1 00:00:00,000 --> 00:00:11,360 Welcome to the Gilt Trips Podcast. I'm your host, Kendra Lockhart. As a goldsmith and 2 00:00:11,360 --> 00:00:17,560 gemologist, I'll be speaking 24 Karat on all things jewelry, metals, and gems. Join 3 00:00:17,560 --> 00:00:24,080 me plus a few friends to demystify both materials and designs as your private jeweler. Let's 4 00:00:24,080 --> 00:00:35,240 tune in on these topics and get golden. Martin Rappaport said last week, synthetics are only 5 00:00:35,240 --> 00:00:42,480 right for poor people at the JCK trade show, the Super Bowl of the jewelry world. Yet Leonardo 6 00:00:42,480 --> 00:00:49,280 DiCaprio, who has invested in man-made material, stated he is proud of, quote, cultivating real 7 00:00:49,280 --> 00:00:55,240 diamonds in America without the human and environmental tolls. Why is this issue so 8 00:00:55,240 --> 00:01:01,360 polarized? How long did it take us to invent lab-grown diamonds? Where is the diamond 9 00:01:01,360 --> 00:01:08,880 industry heading? Let's get real about truth versus story, prose versus cons, and its rocky 10 00:01:08,880 --> 00:01:20,680 road ahead. Chapter timestamps will be in the show notes. Synthetics aren't new. Lab rubies 11 00:01:20,680 --> 00:01:28,360 were created back in 1837, and by 1902, the flame fusion process was perfected. There 12 00:01:28,360 --> 00:01:34,040 are multiple ways to create man-made gems and multiple gems that are man-made. Did you 13 00:01:34,040 --> 00:01:41,320 get a class ring? Hydrothermal emeralds. Got an expensive timepiece? Synthetic sapphire 14 00:01:41,320 --> 00:01:47,640 instead of glass for the crystal over its dial. What is a simulant, then? Whether it 15 00:01:47,640 --> 00:01:54,960 is rhinestone, cubic zirconia, commonly known as CZ, moistenite, or even naturally occurring 16 00:01:54,960 --> 00:02:01,840 gems, those are mistaken for the actual diamond. There is debate over the old term for man-made 17 00:02:01,840 --> 00:02:06,400 versus modern wording, so we are all going to call them lab-grown for the rest of this 18 00:02:06,400 --> 00:02:14,200 episode. Back to diamonds. While there were many technologies to create on-demand crystals, 19 00:02:14,200 --> 00:02:21,000 flame fusion, crystal-pulling, hydrothermal, and flux growth, none of these are used with 20 00:02:21,000 --> 00:02:26,840 diamonds, so previous techniques were not going to work for this type of creation. Because 21 00:02:26,840 --> 00:02:31,080 you are just now hearing about lab-grown diamonds in the last few years, you may think this 22 00:02:31,080 --> 00:02:39,000 is a recent breakthrough in science. Hardly. 70 years ago, in 1954, a chemist at General 23 00:02:39,000 --> 00:02:45,120 Electric succeeded in the first synthetic diamond. Years before that, scientists around 24 00:02:45,120 --> 00:02:53,200 the world were attempting to prototype this ability. Now good things take time, and they 25 00:02:53,200 --> 00:02:58,920 had to walk so that we could run. The original material was not as colorless or as clear 26 00:02:58,920 --> 00:03:05,840 as today's product. Results were inconsistent and relegated as industrial material for lasers 27 00:03:05,840 --> 00:03:13,920 and abrasives, not commercial grade or consumer-worthy just yet. In 1971, the first gem quality 28 00:03:13,920 --> 00:03:20,160 material is achieved. So now we have a process that is perfected enough to have a valuable 29 00:03:20,160 --> 00:03:27,160 result. A decade later in the 1980s, an alternative procedure to this is now streamlined, and 30 00:03:27,160 --> 00:03:33,120 thus creating two roads leading to Rome in the form of lab-grown diamonds. But large 31 00:03:33,120 --> 00:03:39,160 enterprises take years to counterbalance all the peripheral sectors. It would not be until 32 00:03:39,160 --> 00:03:46,280 the 2000s that the GIA, Gemological Institute of America, would create the division to certify 33 00:03:46,280 --> 00:03:54,080 lab-grown diamonds. And later in 2018, the FTC, or Federal Trade Commission, would officially 34 00:03:54,080 --> 00:04:01,560 recognize lab-grown diamonds as real gems. It wasn't until 2019 that my diamond dealer 35 00:04:01,560 --> 00:04:07,920 colleague invited me to come see them in person, and I found the financial benefit for an ideal 36 00:04:07,920 --> 00:04:14,120 client. He was in Military Academy on a tight budget, she was the daughter of a southern 37 00:04:14,120 --> 00:04:21,360 matriarch, and we just needed a more substantial carrot size, especially for those circles. 