Thoughts on lab created diamonds

Hi Shawn,
I’d eventually like to write a longer post describing my thoughts, but I think the only reason to buy a lab-created diamond is price (with some caveats described below).  I don’t think lab diamonds exhibit significantly greater benefit in terms of ethics or the environment as is often claimed by lab diamond proponents.

First, price.  The prices of lab-diamonds are falling and the discount spread between lab-diamonds and natural diamonds is increasing.  Lab-diamonds are currently cheaper than natural diamonds and I think that spread will continue to increase over time.  As an early-adopter of lab diamonds, you might be buying at a moment of maximum future depreciation.  I think we’re at the beginning of the bifurcation in prices between lab and natural diamonds, potentially following the precedent set by lab and natural sapphires in which lab sapphires are significantly cheaper than natural sapphires.

For ethics, mined and lab diamonds have a more similar “True Price” than you might initially expect.  Slide 6 shows the comparative True Price of a large-scale mined diamond is $137 vs. $105 for a lab diamond.  The majority of the ethical cost of diamonds is due to the common processing step (cutting and polishing, $95) that both lab and natural of diamonds must undergo (slide 10).  This common processing step usually isn’t mentioned when discussing the ethics of lab diamonds.

For the environment, lab diamonds are energy intensive to create.  They take 28 kWh of energy per carat.  Natural diamonds can range from 7.5 kWh to 66.3 kWh.  Depending on their source, a natural diamond could be more energy efficient than a lab diamond to create.  This is important because most lab diamonds are created in China, so that 28 kWh of electricity is being generated by coal power plants.  It’s easier to see the environmental effect of a diamond mine, but lab diamonds hide their environmental impact upstream in the mining and burning of fossil fuels to generate the electricity to power the diamond reactors.  Lab diamonds don’t appear magically out of thin air, they have environmental costs too.

And all of this is before the social aspect – will your friends and social circle care if it’s a lab or natural diamond.  Diamonds are a Veblen good – they are more desirable because of their high prices, which is why I think there is a stigma associated with lab diamonds.  It’s the price that’s the signal, not the rock itself.

If your main goal is simply to buy a shiny diamond, then a lab diamond will work.  But you might also consider these other factors to see if they match your needs.

Based on the small sample of lab diamonds posted on reddit, I think Brilliant Earth tends to have lab diamonds with better color (yellow undertone).  The diamonds I’ve seen posted from other vendors will often have a brown understone.  However, you’ll pay more at Brilliant Earth as they have higher markups.  So just be aware of the color should you decide to look elsewhere.

A lab diamond is still a diamond, so you can still use my tools whatever you decide to buy.

Best,
Joe