When the author of this article took an interest in collecting aesthetically pleasing minerals early in life, owning a diamond in a collection was like finding a pot of gold at the end of the rainbow. Not because diamonds were too costly, but because the Soviet government prohibited citizens from owning precious stones not studded in a jewelry item. Decades have passed, but this ban remains in effect in modern Russia, with the exception of being able to own loose polished diamonds as an individual. The youthful dream of having a rough diamond in my collection was based on a simple understanding that a diamond ranks at the very top of the gemstone hierarchy, so how could I have no diamonds in my collection?
I believe millions of people around the world have had a similar emotional logic for decades. The only difference was that most people wanted to have a polished diamond. Unlike a rough diamond, a polished diamond is attractive due to its play of light and color and, as for its aesthetic look, is quite competitive with gemstones. However, people wouldn’t be willing to pay huge sums of money for a polished diamond’s beauty alone if it didn’t have a well-established status of the ‘king of gemstones’. And it did. And today, it’s being destroyed.
There’s no point in reminding the story of the polished diamond’s rise to Olympus; it’s been told thousands of times. I’ll simply note that the gemological diamond grading system is perhaps the highest level of marketing excellence in the world in honest promoting of essentially the same product, but at prices that vary tremendously - hundreds of times. Almost anyone having no training or gemological knowledge can easily distinguish a high-end emerald, ruby, or sapphire from a cheaper one of similar size and cut quality. It’s quite another matter to ask even a jewelry connoisseur to distinguish a high-end polished diamond from a polished one of similar size and cut quality, but relatively inexpensive. Without a magnifying glass, there’s no way to tell the difference.
Then, can polished diamond color and clarity grades be considered a marketing ploy? I don’t think so - it’s a bright invention that allows identical goods to be rated for buyers of varying wealth based on the production cost of each individual jewelry piece. Really, the gemologists’ assessments of both color and clarity are subjective, but these assessments are nevertheless understandable and relatively accurate. And, importantly, these polished diamond quality grades truly reflect the relative cost of the goods related to the rarity of mining a rough diamond of the corresponding size, color, and clarity. It’s of utmost importance that the grades reflect the differences in the average cost of the raw materials used (i.e., the mined rough diamonds), while the quality of subsequent processing (cutting and polishing) takes into account a different factor. The average production cost of rough diamonds of a given quality and size is an objective reality, stemming from the natural conditions of diamond occurrence and mining worldwide. In other words, the 4Cs (cut, carat, color, and clarity) de facto reflect the true VALUE of a polished diamond with given characteristics.
The cost of diamond mining cannot decrease (especially, significantly) for a number of reasons as it consists of the cost of exploring diamond deposits to replenish reserves, the cost of mining, and so on. Moreover, all these costs are subject to inflation, which resulted in increased diamond prices overall, coupled with the growing number of wealthy people worldwide willing to purchase diamond jewelry and fueling the demand. Certainly, this happened with the support of marketers.
It’s important that a beauty of a polished diamond, its visual splendor is largely independent of its color and clarity characteristics to a low-skilled person, but depends primarily on the size and the cut quality of a gem. Only stones with the lowest characteristics show clearly visible differences in comparison. In other words, grading a polished diamond according to the 4C system is less about the precious stone’s actual beauty, but rather about its suitability for a particular buyer’s budget.
The above is important for understanding the folly of grading synthetic polished diamonds using the 4C system. What do these grades reflect in synthetic polished diamonds? The perfection of the technological process used to produce synthetic rough diamonds?
We understand perfectly well that, unlike the objective limitation on the number of kimberlite pipes on the planet, the quantity of equipment on the market for producing synthetic diamonds (using both HPHT and CVD technologies) is limited only by the demand for these synthetic stones. We understand perfectly well that any production process, including the one to make synthetic diamonds, can be constantly improved, instantly scaling up a successful result. Moreover, the cost of both the equipment and the overall production of large, extremely pure, and colorless synthetic diamonds will depend solely on the demand for these stones. And with the growing competition in this market, unconstrained by anything other than demand, the production cost will decline. Perhaps, the only limiting factor will be the cost of electricity, as is the case with cryptocurrencies... Although in our case, it seems that scientific approaches will allow for a significant, many-fold decrease in production costs.
All this means that in the near future, the jewelry market will see a supply of synthetic polished diamonds of any size and of the best color and clarity characteristics, limited by demand only. All other man-made diamonds will be considered defective for jewelry use, and will become industrial diamonds.
Grading synthetic polished diamonds on the 4C scale, and ensuring that synthetic polished diamonds are perceived as ‘real’ by consumers, is a deliberate misleading message about the alleged perceived value of these stones.
Naturally, jewelers, diamond dealers, and diamond mining companies are well aware of the above. Each sector has its own business interests. However, jewelers are the main players. After all, it is the jewelry industry that receives both natural and man-made synthetic diamonds. The long-term interests of jewelers are obvious, as profit margins of jewelry businesses are largely based on the high cost of rough diamonds. At current diamond prices, they take up at least 40% in the polished diamond sector. And if the overall price of diamonds falls 100-fold due to the replacement of natural rough diamonds with synthetic ones, the loss of profit margins for jewelers in the polished diamond sector would be enormous!
