The diamond market disrupted

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Pushkin.

Katie Martin (0:39)

You know what they say, fake it till you make it. Well, that's working out a little bit too well in the most sparkly market of all. Diamonds.

Lab-grown diamonds are kind of taking over, and the price of the real stones has been in quite a bit of trouble. Today on the show, we're popping the question, have diamonds been disrupted?

This is Unhedged, the markets and finance and now shiny stones podcast from the Financial Times and Pushkin. I'm Katie Martin, markets columnist at the FT in London, and I'm joined today also in London on a nice comfy sofa by the sparkling Alan Livesey from the Lex Column. Alan, you like the finer things in life, if I'm not mistaken. Theatre, wine, diamonds. You know, when was the last time you bought someone a diamond?

Alan Livesey (1:28)

Possibly when I proposed to my wife. I've bought her lots of jewelry. I have, though, veered more towards color gemstones than diamonds, but diamonds, she has.

Katie Martin (1:37)

Mm, good. Glad to hear it. So listen, you've been writing about diamonds recently. What's going on here? The price has been sliding pretty consistently over the past couple of years, right?

Alan Livesey (1:49)

I mean, I think in the natural rough stone market, there has been oversupply in the last couple of years.

There was a post pandemic boom, I would say. There was a bit of a boom in weddings and everything because the lockdowns shut everything down. And I guess everyone wanted to get back together and there were gifts and there was happy.

Katie Martin (2:10)

It was a beautiful time.

Alan Livesey (2:11)

It was a beautiful time and diamonds were bought. And that was good for the diamond industry. Prices actually went up, but then they came straight back down. And in fact, natural diamond prices, the rough ones, I don't think they've moved in price since 2011

It's a long time.

Katie Martin (2:29)

It's rubbish. That's not an inflation hedge. They look nice though, which is important. But so one of the things that's kind of monkeying around with this market is lab grown diamonds. And these things are not new. You've been able to somehow, using alchemy and magic, been able to make diamonds in labs for what, 70 years?

Alan Livesey (2:47)

Yeah, I think since the early 50s, I think the process was originally, or as far as I know, just a high pressure kind of Superman like crush of a lump of coal.

And through high pressure, create this diamond. But that required a lot of energy. I think newer processes have found ways of literally growing them in the lab.

Katie Martin (3:11)

That is pretty cool though, isn't it? When you think about it.

But also it means you don't have to send people down holes in the ground doing dangerous stuff to find these things, right? You can just make them in a lab.

Alan Livesey (3:21)

Which has always been the problem. And it's been a problem for the diamond industry, right? So they've been trying to find ways of marking the provenance of diamonds and showing that they were mined in a sustainable way, in a healthy way, and not hurting anyone. I guess this synthetic diamonds more or less don't have that kind of issue, right?

Katie Martin (3:43)

Right, right.

So there was this idea for a while that those companies out there that dig these things out of holes in the ground have tried to kind of amp up the romance and kind of organic nature of diamonds. But that doesn't seem to be working, right? Because lab-grown diamonds are grabbing an increasing size of the market.

Alan Livesey (4:02)

They definitely are. And they spent a huge amount of money over the decades.

You know, a diamond is forever. There are songs by Shirley Bassey and Bond movies and whatever. And it's worked, right? And the jewelers have sold lots of diamond rings for weddings and whatnot.

And probably the price now is getting attacked. So what's happened is, if we went back to 2015, lab-grown diamonds really didn't feature. And when you looked at it as a proportion of the diamond jewelry market globally, it's hardly there. But by last year, it was 10, 11, 12%.