Investors are grappling with unprecedented uncertainty due to inflation fears, slowing growth and global trade tensions. Similar anxiety is spreading through the diamond industry for a different reason: the rise of lab-grown diamonds. This disruptive technology has generated panic for some but opportunities for others.
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Lab-grown diamonds have quickly gained mainstream acceptance, mainly due to changing perceptions. Chemically identical to mined diamonds, they sell for just 10% of the price. Regardless of one’s opinion on authenticity, lab-grown diamonds are transforming the industry, and anybody considering buying or selling a diamond should pay attention.
Ten years ago, lab-created diamonds were priced approximately 10% below their natural counterparts. Over the past decade, technological advancements and increased production have caused lab diamond prices to plunge dramatically. Today, they’re typically sold at an 80% to 90% discount to mined diamonds.
This price drop has significantly boosted market share. In , lab-grown stones accounted for just 1% of diamond sales but rose to approximately 20% by . Engagement ring trends have shifted even more dramatically. According to wedding platform The Knot, 52% of center stones were lab-grown in , up from 12% in .
Consumer attitudes toward diamonds are shifting. Buyers today are often willing to choose a lab-grown diamond to get a larger or higher-quality stone for the same budget. The perception that a diamond is a diamond regardless of origin has gained traction since there is no readily available way for consumers to tell the difference.
Lab-grown diamonds can be compared to generic medications. Lab diamonds are chemically and visually identical to mined diamonds, just as generics match brand-name drugs in active ingredients. The only difference is cost.
This trend is driven by younger consumers who value ethical and environmental aspects. Many customers who might have purchased a smaller mined diamond a decade ago now opt for a bigger lab-grown stone at the same price.
While consumers are happy to have alternatives to expensive mined stones, some industry participants struggle with the transformation. Many dealers with high inventory of mined diamonds have had to adjust prices lower, hurting margins. Dealers slow to embrace the trend have lost overall market share. Retailers who do not have their heads in the sand are now stocking lab-grown inventory and marketing it aggressively. Some dealers have even stopped selling mined diamonds altogether.
Lab-grown diamonds are also reshaping the perception of diamonds as a store of value. As affordable lab-grown options flood the industry, the resale value of older mined diamonds has diminished, leaving owners with pieces that fetch far less today.
Highlighting another stress in the industry, major mining companies such as De Beers have cut production and even launched their own lab-grown lines to adapt. Industry giant Anglo-American has been trying to sell or spin-off De Beers since last May and took a $2.9 billion write-down on its stake in .
The growing acceptance of affordable lab diamonds has put significant downward pressure on mined diamond prices. After a brief pandemic-era boom, natural diamond prices have collapsed to multi-year lows. According to data published by industry expert Paul Zimnisky, prices for rough, mined diamonds fell 34% from their peak in to late . Lab-grown stones have eroded the pricing power of natural diamonds, especially in more standard sizes and qualities.
Martin Rapaport, founder of the Rapaport Diamond Report and RapNet, an online diamond trading network, has recently faced intense criticism for lowering diamond prices on the Rapaport Price List in January . A viral Instagram post showed him arguing with dealers about the reality of lower prices.
With respect to lab-grown diamonds, industry experts expect further price declines as production scales and manufacturing costs fall in China and India. Currently priced around 90% below natural diamonds, lab-grown diamond prices could drop an additional 50% to 80%, according to Diamond Standard CEO Cormac Kinney.
Walmart is selling a 5-carat round-cut diamond engagement ring with a 14k white gold band for $2,990. If you saw someone wearing it, you wouldn’t be able to tell it was made in a lab.
The growing presence of lab-grown diamonds in discount retailers like Walmart threatens the perception of diamonds as luxury items. It undermines their exclusivity, making it harder to symbolize wealth with a ring that’s widely accessible online. New trends may emerge as a result. A marriage proposer might opt for a traditional lab-grown diamond ring and add another more exclusive and coveted item—like a Rolex watch or a Hermès Birkin bag—for value and status. Such a break in tradition would be catastrophic for the diamond industry, which is already in turmoil.
