Welcome to the Gilt Trips Podcast. I'm your host, Kendra Lockhart. As a goldsmith and
gemologist, I'll be speaking 24 Karat on all things jewelry, metals, and gems. Join
me plus a few friends to demystify both materials and designs as your private jeweler. Let's
tune in on these topics and get golden. Martin Rappaport said last week, synthetics are only
right for poor people at the JCK trade show, the Super Bowl of the jewelry world. Yet Leonardo
DiCaprio, who has invested in man-made material, stated he is proud of, quote, cultivating real
diamonds in America without the human and environmental tolls. Why is this issue so
polarized? How long did it take us to invent lab-grown diamonds? Where is the diamond
industry heading? Let's get real about truth versus story, prose versus cons, and its rocky
road ahead. Chapter timestamps will be in the show notes. Synthetics aren't new. Lab rubies
were created back in 1837, and by 1902, the flame fusion process was perfected. There
are multiple ways to create man-made gems and multiple gems that are man-made. Did you
get a class ring? Hydrothermal emeralds. Got an expensive timepiece? Synthetic sapphire
instead of glass for the crystal over its dial. What is a simulant, then? Whether it
is rhinestone, cubic zirconia, commonly known as CZ, moistenite, or even naturally occurring
gems, those are mistaken for the actual diamond. There is debate over the old term for man-made
versus modern wording, so we are all going to call them lab-grown for the rest of this
episode. Back to diamonds. While there were many technologies to create on-demand crystals,
flame fusion, crystal-pulling, hydrothermal, and flux growth, none of these are used with
diamonds, so previous techniques were not going to work for this type of creation. Because
you are just now hearing about lab-grown diamonds in the last few years, you may think this
is a recent breakthrough in science. Hardly. 70 years ago, in 1954, a chemist at General
Electric succeeded in the first synthetic diamond. Years before that, scientists around
the world were attempting to prototype this ability. Now good things take time, and they
had to walk so that we could run. The original material was not as colorless or as clear
as today's product. Results were inconsistent and relegated as industrial material for lasers
and abrasives, not commercial grade or consumer-worthy just yet. In 1971, the first gem quality
material is achieved. So now we have a process that is perfected enough to have a valuable
result. A decade later in the 1980s, an alternative procedure to this is now streamlined, and
thus creating two roads leading to Rome in the form of lab-grown diamonds. But large
enterprises take years to counterbalance all the peripheral sectors. It would not be until
the 2000s that the GIA, Gemological Institute of America, would create the division to certify
lab-grown diamonds. And later in 2018, the FTC, or Federal Trade Commission, would officially
recognize lab-grown diamonds as real gems. It wasn't until 2019 that my diamond dealer
colleague invited me to come see them in person, and I found the financial benefit for an ideal
client. He was in Military Academy on a tight budget, she was the daughter of a southern
matriarch, and we just needed a more substantial carrot size, especially for those circles.
I would walk away a winter.
Original product and its results were very labor-intensive and cost-prohibitive. Does
this sound familiar? Do you remember the first handheld video camera recorders, or DVDs,
or cell phones? What are these current methods? How are lab-grown diamonds made? The first
way to create lab-grown diamonds that led to the aftermath in 1954 is HPHT, or high-pressure,
high-temperature. It is the older of the two styles and consists of a seed diamond, which
is natural, being placed in an environment to create the heat and force of earth through
machinery. Inserted into pure carbon, the simulated elements melt and later crystallize
into the raw material. This method is not as efficient and is used for industrial material
rather than commercial.
The other technique is CVD, which stands for Carbon Vapor Deposit. Again, using a seed
diamond, it gets exposed in a vacuum chamber with carbon-rich glass. Up goes the temperature,
and next the chemicals begin to precipitate and attach to the starter. While this took
longer to perfect, it is superior in its energy use as well as caliber of material. So most
lab diamonds are now made this way, and of the CVD lab diamonds, occasionally a post-growth
exposure to HPHT is used to improve certain characteristics.
There are these laboratories and locations. China produces over half of the supply. India
is right behind, and domestically, we finish at third. Two of these three countries do
not yield viable sources of natural crystals. But this won't surprise you. While America
is number three as far as maker, we are number one as far as the market. The United States
spent $20 billion on lab-grown diamonds and jewelry in 2021, just a year after the pandemic,
the lockdown, and our quarantine.
As for gemology tests to distinguish natural material from man-made, it used to be somewhat
easy to identify a lab-grown diamond. Under the microscope, I could find hematite-looking
metallic needle-like inclusions, or strong purple, possibly orange color, under short-wave
and long-wave UV light lamps or light boxes, those made for very confident findings. We
even relied on the GIA GemID100 unit just two years ago. But the game has gotten stronger,
and the discernment is more nuanced. Dealers have been punked with a blend of their melee,
form for smaller or accent diamonds, as lab-growns have been mixed into the parcel, and it was
priced and sold as natural. Counterfeiters and scammers were inscribing natural diamond
serial numbers matching GIA lab reports onto man-made goods, further muddying the waters.
There is a new game on both seller and buyer to find integrity, discernment, and authenticity
on both sides of the transaction. Let's explore current business models and compare and contrast
two ways that consumers can acquire lab-grown diamonds. I've had the benefit of working
with both of the companies that I'm going to use as examples of each avenue.
