Lab-Grown vs. Natural Diamond Resale Value (And does it Really Mattter?)
Diamonds are more than just sparkling stones; they’re often seen as emotional or financial investments. However, not all diamonds are created equal in terms of resale value.
Lab-grown diamonds have gained popularity for their ethical appeal and lower cost, but their resale value remains a hot topic of debate. On the other hand, natural diamonds, with their rarity and historical significance, often hold a different position in the market.
This blog explains the key differences between lab-grown and natural diamonds in terms of resale value, shedding light on the market dynamics, consumer perceptions, and technical aspects behind these stones.
Key Takeaways
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Resale Value of Natural Diamond
Natural diamonds typically resell for 20-60% of their original retail price. They retain value over time due to their rarity and exceptional clarity, color, and cut. Being a finite resource, natural diamonds are typically considered a symbol of luxury, status, investments, and bestowal.
Since natural diamonds qualify for GIA certification, they fetch higher prices due to trust in grading. A well-established secondary market exists for natural diamonds, including auctions, jewelry stores, and private sales.
You may not recoup the full retail value of a diamond due to initial markups, and its value tends to depreciate quickly after purchase unless it is rare or highly sought after.
In early 2024, diamond prices declined due to reduced demand from China and the rise of lab-grown diamonds, which appeal to budget-conscious, ethical consumers (Procurement Resource). Economic challenges, reduced marketing, and Gen Z's preference for sustainable products further pressured natural diamond prices and resale values.
Lastly, recent retail markups and market fluctuations influence the actual resale value.
Resale Value of Lab-Grown Diamond
Lab-grown diamonds lose most of their value immediately after the purchase. They have significantly lower resale value, often less than 10-30% of their original retail price because they are easy to mass produce.
They are viewed as less rare, and sometimes, their resale opportunities are limited (with fewer buyers than natural diamonds), further contributing to their lower perceived value.
It is important to note that lab-grown diamonds are an excellent cost-effective alternative to natural diamonds, and are generally 30 to 70% cheaper than natural diamonds. That's why the market for lab-grown diamonds has expanded significantly, with these stones now accounting for approximately 20% of global diamond sales for jewelry.
For example, an equivalent natural diamond of the same size and quality costs about $4,200, while a lab-grown diamond of the same size typically costs around $1,000.
Key Differences
| Factor | Natural Diamonds | Lab-Grown Diamonds |
|---|---|---|
| Initial Cost | Higher | 30%–70% lower |
| Resale Value Percentage | 20%–60% | 10%–30% |
| Market Demand | Established and consistent | Growing but limited |
| Rarity | Unique and finite | Easily reproduced |
| Investment Potential | Moderate to high (for rare stones) | Low |
Factors Affecting Diamond Resale Value
- Quality Matters (The 4 Cs): The resale value of a diamond is influenced by its carat weight, cut, color, and clarity. Diamonds closer to colorless (D to F range) and have fewer inclusions or blemishes (higher clarity grades like FL or IF) are more valuable.
- Fashion Trends & Economic Conditions: Consumer preferences and jewelry trends influence the resale value of diamonds, with popular styles having the highest potential. We've also observed a decline in luxury items sale insights regarding the economic downturn.
- Rarity & Ease of Repeativeness: Rare diamonds, especially those with unique colors like pink, blue, or green, tend to have higher resale values due to their increased appeal and rarity. Since natural diamonds are rare and impossible to mass produce, they usually have a high resale value.
- Certification & Brand: Certified diamonds from reputable labs like GIA or AGS have better resale value due to verified quality. Similarly, diamonds from luxury brands like Gem Jewelers Co. also retain higher value due to their reputation and demand.
What about trade-in value? Doesn’t that count as resale value?
No, the trade-in value is not the same as the resale value. For example, some stores offer a $10,000 trade-in credit for a $10,000 natural diamond but require you to spend at least $20,000 on a new ring. The store profits twice—reselling your original diamond and earning from your new purchase—so you never actually get your money back.
Should you Really Care About the Resale Value?
Caring about a diamond's resale value depends on your priorities. It matters if you're buying as an investment or may sell or upgrade later. However, resale value is less critical for sentimental purchases or lab-grown diamonds. Diamonds are best seen as luxury items, not financial investments.
It’s like a luxury car, you don’t buy it for an investment. You just enjoy driving it!
Your thoughts?
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