38 00:04:21,360 --> 00:04:26,960 I would walk away a winter. 39 00:04:26,960 --> 00:04:32,760 Original product and its results were very labor-intensive and cost-prohibitive. Does 40 00:04:32,760 --> 00:04:40,360 this sound familiar? Do you remember the first handheld video camera recorders, or DVDs, 41 00:04:40,360 --> 00:04:46,160 or cell phones? What are these current methods? How are lab-grown diamonds made? The first 42 00:04:46,160 --> 00:04:55,800 way to create lab-grown diamonds that led to the aftermath in 1954 is HPHT, or high-pressure, 43 00:04:55,800 --> 00:05:01,960 high-temperature. It is the older of the two styles and consists of a seed diamond, which 44 00:05:01,960 --> 00:05:07,040 is natural, being placed in an environment to create the heat and force of earth through 45 00:05:07,040 --> 00:05:14,240 machinery. Inserted into pure carbon, the simulated elements melt and later crystallize 46 00:05:14,240 --> 00:05:20,280 into the raw material. This method is not as efficient and is used for industrial material 47 00:05:20,280 --> 00:05:23,840 rather than commercial. 48 00:05:23,840 --> 00:05:31,520 The other technique is CVD, which stands for Carbon Vapor Deposit. Again, using a seed 49 00:05:31,520 --> 00:05:39,640 diamond, it gets exposed in a vacuum chamber with carbon-rich glass. Up goes the temperature, 50 00:05:39,640 --> 00:05:45,600 and next the chemicals begin to precipitate and attach to the starter. While this took 51 00:05:45,600 --> 00:05:53,440 longer to perfect, it is superior in its energy use as well as caliber of material. So most 52 00:05:53,440 --> 00:06:01,280 lab diamonds are now made this way, and of the CVD lab diamonds, occasionally a post-growth 53 00:06:01,280 --> 00:06:07,560 exposure to HPHT is used to improve certain characteristics. 54 00:06:07,560 --> 00:06:14,880 There are these laboratories and locations. China produces over half of the supply. India 55 00:06:14,880 --> 00:06:21,760 is right behind, and domestically, we finish at third. Two of these three countries do 56 00:06:21,760 --> 00:06:28,920 not yield viable sources of natural crystals. But this won't surprise you. While America 57 00:06:28,920 --> 00:06:35,400 is number three as far as maker, we are number one as far as the market. The United States 58 00:06:35,400 --> 00:06:43,720 spent $20 billion on lab-grown diamonds and jewelry in 2021, just a year after the pandemic, 59 00:06:43,720 --> 00:06:49,080 the lockdown, and our quarantine. 60 00:06:49,080 --> 00:06:55,040 As for gemology tests to distinguish natural material from man-made, it used to be somewhat 61 00:06:55,040 --> 00:07:01,440 easy to identify a lab-grown diamond. Under the microscope, I could find hematite-looking 62 00:07:01,440 --> 00:07:10,000 metallic needle-like inclusions, or strong purple, possibly orange color, under short-wave 63 00:07:10,000 --> 00:07:15,840 and long-wave UV light lamps or light boxes, those made for very confident findings. We 64 00:07:15,840 --> 00:07:24,480 even relied on the GIA GemID100 unit just two years ago. But the game has gotten stronger, 65 00:07:24,480 --> 00:07:30,760 and the discernment is more nuanced. Dealers have been punked with a blend of their melee, 66 00:07:30,760 --> 00:07:37,200 form for smaller or accent diamonds, as lab-growns have been mixed into the parcel, and it was 67 00:07:37,200 --> 00:07:42,480 priced and sold as natural. Counterfeiters and scammers were inscribing natural diamond 68 00:07:42,480 --> 00:07:50,400 serial numbers matching GIA lab reports onto man-made goods, further muddying the waters. 69 00:07:50,400 --> 00:07:57,240 There is a new game on both seller and buyer to find integrity, discernment, and authenticity 70 00:07:57,240 --> 00:08:03,120 on both sides of the transaction. Let's explore current business models and compare and contrast 71 00:08:03,120 --> 00:08:08,600 two ways that consumers can acquire lab-grown diamonds. I've had the benefit of working 72 00:08:08,600 --> 00:08:14,800 with both of the companies that I'm going to use as examples of each avenue. 