Business to Consumer
Brilliant Earth is a company that was founded in 2005, and the co-founder the year prior
did so because she said she couldn't find a diamond in engagement ring that was ethical,
sustainable, and traceable. In the last episode, the timeline of the uprising in Sierra Leone
began in 1991, and it had a second wave in 2000. Conflict-free diamonds from Canada hit
the market in the 1990s, and by 2003 the Kimberley process of giving a diamond material, a pedigree,
a paper, and a passport was established. Perhaps this was not on her radar, nor a common conversation
with where she had been shopping for engagement rings.
As far as Brilliant Earth's sustainability in metal, that can be vouched for. When I
was a director in a Chicago manufacturing company, they were on account of ours, and
we were actively participating in the Harmony Project, which used 100% recycled metals.
This is where refiners come in and purify gold and platinum back to a starting point
to realloy and cast again and again.
So a shopper books a visit to a Brilliant Earth showroom, or has a virtual appointment
with one of their consultants. Rings are tried on, or discussed online, stones are looked
at, or explained over a Zoom conference call, and sometimes customization is the chosen path.
Regardless of Brilliant Earth being a lab-grown diamond business, it is joining the movement
of quote, green companies by making reduced emissions, zero waste, and circularity part
of their culture and commitment. Alternatively, direct to consumer, or D to C, can be found
in Rotani. Rotani is a company that was founded in 1999 by a family of jewelers, and 10 years
later was an in-demand wholesale designer brand for retail showrooms. In January of
2014, Rotani was selected for the Forbes list of America's most promising companies, with
its unique quote, clicks and bricks model that blended online shopping with brick and
mortar stores. Today, the direct to consumer style of business consists of an online inventory,
ability to build your own ring, which ships out to an independent contracted gemologist,
where it is audited for its product, paperwork, and the serial number is located on the ring
as well as the diamonds inscribed, certified number. Then the gemologist meets with the
consumer for a preview and a pickup. Now let's explore the pros and cons. The benefits of
a lab-grown diamond from the industry side is that its origin is automatically traceable
because of the process to generate the supply, and that the supply is not finite, nor are
we at the effect of fluctuations in the pipeline. Environmentally, it has different offsets
than mining. Eco-friendly is a marketing hook. There are companies that have found actions
to counterbalance into carbon neutral systems, but don't think it doesn't take matter for
an earth mind and energy for a lab-grown to give us an end product. For the consumer,
the price being 80% less than a natural diamond opens up discretionary spending. Instead of
one major purchase per year, clients can avoid choosing between and actually have both. Conversely,
they can make one purchase for the duration of the relationship versus having to upgrade
a diamond as monetary grounds are gained. Have the ring and the trip, or the wedding,
or the down payment on the home, versus planning out acquisitions year by year. As for detriments,
lab-grown has been divisive in the diamond districts. Pricing has dropped so that wholesalers
and dealers are less interested in a large inventory if they had bought product that
was higher than it is now. Does that mean pass the pricing onto the client? What if
that client can find it for less elsewhere? Regarding end users, there is no resale value.
In-secondary markets for pre-owned items, like the real real, is finding it problematic
to quote or create a value if the baseline keeps shifting and the numbers are appearing
erratic. This volatility was not unprecedented. Try pricing a cell phone. This was always
about the technology as a value proposition and not the material. It did not take millions
of years to seed and grow above-ground crystals. The breakthrough in innovation to invention
changed the game of both time and availability. So why has pricing been such a moving target?
Whether it was timely or coincidental, well, every jewelry store owner and tradesperson
who makes the annual pilgrimage to Las Vegas for the JCK jewelry show, almost a week-long
mega event of products, speakers, technology, loose gems, and above all, networking, that
coincided with DeBeers announcing its exit from lab diamonds. Which coincided with South
Korea managing to produce lab diamonds from a reduced heat version of the HPHT process
using liquid metal and yielding small diamonds in 15 minutes. Pricing may be turbulent, but
the advancements have never been more riveting. So what comes next for creators and consumers?
A forecast on the future? Like any good marketing course will tell you, the demand for something
is driven by the desire. Diamonds have only recently surged as mainstream for bridal jewelry.
For centuries they had been positioned as the candy of both the wealthy and the powerful.
They already had their hour of being canceled, as captured in the film Blood Diamonds, which
highlighted a single country's uprising, as well as a blind spot in our industry. Consumers
and collectors then did not turn away from diamonds. They simply demanded a better way
to acquire them. So we can address the elephants in the room. Relationships converting to marriages
dropped during the pandemic, quarantine, and aftermath. Like our 2008 recession, business
is closed, income was restricted, so financial literacy became situational and part of survival.
But diamonds are not a necessity. They are emotional and psychological. A feel-good purchase
with implied value retention, either on the natural material or the thousands saved by
going with a lab grown, is here to stay. Any anti-diamond movement has too many identities
and layers in us to dissolve or destroy. If the flaw was making diamonds available to
everybody, I have yet to see a solid collective aversion to this gem, whether it is natural
or man-made. Rather, let's answer the question, when I wear diamonds, I get to be close to
my grandmother, celebrate a milestone, be someone who found love, design my own peace,
maybe even mark an unconquerable moment, just like the word and the jewel itself.