The industry’s struggles are brought to light in the entertaining Netflix documentary, “Nothing Lasts Forever.” The film exposes some of the industry’s dirty secrets, including credibility concerns due to the previously undisclosed mixing of lab-grown and mined diamonds and the notion that natural diamond scarcity is a farce.
According to the documentary, De Beers created an illusion of diamond scarcity by controlling supply and demand. Despite relatively abundant diamonds, the company restricted market releases to maintain high prices. Through clever marketing campaigns like “A Diamond Is Forever,” De Beers convinced consumers that diamonds were rare, driving up demand and sustaining artificially high prices.
De Beers’ projection of diamond scarcity is like the man behind the curtain in The Wizard of Oz. This carefully crafted illusion that unraveled once the truth was exposed, revealed that diamonds are far more abundant than their marketed rarity suggests.
The erosion of the scarcity perception and the growing acceptance of lab-grown diamonds as a credible alternative for jewelry and other applications is a double-whammy for the vast majority of the diamond industry.
A bifurcated market may develop where truly exceptional verified natural diamonds, such as rare, flawless, colored diamonds, retain their value or even appreciate. While natural diamonds, especially smaller ones, will likely continue to depreciate as they are indistinguishable to the naked eye from their lab counterparts.
Consumers may enjoy lower prices on natural diamonds in the coming years, and those holding diamonds as assets should temper expectations about value retention or appreciation. Most signs point to lower prices, and it’s hard to imagine a scenario where they bounce back. A diamond may last forever, but its value may not.
Lab-grown diamonds may be created in a factory, but they will still have imperfections similar to natural diamonds. Those blemishes and imperfections are referred to as inclusions and are graded on the diamond clarity scale. In order to get the best value when purchasing a lab-grown diamond, you need to understand how diamond clarity impacts the appearance of the diamond and it’s value. This article will cover everything you need to know about diamond clarity in lab-grown diamonds.
What is diamond clarity?
How are clarity grades determined?
Diamond clarity scale
Are you making the most common mistake?
What are the different types of inclusions?
Bottom line recommendation
Diamond clarity refers to the blemishes and inclusions a diamond has. The fewer imperfections, the better the clarity grade. While clarity can impact a diamond’s value, imperfections typically can’t be seen by the naked eye.
Different than natural diamonds, lab-created stones are formed through a high-temperature carbon growing and compression process. They’re complex structures that are then cut into the shape and carat weight that’s desired. While their growth and cutting processes takes several weeks, only a few lab-created diamonds emerge in perfect condition. In most cases, the diamonds are imperfect and contain varying amounts of surface blemishes and internal inclusions.
While we strongly encourage a GIA certified natural diamond, we recommend the IGI certificate for lab-created diamonds, mainly from James Allen as they carry more than 30,000 lab diamonds with a wide selection of shapes and grades.
Here’s the IGI clarity grading scale (from best to worst):
Internally Flawless (IF), Very Very Small Inclusions 1 (VVS1), Very Very Small Inclusions 2 (VVS2), Very Small Inclusions 1 (VS1), Very Small Inclusions 2 (VS2), Small Inclusions 1 (SI1), Small Inclusions 2 (SI2), Inclusions 1 (I1), Inclusions 2 (I2).
When evaluating a diamond’s clarity, experts look at the diamond face-up under 10x magnification. With a microscope, they can review the diamond to determine if any inclusions are present internally. They’ll also look at the diamond closely to see if there are any surface blemishes.
In general, experts look at five main factors to determine a diamond’s clarity grade. The five aspects include size, nature, number, location, and the relief of the inclusions. All of these characteristics play into the Clarity grade.
The size of inclusion is important. The bigger the inclusion, the lower the diamond’s clarity grade. If it’s a small inclusion, it’s likely to not impact the diamond’s beauty as much.