73 00:08:14,800 --> 00:08:15,800 Business to Consumer 74 00:08:15,800 --> 00:08:22,800 Brilliant Earth is a company that was founded in 2005, and the co-founder the year prior 75 00:08:22,800 --> 00:08:28,280 did so because she said she couldn't find a diamond in engagement ring that was ethical, 76 00:08:28,280 --> 00:08:35,520 sustainable, and traceable. In the last episode, the timeline of the uprising in Sierra Leone 77 00:08:35,520 --> 00:08:42,640 began in 1991, and it had a second wave in 2000. Conflict-free diamonds from Canada hit 78 00:08:42,640 --> 00:08:51,520 the market in the 1990s, and by 2003 the Kimberley process of giving a diamond material, a pedigree, 79 00:08:51,520 --> 00:08:59,040 a paper, and a passport was established. Perhaps this was not on her radar, nor a common conversation 80 00:08:59,040 --> 00:09:03,040 with where she had been shopping for engagement rings. 81 00:09:03,040 --> 00:09:08,800 As far as Brilliant Earth's sustainability in metal, that can be vouched for. When I 82 00:09:08,800 --> 00:09:14,320 was a director in a Chicago manufacturing company, they were on account of ours, and 83 00:09:14,320 --> 00:09:20,840 we were actively participating in the Harmony Project, which used 100% recycled metals. 84 00:09:20,840 --> 00:09:26,240 This is where refiners come in and purify gold and platinum back to a starting point 85 00:09:26,240 --> 00:09:31,440 to realloy and cast again and again. 86 00:09:31,440 --> 00:09:36,740 So a shopper books a visit to a Brilliant Earth showroom, or has a virtual appointment 87 00:09:36,740 --> 00:09:43,280 with one of their consultants. Rings are tried on, or discussed online, stones are looked 88 00:09:43,280 --> 00:09:51,080 at, or explained over a Zoom conference call, and sometimes customization is the chosen path. 89 00:09:51,080 --> 00:09:56,240 Regardless of Brilliant Earth being a lab-grown diamond business, it is joining the movement 90 00:09:56,240 --> 00:10:03,160 of quote, green companies by making reduced emissions, zero waste, and circularity part 91 00:10:03,160 --> 00:10:10,960 of their culture and commitment. Alternatively, direct to consumer, or D to C, can be found 92 00:10:10,960 --> 00:10:18,560 in Rotani. Rotani is a company that was founded in 1999 by a family of jewelers, and 10 years 93 00:10:18,560 --> 00:10:25,480 later was an in-demand wholesale designer brand for retail showrooms. In January of 94 00:10:25,480 --> 00:10:32,200 2014, Rotani was selected for the Forbes list of America's most promising companies, with 95 00:10:32,200 --> 00:10:38,720 its unique quote, clicks and bricks model that blended online shopping with brick and 96 00:10:38,720 --> 00:10:46,960 mortar stores. Today, the direct to consumer style of business consists of an online inventory, 97 00:10:46,960 --> 00:10:53,000 ability to build your own ring, which ships out to an independent contracted gemologist, 98 00:10:53,000 --> 00:10:58,640 where it is audited for its product, paperwork, and the serial number is located on the ring 99 00:10:58,640 --> 00:11:05,000 as well as the diamonds inscribed, certified number. Then the gemologist meets with the 100 00:11:05,000 --> 00:11:15,800 consumer for a preview and a pickup. Now let's explore the pros and cons. The benefits of 101 00:11:15,800 --> 00:11:21,720 a lab-grown diamond from the industry side is that its origin is automatically traceable 102 00:11:21,720 --> 00:11:28,600 because of the process to generate the supply, and that the supply is not finite, nor are 103 00:11:28,600 --> 00:11:33,600 we at the effect of fluctuations in the pipeline. Environmentally, it has different offsets 104 00:11:33,600 --> 00:11:39,680 than mining. Eco-friendly is a marketing hook. There are companies that have found actions 105 00:11:39,680 --> 00:11:45,280 to counterbalance into carbon neutral systems, but don't think it doesn't take matter for 106 00:11:45,280 --> 00:11:52,440 an earth mind and energy for a lab-grown to give us an end product. For the consumer, 107 00:11:52,440 --> 00:11:58,120 the price being 80% less than a natural diamond opens up discretionary spending. Instead of 108 00:11:58,120 --> 00:12:05,680 one major purchase per year, clients can avoid choosing between and actually have both. Conversely, 109 00:12:05,680 --> 00:12:10,600 they can make one purchase for the duration of the relationship versus having to upgrade 110 00:12:10,600 --> 00:12:18,880 a diamond as monetary grounds are gained. Have the ring and the trip, or the wedding, 111 00:12:18,880 --> 00:12:27,360 or the down payment on the home, versus planning out acquisitions year by year. As for detriments, 112 00:12:27,360 --> 00:12:32,400 lab-grown has been divisive in the diamond districts. Pricing has dropped so that wholesalers 113 00:12:32,400 --> 00:12:38,160 and dealers are less interested in a large inventory if they had bought product that 114 00:12:38,160 --> 00:12:44,920 was higher than it is now. Does that mean pass the pricing onto the client? What if 115 00:12:44,920 --> 00:12:53,320 that client can find it for less elsewhere? Regarding end users, there is no resale value. 