around £8000 for a fine quality ( D colour VS1 clarity) earth mined diamond Vs. around £1500 for a similar quality lab grown diamond bought in the UK. Out of the £8000, £1333 is VAT which is not part of the intrinsic value of the diamond (unfortunately). Comparing this to the £1500 lab grown diamond (VAT is £250), the maths is very simple. When you walk out of Marlows with the earth mined diamond, a normal retail customer loses £1333 in VAT, while with a lab diamond, one loses £250, and that too on a smaller initial investment. Both are real diamonds of 1ct and same quality. The same theory goes for a 2ct or a 3ct, the larger the diamond, the more the intrinsic value held with the lab grown option. Over very long periods of time, both lab grown and earth mined diamond values will fluctuate like any other commodity depending on demand and supply at the time.
In summary, if you wish to get a top quality real diamond and have no intention of parting with it soon, you can viably opt for a lab grown diamond, although consider the earth mined option as well.
This is recommended for purchases up to £15,000. Your wedding ring will sparkle much more if produced in the right way as at Marlows, will be larger like for like and you will enjoy wearing or gifting the ring plus do your small part in reducing carbon emissions. Compare this to buying a Tesla or any electric car, it may depreciate but you will enjoy driving it, sometimes through your lifetime.
The analysis and conclusion become tricky on larger, more important, better quality diamonds. Generally, for important diamonds costing £30,000 plus, we recommend you continue the search for the earth mined option. The main factor is that larger better quality lab grown diamonds are rarer as of today. For eg, you will be hard pressed to find a lab grown diamond of 5ct and D Flawless quality and even if you do, the cost will be exorbitant due to its rarity today, but as technology improves and more can be grown, this will depreciate substantially over time and with such a large initial investment, we would not want our customers taking a risk today.
We hope this blog has gone some way in clearing things up. Should you want a one to one consultation, please call us on 02074051477 or 01212364415.