The type of inclusion and its nature also matter. If the inclusion is deep within the stone, it will impact the diamond more than if it’s just a surface blemish.
Fewer imperfections mean a better Clarity grade. A diamond with many inclusions will likely have a lower clarity grade, such as SI2, than a diamond with one or two imperfections.
The location of an inclusion affects clarity grade as well. For example, if an inclusion lies close to the girdle (edge of the diamond), it’s not as noticeable. If an imperfection rests in the center of the diamond’s table, it’s more obvious and detracts from the stone’s beauty.
The relief of an inclusion refers to how noticeable it is in relation to the rest of the diamond. If a blemish is dark, it’s likely to stand out more than a lighter blemish.
The most common mistake people make when buying diamonds is purchasing a diamond with a clarity grade that’s too high to appreciate. For example, they might purchase a VVS1 diamond that’s eye clean when they could purchase an eye-clean VS1 diamond for far less.
The chart above contains real magnified sample images of IGI certified lab-created diamonds. I’ve chosen to show round cut diamonds because they’re the most popular diamond shape.
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The chart helps to show why it’s so crucial to only buy from an online vendor (like James Allen) that provides high-quality images of every diamond. It’s essential to review each diamond closely to see if imperfections are visible.
If you see anything on a diamond with a flawless clarity grade, you can be assured that it’s merely dust. For instance, if you view this IF 1.10 carat diamond from James Allen, you’ll notice on one o’clock on the table, there’s a tiny white speck. That small speck, if it were an inclusion inside the diamond, would probably render a VVS2 clarity grading.
With a VVS1 clarity grade, tiny imperfections can only be seen under a powerful microscope. As you can see in this 1.40 carat diamond from Blue Nile, VVS1 size inclusions aren’t visible at this level. Even a highly magnified photograph can only focus on one layer of depth.
If a diamond has a VVS-size inclusion and the image is focused on a different layer of depth, there’s no chance a tiny inclusion is visible.
In most cases, you need a gemological microscope to identify a VVS2 inclusion. The inclusion pattern is not one larger speck, but a few separate VVS1-sized spots that collectively equal a VVS2 clarity grade. Since each speck is too small to be seen with a jeweler’s loupe, you need a microscope to identify the imperfections.
Unlike VVS2 clarity diamonds, a microscope isn’t needed to find a VS1 inclusion. You’ll still need 10x magnification, like a standard jeweler’s loupe. As you might be able to see in this sample diamond from Blue Nile, a VS1 clarity inclusion is quite small and isn’t visible to the naked eye.
VS2 Clarity inclusions are almost always invisible to the naked eye, as seen in this eye-clean 1.54 carat stone. In some cases, you can see inclusions in a VS2 clarity diamond, but that’s more unusual.
Keep in mind that the size of the diamond affects how easily the inclusion can be seen. For example, a VS2 inclusion is easier to see in a 3 carat diamond than in a 1 carat diamond.
A diamond’s clarity grade is based on many different inclusion factors, such as the location and number of imperfections. It’s uncommon (especially for SI1 and lower) that the clarity grade is based on just one concentrated inclusion.
Usually, there are a number of smaller spots and clouds that contribute to the diamond’s lower clarity grade. In these cases, since each inclusion is quite small, the diamond can still look clean to the naked eye.
If you’re looking for an SI1 diamond, you’re best off contacting us. We can help you find an eye-clean SI1 clarity diamond.
With step cut diamonds like asscher and emerald cuts, an SI2 inclusion will most likely be visible to the naked eye (as is the case with this 0.71 carat emerald cut from Blue Nile). With almost every other shape, an SI2 clarity inclusion is usually clean to the naked eye.
I1 clarity inclusions are obvious on almost any shape, especially step-cut diamonds (emerald & asscher cuts). That’s why I1 lab-created diamonds are hardly ever produced. In some rare cases, you can still find an eye-clean I1 clarity diamond.
