Why Man-made Diamonds do not Retain their Value

Question

For our anniversary I want to buy my wife diamond earrings. I bought her a lab made diamond bracelet in the past and she loved it, but said that she would rather have earth made diamonds because she wants it to retain value to pass on to our daughter.

Looking online I see many sites from jewelers that confirm what she claims, but I do not trust their bias. Is it true that man made diamonds that are considered ‘perfect’ are worth less in the long run compared to their earthen made brethren?

In: 1669

Answer 1

Diamonds aren’t investments. Period. There you go.

Lab made or mined means nothing. As soon as you buy it, it’ll lose somewhere between 10-50% of it’s value, and it will never increase in value.

Some reasons diamonds in general don’t retain value:

* There’s no shortage of supply. They’re not that rare, and they’re relatively easy to make (at least for the price we charge for them).

* They’re not practically reusable (at their high price point) except for in jewelry, and there’s a stigma against reuse.

* Jewelers make more money turning over new diamonds than they would by buying back older diamonds.

* Jewelers are the only ones who will buy diamonds. There’s no used market for diamonds like there are for cars, because it’s too easy for a buyer to get conned with an imitation. This means jewelers dictate the price.

So why might lab diamonds be worth less on the resale market? Look no farther than the last reason. Jewelers are the only buyers, so only jewelers dictate the price. Jewelers are already being undercut by lab made diamond jewelry.

A lab diamond company could buy-back and re-shelve merchandise, but if you’ve ever looked into buying lab made diamonds online, it’s pretty clear there is zero shortage of product in their catalog.

Lets get to the more applicable point though:
Why does it need to retain value in order to pass it along?
If you pass any earrings to your daughter, she’ll value them for sentimental reasons. Unless you’re literally planning for her to pawn them someday, they don’t need to retain *any* monetary value.