116 00:12:53,320 --> 00:12:59,080 In-secondary markets for pre-owned items, like the real real, is finding it problematic 117 00:12:59,080 --> 00:13:03,880 to quote or create a value if the baseline keeps shifting and the numbers are appearing 118 00:13:03,880 --> 00:13:13,320 erratic. This volatility was not unprecedented. Try pricing a cell phone. This was always 119 00:13:13,320 --> 00:13:19,080 about the technology as a value proposition and not the material. It did not take millions 120 00:13:19,080 --> 00:13:26,240 of years to seed and grow above-ground crystals. The breakthrough in innovation to invention 121 00:13:26,240 --> 00:13:35,360 changed the game of both time and availability. So why has pricing been such a moving target? 122 00:13:35,360 --> 00:13:41,000 Whether it was timely or coincidental, well, every jewelry store owner and tradesperson 123 00:13:41,000 --> 00:13:48,600 who makes the annual pilgrimage to Las Vegas for the JCK jewelry show, almost a week-long 124 00:13:48,600 --> 00:13:57,640 mega event of products, speakers, technology, loose gems, and above all, networking, that 125 00:13:57,640 --> 00:14:03,560 coincided with DeBeers announcing its exit from lab diamonds. Which coincided with South 126 00:14:03,560 --> 00:14:11,120 Korea managing to produce lab diamonds from a reduced heat version of the HPHT process 127 00:14:11,120 --> 00:14:20,080 using liquid metal and yielding small diamonds in 15 minutes. Pricing may be turbulent, but 128 00:14:20,080 --> 00:14:30,760 the advancements have never been more riveting. So what comes next for creators and consumers? 129 00:14:30,760 --> 00:14:36,920 A forecast on the future? Like any good marketing course will tell you, the demand for something 130 00:14:36,920 --> 00:14:44,320 is driven by the desire. Diamonds have only recently surged as mainstream for bridal jewelry. 131 00:14:44,320 --> 00:14:50,840 For centuries they had been positioned as the candy of both the wealthy and the powerful. 132 00:14:50,840 --> 00:14:56,160 They already had their hour of being canceled, as captured in the film Blood Diamonds, which 133 00:14:56,160 --> 00:15:02,840 highlighted a single country's uprising, as well as a blind spot in our industry. Consumers 134 00:15:02,840 --> 00:15:07,960 and collectors then did not turn away from diamonds. They simply demanded a better way 135 00:15:07,960 --> 00:15:15,320 to acquire them. So we can address the elephants in the room. Relationships converting to marriages 136 00:15:15,320 --> 00:15:23,160 dropped during the pandemic, quarantine, and aftermath. Like our 2008 recession, business 137 00:15:23,160 --> 00:15:31,360 is closed, income was restricted, so financial literacy became situational and part of survival. 138 00:15:31,360 --> 00:15:37,960 But diamonds are not a necessity. They are emotional and psychological. A feel-good purchase 139 00:15:37,960 --> 00:15:44,480 with implied value retention, either on the natural material or the thousands saved by 140 00:15:44,480 --> 00:15:51,760 going with a lab grown, is here to stay. Any anti-diamond movement has too many identities 141 00:15:51,760 --> 00:15:57,480 and layers in us to dissolve or destroy. If the flaw was making diamonds available to 142 00:15:57,480 --> 00:16:04,040 everybody, I have yet to see a solid collective aversion to this gem, whether it is natural 143 00:16:04,040 --> 00:16:12,400 or man-made. Rather, let's answer the question, when I wear diamonds, I get to be close to 144 00:16:12,400 --> 00:16:20,200 my grandmother, celebrate a milestone, be someone who found love, design my own peace, 145 00:16:20,200 --> 00:16:42,120 maybe even mark an unconquerable moment, just like the word and the jewel itself.