Lab grown diamonds have become more and more prevalent and main stream as the technology has advanced. The technology to produce lab grown diamonds has improved and gotten much cheaper in the past few years, to the point where they are now being produced to a large scale. While they have gained a lot more acceptance over the past few years, they are till estimated to only represent about 5-7% of the total diamond market. The marketing has also gotten much more aggressive to position lab grown as a more ecofriendly, conflict free option.

What the marketing doesn’t tell you is that with simple research, you can find that lab grown diamonds use massive amounts of energy, since a massive amount of heat and pressure has to be applied to create a lab grown diamond, 24 hours a day for weeks on end until it grows to a size big enough to be cut and polished for jewelry. So while they are guaranteed to be conflict free, they are not environmentally friendly by any means. And while the issue of conflict diamonds gained a lot of awareness after the movie Blood Diamond, the movie also resulted in a massive effort across the diamond industry to eliminate conflict diamonds from the supply chain. They now are estimated to only represent up to 4 percent of the total diamond trade, and almost every reputable wholesaler and retailer has vowed not to sell conflict diamonds.

Lab grown diamonds are still very much an American phenomenon, and acceptance has not increased to the same levels in other countries. A lot of it has to do with the cultural history of diamonds. Diamonds and jewelry in general have bene seen in Asia as an investment and a store of value. And historically, jewelry with high gold content and with high quality diamonds have held their value well. Gold and diamonds both have held up well to inflation over the years.

However, lab grown diamonds are a very new segment, and have only gotten cheaper and cheaper over the years. So, anyone who bought $10,000 worth of lab grown diamonds a few years ago can expect to get about a 10% return on their purchase at the most when looking to sell or trade in their diamond. However, anyone who put in $10,000 into natural diamonds a few years ago can expect to get approximately 50-80% of the value back depending on the size of the diamonds as well as the retail markup they paid.

Many don’t consider or care about the resale value of a large lab grown diamond when purchasing an engagement ring. I’ve had friends tell me that they don’t ever intend to sell their engagement ring, so the resale value is irrelevant and they are thus considering purchasing a lab grown diamond to get a larger diamond for their money. Something they aren’t considering though is that if they ever come across hard times and need to sell their jewelry for cash or want to trade up to a larger or different shaped diamond, they will not be able to easily sell their lab grown diamonds for much at all. Also, when they one day will pass on their jewelry to their children as part of their estate, they will be passing on 1-5% of what they paid, rather then 80% or more.

One metaphor I use to help explain this in a way they will understand better is to use the metaphor of purchasing your forever home. While you may intend to live in the home forever, and thus aren’t looking at the resale value, how many people would feel good about their purchase if the home they purchased for $500,000 is worth only $50,000 a year later? I’m sure no one would feel good about that at all. Because who knows, your family may grow and you may want to trade up for a bigger house later, or you may pass it down to your kids. However, if the house is only worth 10% of what you paid, you will feel like you threw away that money, and instead of having that portion as part of your assets and balance sheet, it is instead lost to massive instant depreciation.

Another factor to consider is that lab grown may make sense for a fashion purchase where it doesn’t have much significance to the wearer, an engagement ring is historically a more emotional one. It signifies commitment to the other person, and is something that you and your partner will cherish for as long as you are together (likely your entire life). A natural diamond will always have value since it is infinitely scarcer than a lab grown diamond. All the natural diamonds on Earth were produced about a billion years ago, and there will never be any new ones produced, only existing ones dug out of the Earth. However, lab grown diamonds will constantly be created every single day for the rest of our lives. They will only get cheaper and cheaper and while beauty is in the eye of the beholder, their significance will lessen as well. This is why I recommend friends who are looking for everyday wear to consider lab grown diamonds, but for those who are looking for heirloom pieces that they will cherish forever, natural diamonds are a much safer investment.