Really, it’s a challenging economic time today worldwide. It’s clear that jewelers can currently sell synthetic diamond jewelry at a price quite close to that of natural diamond jewelry, but at significantly lower production costs. People are accustomed to the fact that diamond jewelry can’t be cheap. However, it’s also clear that over time, competition will lead to retail prices for synthetic diamond jewelry being close to their actual production costs.
So, in pursuit of short-term profits and less-affluent customers, the jewelry industry is setting itself up for a decline in average margins in the future? Not quite so. These are gemologists who are helping jewelers become poorer.
Gemology is a very useful service for the jewelry industry. It’s largely thanks to gemologists that synthetic corundums and emeralds haven’t completely replaced their natural counterparts in jewelry. But the difference is that no gemological centers issue certificates for synthetic corundums, beryls, chrysoberyls, and other man-made gemstones. The gemological schools do not assess the characteristics of these synthetic stones using the same scale as the one used to assess the characteristics of respective natural diamonds. So why did things turn out differently with polished diamonds?
I think the problem is that the world’s gemological centers, being commercial entities with their own commercial interests, reasoned that synthetic diamonds look so similar to natural ones that man-made stones could significantly push mined gems out of the jewelry market. And then the number of certificates for polished diamond issued by gemological centers would decrease dramatically. Of course, this is undesirable for gemological laboratories.
Perhaps this opinion is wrong. But the fact is that global gemology, as a field serving the interests of the jewelry industry, has profited commercially by transferring the 4C natural diamond grading system to synthetic stones. Moreover, some global gemological centers issue certificates for synthetic polished diamonds, using the SAME 4C grading system, and creating an illusion among buyers of synthetic diamond jewelry that these stones are completely identical to natural diamonds! Isn’t this a case of ‘the tail is wagging the dog’ in its own interests?
Of course, there are also the interests of synthetic diamond manufacturers. They’ve spouted so much cynical nonsense about comparing these diamonds! Environmental, Social, and Governance criteria (ESG)... But all these buzzwords are not as important to a real jewelry buyer as understanding the truth - whether the diamond is ‘real’ or ‘not real’?
Buyers are told: this diamond is just as real as a natural one. It’s not so, it’s a lie in principle! Especially for Russia, with its diamond industry legislation.
Firstly, a natural rough diamond is legally a ‘precious gemstone’ in Russia. A synthetic rough diamond, however, is not legally considered a ‘gemstone’.
Secondly, a rough diamond is a natural mineral, a cubic allotrope of pure carbon. It’s a natural diamond, not a synthetic one. So, a synthetic diamond, not a mineral at all, cannot be ‘real’.
Can a synthetic product have the same name as a mineral? Probably, but only if you don’t forget to add qualifying words ‘synthetic’ or ‘artificial (man-made)’. Not ‘grown’. Flowers are grown in gardens, but things are made - produced - in industrial facilities.
What could be the consequences of this state of things for the global jewelry industry? This can lead to a gradual driving of natural polished diamonds not only from the low-end and mid-range segments of natural diamond jewelry, but also from a high-end, premium segment. Diamonds either have or don’t have the status of the ‘king of gemstones’. Even the most affluent people in the world accept the prevailing notion of ‘value’ in society. The social value of a natural polished diamond is increasingly being changed in people’s minds by the opportunity to save money by replacing a natural polished diamond with a synthetic one. And the grading system used to assess the characteristics of synthetic polished diamonds identical to that used for grading natural ones contributes significantly to this.
A natural polished diamond is a historical symbol of preciousness itself. A synthetic polished diamond is an insert in a jewelry piece made artificially, although it is indistinguishable to the naked eye from a real natural polished diamond. However, it is not made from a real rough diamond.
Jewelers should focus on the wealthiest, premium consumers in their polished diamond advertising, so that the consumers would like to have natural polished diamonds. Meanwhile, medium- and low-income consumers of diamond jewelry will consciously and happily buy affordable substitutes for real polished diamonds, just as they buy inexpensive replicas of luxury clothing, shoes, and accessories. Those who buy a well-made but budget-priced counterfeit of a premium brand usually realize it’s an imitation. But this doesn’t bother them, because they simply don’t have money for original branded things.
Most surprising is the reaction of the Russian diamond mining company ALROSA to the synthetic polished diamonds’ incursion. Instead of trying to maintain the VALUE of natural diamonds, the company has focused on their PRICE, or more precisely, their investment potential, which, if you take into account the actual prices of polished diamonds in recent years, is nowhere to be seen. In fact, prices have been falling. Under these conditions, was it possible to launch an ‘investment-grade polished diamond’ program, even to call them so? But most importantly, ALROSA hasn’t made any efforts to implement national measures banning the inclusion of 4C grading on jewelry tags and certificates for synthetic polished diamonds.
The markets for natural and synthetic diamond jewelry items need to be separated, not on paper but in real life, through regulations. It’s necessary to separate them so that no jewelry buyer is left with any illusion that a synthetic polished diamond is the same as a natural one, only cheaper.
So, to preserve the status of a natural polished diamond as the ‘king of gemstones’, the global jewelry community should push for gemological laboratories to completely abandon any certification of the quality characteristics of synthetic polished diamonds. They should only make diagnostics whether it is natural or synthetic. And if it’s synthetic, then no 4C grading should be carried out and no certificate should be issued!
Vladimir Zboykov, Executive Director of the Guild of Jewelers of Russia, for Rough&Polished
