Diamond Prices Continue to Tumble
- Anna Milovanovic
- Jan 27
- 3 min read
Updated: Jan 31
If you thought investing in diamonds was as wise an investment as investing in gold, you may need to think again. Diamond prices have decreased in the last year; in the United States, natural diamonds cost about one-quarter less in shops than two years ago, and lab-grown diamonds (LGD), even about three quarter less than in 2020, according to The Guardian. Diamond prices are set globally, meaning that the Netherlands is experiencing the same trend, despite there not being a nationwide survey of this.
Tenoris, a trend analytics company supplying retail and consumer trend data, published a report earlier this month stating that the average retail price per carat stood at $7,274, down 4.5% year over year, while the average price for lab-grown diamonds sank 21.8% to $2,443 per unit.
The recent decline in diamond prices is due to lower Chinese demand and competition from lab grown diamonds, according to Rapaport, which publishes The Rapaport Price List, the benchmark for pricing diamonds.
Impact on Local Businesses
The Groningen high street is not particularly concerned with this news.
A jewelry shop owner, Maarten Yedema who owns both, "Maartens Horloges and Sieraden" and "De Schatkamer Juweliers", mentions to The Glass Room that while stones may have been €20 before, they have dropped by a maximum of €5 in price, so the financial cost is negligible in many cases. He explains that as gold prices are rising rapidly, profits remain steady.
“It was surprising though, the price drop,” he added, attributing the decrease to the quality of LGD and them getting more market share. LGD are not sold at his stores as his father has moral concerns that the diamonds are not natural and real; meanwhile for Maarten, not selling LGD is a practical issue. It limits the amount of options on offer, simplifying staff training and displays.
Another high-street retailer, Pandora, is not affected as it only sells LGD. However, “our lab-grown diamond range is (…) unfortunately not yet available in the Netherlands,” says Mr. Johan Melchior, VP, Media Relations & Public Affairs, Global Communications & Sustainability. They do not sell any mined diamonds.
Ms. Gerda from Juwelier Repko said that they do not buy loose diamonds, only jewelry, so are not impacted by this phenomenon, while a representative of Siebel Juweliers declined to comment.
Why is This Happening?
After COVID-19 there was a slight boom in diamond prices, as demand increased with many weddings that had been postponed finally taking place. However, not only has this dissipated, it has been accompanied by a downward trend in both natural diamond and LGD prices because of the increasing market for lab-grown diamonds. Also, a growing number of people are choosing not to marry, but to live together as an unmarried couple in 2024, as per the Central Bureau of Statistics, in several cases decreasing the demand for diamond rings.
LGD are cheaper than and chemically identical to a natural diamond. They are composed of carbon, but the pressure applied to them is not over billions of years, as with natural stones, but only over a few hours, in a controlled environment.
In addition to their lower cost, LGD offer an ethical advantage. Unlike natural diamonds, they are free from the controversy surrounding “blood diamonds,” whose profits may fuel conflicts and insurgencies. The natural diamond industry is trying to combat the problem of blood diamonds by working to control production from the source, but some customers are not convinced of changes at the source.
How Diamond Prices are Calculated
Rapaport is the central system for all diamond sellers to set natural diamond prices. LGD are not held to this. Diamonds are sold by price per carat (200mg) and diamond quality factors are determined by the “4Cs” - carat weight, clarity, color and cut - as stated by the Gemological Institute of America. Demand is also taken into account for deciding on the price.
As Maarten points out, his business is more likely to sell more small stones than large ones so the impact of the diamond price decline will be limited. He mentions that he hopes LGD prices “decline enough to make it interesting, that the price [of LGD] comes closer to that of Zirconium, and then it would be easier to buy a real diamond - which remains, to this day, the most beautiful.”
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