Why your diamond ring could be a terrible investment

After spending a good chunk of change on my wife’s engagement ring a few years ago, I was a little bit annoyed to read this article about new diamond technology. Evidently, the diamond farming technology has improved to the point where experts can no longer tell the difference between a real and a lab grown.pic-diamonds.jpg

Growing diamonds like crops

The natural process for creating a diamond requires a lot of pressure, heat and time. Scientists have been trying to duplicate and speed up this process and unitl recently they have been small and impure. But, over the past decade they have had pretty good success.

Researchers have perfected a process called chemical vapor deposition (CVD) which grows pure and comparable sized diamonds in a matter of months. They are so good in fact that the writer of the article went to a jeweler with one of the stones to get an unbiased assessment of the diamond’s quality:

…The next day, I place the .38 carat, princess-cut stone in front of Virgil Ghita in Ghita’s narrow jewelry store in downtown Boston. With a pair of tweezers, he brings the diamond up to his right eye and studies it with a jeweler’s loupe, slowly turning the gem in the mote-filled afternoon sun. “Nice stone, excellent color. I don’t see any imperfections,” he says. “Where did you get it?”

“It was grown in a lab about 20 miles from here,” (he) replied.

He lowers the loupe and looks at me for a moment. Then he studies the stone again, pursing his brow. He sighs. “There’s no way to tell that it’s lab-created.”

So this begs the question: If diamonds will soon be able to be mass-produced on demand, won’t real diamonds be worth a lot less?

Unless they can figure out a fail-proof method of telling them apart, I think it is inevitable. The challenge is that unlike a Gucci handbag and a knockoff, both diamonds are made from the same materials: carbon. One is just created a lot faster than the other.

What good could come out of grown diamonds?

  • The positive to this is that those involved in the exploitation of people in this movie may see their profits dry up. I haven’t seen Blood Diamond and I really don’t know much about the whole situation, but hopefully this would help bring it to an end.
  • You may be able to get a fat rock for your honey for a fraction of the price. If it is just the sparkle of the gem that you are interested in, it will still be there.
  • There are endless technological advancements that can come from the cheapening of diamonds. Some experts think they could, “become as significant as steel or silicon in electronics and computing.”

I will not be pawning my wife’s ring anytime soon, but it may be something to keep in mind before spending your hard-earned cash on a new diamond.

This article was featured in the Carnival of personal finance.

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8 Comments
  1. Shannon

    Even as a woman, it’s hard for me to understand why gems are so valuable. I know they’re rare and beautiful, but if good imitations can be made for much less, why bother with the real jewelry?

    If manufactured diamonds have indeed become identical to real ones, it will be a shame to see the existing jewelry lose value, but it will also be nice to pay less for something pretty.

    I expect that diamond rings as tokens of affection will go the way of the Victrola as a music player, and only antiques will be valuable. Perhaps men will stop buying their sweethearts diamond rings and instead buy something that is more costly — oil engagement rings, anyone?

  2. bob

    @shannon
    LOL, how much is a carat of oil going for these days? It won’t be too much longer before it passes up diamonds ๐Ÿ˜‰

    I agree with you that the days of a diamond being the only option for an engagement ring are headed out the door – what is amazing to me is how the jewlery industry some how managed to convince the world of this in the first place…

  3. Matt

    If the sparkly is all women cared about, why do they get all mad when you buy them costume jewelery?

  4. bob

    @Matt
    your guess is as good as mine ๐Ÿ˜‰

  5. Slinky

    @Matt & Bob – Because costume vs real makes a huge difference. Costume just isn’t the same, it looks different, and it’s often cheaply made and will break. Also, many women care about how much you spend on them for some reason.

    That said, I wear a lab created Sapphire engagement ring and most of my jewelry is costume. As you say, I just want the sparkly. I’d get more real jewelry if I could afford it. It generally lasts longer and sparkles better.

  6. bob

    @Slinky
    thanks for clarifying for the boys ๐Ÿ˜‰

  7. sundreez

    The diamond is more than just an investment, it is a symbol. A diamond can last forever just as a marriage should.

  8. MEL

    I am with someone who is too cheap to buy even the synthetic stuff. He says” You have lots of nice jewelry you bought yourself or inherited so why should I buy you anything? I’d spend the money if it was something worth buying but buying you more jewelry is not worth it” Dude, that’s not the reason I want a nice ring from you. I know you don’t have the money to buy anything truly fancy> I don’t expect you to go into years of debt over a ring. But even a decent synthetic ring would make me happy. I don’t even care if it’s a diamond. My birthstone would work fine for me. It’s the fact that you would care enough and respect me enough to get me something every other woman I know has gotten from her fiancรฉe or husband. And you can’t seem to ‘get’ that part of the scenario.