Most clarity grades are given based on several smaller inclusions spread out over the diamond. That’s why an I1 clarity inclusion is less noticeable to the naked eye. Sometimes it’s even invisible unless you look at the stone under magnification. Diamonds with concentrated inclusions in the center is the exception, not the rule.
There are several types of inclusions to consider when evaluating diamond clarity. Here are a few common types and what they mean:
Graining: Because of irregular crystal growth, this inclusion creates internal graining. It causes white, colored, or reflective lines—and gives the diamond a hazy appearance.
Feather: A feather is a small crack that’s found within a diamond. Depending on the angle, it can appear to be transparent, or it captures light to create a white appearance.
Cavity: A cavity can appear colorless depending on the type of included minerals that exist within the diamond. If the crystal inclusions within the cavity are colored, they’ll be more obvious and can often be seen with the unaided eye.
Bearding: These inclusions form near the girdle and can cause a blurred or fuzzy appearance.
Overall, these are just a few of the many possible inclusions you can find within lab-created diamonds. It’s always best to and rely on the IGI (International Gemological Institute) to determine the exact clarity grade of the diamond.
When it comes to the clarity grade of lab-created diamonds, there are some tricky features. Having worked in the diamond business for so many years, I have a lot of experience with different diamonds.
For example, if you gave me a diamond with VVS clarity, it would probably take me a few minutes under 10x magnification to find the pinpoint of an imperfection that’s considered a “Very Very Small Inclusion.”
I could find a VS1 clarity inclusion in less time, but it’s only marginally larger than a VVS2 inclusion. And VS2 clarity grade inclusions can be spotted right away with a 10x powered loupe, but are usually invisible to the unaided eye.
On the other hand, when you reach the SI1 and SI2 diamond clarity grades, you begin to find a higher concentration of visible inclusions. That’s why you should limit your search to vendors with high-quality photos, like James Allen.
We also encourage you to reach out to us so we can help you choose a beautiful diamond that’s eye-clean.
It’s important to remember that not all inclusions are equal.
Some inclusions are shiny while some are almost entirely clear. Some are pure white while others are stark black. Some imperfections are located in the center of the diamond, and some are pushed off to the side.
In general, though, the clarity grade takes into account the size of the inclusion. The color and opaqueness of the inclusion and its position is rarely considered.
Thankfully, James Allen offers cutting-edge photography of each diamond. You can review actual clarity examples with a tool they call 360° Diamond Display Technology. It provides you with 18x magnification around the entire stone.
While we believe diamonds shouldn’t be viewed as an investment, they carry far more long term value than lab-created diamonds. Natural diamonds usually retain about 50% or more of the original price, while lab-created diamonds have zero resale value.
If you do decide to pursue a lab-created diamond, we suggest shopping with James Allen, as they carry IGI certified lab-created stones at competitive prices. You’ll also be able to use their photography to view the diamond up close to ensure that it’s eye-clean.
We recommend looking for a diamond that’s eye-clean, meaning no blemishes or inclusions are visible when you look at it without magnification. In general, a low-graded eye-clean diamond looks identical to a flawless-graded diamond (assuming all else is equal) but will cost far less.
The best vendor who offers sufficient high-quality images to review clarity of their lab-created diamonds is James Allen. With their technology, you can find diamonds like this beautiful SI1 or this VS2 diamond. Other recommended vendors can be seen in this article.
Also, make sure to check out Blue Nile. They offer lab-created diamonds too and their prices are very competitive. Check out this beautiful 1.50ct asscher cut diamond.
If you feel uncertain about evaluating clarity, feel free to contact us. We’ve helped thousands of readers sift through images to determine which diamond is eye-clean.
In general, though, we are hesitant about buying a lab-created diamond. They have no resale value and their prices have plummeted over the last few years. You will get better long term value finding a beautiful natural diamond, but you will get more visual bang for your buck with a lab-created diamond.
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