You probably know that diamonds are created when buried pieces of organic material (carbon) is subjected to tremendous pressures and heat deep underground for long periods of time, fusing the atoms together into a bright, clear (or mostly-clear) crystalline form. If you want an absolutely pure diamond, you would pay top dollar for it. Or you would have someone manufacture it for you.
The controlled laboratory processes that produce synthetic diamonds are now surpassing the real thing in terms of clarity and purity, but most of the demand is still coming from industry. Synthetic diamonds are produced at roughly $800-$1,000 per carat1, which is dirt cheap considering the price of perfectly pure natural diamonds sold at auction at Sotheby’s and other houses, or sometimes worn on royal crowns at certain state coronations. Yet despite their purity, synthetic stones make up less than 1% of the global demand for diamond jewelry, compared with an estimated $14 billion market by various industries who need access to the hardest material known to science2.
Synthetic diamonds are used in the manufacturing of computer chips and electronics; CVD diamonds are a component of high-performance loudspeakers, and research centers use synthetic diamonds in their detectors of high-energy particles. Diamonds are used in abrasion and polishing, stone cutting, surgery, astronomy and electric insulation, and most drilling equipment uses the world’s hardest substance to slice through layers of rock. Ironically, synthetic diamonds are also used in gem exploration drilling equipment.
All of this is relevant because of sales pitches from unscrupulous investment brokers who are touting diamonds as the ultimate store of wealth. These pitches ignore other facts as well: the fact that diamonds are actually the least rare gemstone in the world in terms of inventory, but an organization (the De Beer organization) controls sales and therefore prices, and there is really no liquid market for diamonds like there is for, say, stocks or bonds.
As synthetic diamonds take over the industrial marketplace, global demand is comparably reduced. And as people begin to realize that synthetic diamonds are actually real stones, but are more reliably pure and dramatically cheaper than what comes out of the ground after millions of years of random processes, the jewelry market could shift as well.
Diamonds are still forever. But today’s prices may not be.
Registered Representative and Financial Advisor of Park Avenue Securities LLC (PAS). OSJ: 5280 CARROLL CANYON ROAD, SUITE 300, SAN DIEGO CA, 92121, 619-6846400. Securities products and advisory services offered through PAS, member FINRA, SIPC. Financial Representative of The Guardian Life Insurance Company of America® (Guardian), New York, NY. PAS is a wholly owned subsidiary of Guardian. LIVING LEGACY FINANCIAL INSURANCE SERVICES LLC is not an affiliate or subsidiary of PAS or Guardian. Insurance products offered through WestPac Wealth Partners and Insurance Services, LLC, a DBA of WestPac Wealth Partners, LLC. CA Insurance License Number - 0F64319, AR Insurance License Number - 9233390. | 2023-152389 Exp. 03/25 | This article was written by an independent third party. It is provided for informational and educational purposes only. The views and opinions expressed herein may not be those of Guardian Life Insurance Company of America (Guardian) or any of its subsidiaries or affiliates. Guardian does not verify and does not guarantee the accuracy or completeness of the information or opinions presented herein. Guardian, its subsidiaries, agents and employees do not provide tax, legal, or accounting advice. Consult your tax, legal, or accounting professional regarding your individual situation.