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Money Times - July 3, 2018

Posted by Jill Kerby on July 03 2018 @ 09:00

ENGAGED COUPLES ARE DISCOVERING THAT SYNTHETIC DIAMONDS REALLY ARE FOREVER

It’s wedding season and the weather couldn’t be nicer for those brides and grooms tying the knot this weekend.

Luckily the only invitations I’ve received so far this summer are for engagement parties.  Long-time readers of this column know that while I delight in sharing the actual wedding service, I’m not a fan of traditional receptions, especially the kind that go on for days and happen in foreign locations.  (Even worse are the ones with invitations that crassly suggest cash gifts instead of presents. Call me old fashioned, but I’m not sure you’re a genuine ‘guest’ when you end up paying towards your meal or the bride’s dress.)

Summer engagement parties, on the other hand, are lots of fun, either hosted in a family back garden, hotel or the local sports club. Only close family and friends usually show up and the food, music and speeches are inevitably more informal. The speeches aren’t usually scripted. Best of all, the anxiety index is a lot lower, and the cost, bearable.

Which leads me to the very welcome recent announcement by the diamond sellers, DeBeers that they are going to start selling lab-grown diamonds that are expected to cost about a tenth of the price of their natural ones.

This is terrific news for newly engaged couples, who will hopefully abandon the absurd but wildly successful (until now) DeBeers marketing myth that diamonds command a huge price tab because they are not only ‘forever’ but rare too. 

Diamonds may be the hardest gemstone, but they are certainly not rare:  jewellery shop windows in every town and city on the globe (not to mention diamond cutting factories and museums) display endless numbers of diamonds of varying degrees of colour, clarity, carat and cut. Millions of women own diamond jewellery and while traditional diamond mines in South Africa are being worked out, new mines – like the DeBeers-owned Gahcho K’ue mine in Canada’s North-West Territories that opened in September 2017, is producing 2.4 kg of diamonds per day.

There is no shortage of jewellery or industrial-grade diamonds in the world. Which is why DeBeers has invested a fortune for the past 80 years of so in creating the myth that convinced generations of newlyweds that buying a diamond engagement ring was the only way to truly express their love and fidelity – as in, if the diamond was forever, so would be the marriage.

DeBeers are coming to the lab-created diamond business late in the day. Russian labs were the first to start manufacturing them several years ago and the South African company (which now only control about a third of world’s diamond production) reacted by saying they would engrave a DeBeers logo onto their diamonds so that retailers and buyers could be certain their diamond was ‘real’ and not synthetic.

Except there’s nothing unreal about synthetic diamonds, which are literally created from a genuine carbon ‘seed’ and put under immense pressure for a few weeks.  The brand new raw diamond is then cut and polished just like the ones formed after millions of years, deep in the earth.

The synthetic De Beers diamonds are expected to go on sale from this September under the brand Lightbox and prices will start at c$200 per quarter carat or $800 a full carat, instead of, typically, $8,000 for a natural carat stone of fine quality. Buyers then have to add the cost of the gold or platinum setting and other sales margins.

Demand for such affordable diamonds is sure to grow as this generation of engaged couples, who have reportedly already been eschewing diamonds for cheaper coloured stones (or no engagement ring at all), become aware of their existence. Instead of feeling pressured into spending two or three months of income on a diamond ring – another successful De Beers marketing ploy -– they can spend a tenth of that outlay and no one will be able to tell the difference.

Irish jewellers might want to start preparing for what will undoubtedly be a gradual shift towards buying manufactured or synthetic diamonds by many existing and potential customers.  Industry commentators predict that the price of real diamonds will inevitably come down.

Anyone who has ever tried to resell a diamond engagement ring knows only too well that they were very lucky to get even half the original price back; only exceptionally fine, rare stones with a sparkling provenance keep their value.

For the rest of us, the ring mounting - depending on how heavy and how pure the gold or platinum – could be worth more once melted down and sold, than the actual diamond.

 

(The new TAB Guide to Money Pensions & Tax 2018 is now out. See www.tab.ie for ebook edition.)  

 

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