Episode 92: 24 Karat Weekend, Russian Diamonds, and Lab-Grown Diamond Quality

The Jewelry District

You’ll hear JCK editor-in-chief Victoria Gomelsky and news director Rob Bates talk about the 24 Karat Weekend, including the Gem Awards, updates about crime stats at the Jewelers’ Security Alliance lunch, and some news that broke at the Jewelers’ Vigilance Committee luncheon. This leads to a discussion of a potential increase in restrictions on Russian diamond imports and the complexities of this issue. Victoria asks Rob about his take on falling lab-grown diamond prices. She also shares some insights learned from a presentation about differences in lab-grown diamond quality and how those quality issues occur. Finally, the hosts touch on recent events with banks and their impact on the industry.

Sponsored by De Beers: institute.debeers.com

Show Notes

01:45 24 Karat Weekend

05:00 Updates on U.S. sanctions on Russian diamonds

13:00 Lab-grown diamond prices

15:00 Lab-grown diamond quality variance

23:00 Silicon Valley Bank

Episode Credits

Hosts: Rob Bates and Victoria Gomelsky

Producer and engineer: Natalie Chomet

Plugs: @jckmagazine; institute.debeers.com

Show Recap

24 Karat Weekend

Rob attended the 24 Karat Gem Awards, while Victoria sadly had to stay home. It was a beautiful event, which included a lovely tribute to Steven Kaiser. JCK writer Amy Elliott was up for a media award. Victoria and Rob give a big shout out to Amy, who is a critical member of the JCK edit team and express their pride at her nomination. And they congratulate Michelle Graff, who won this year’s media award.

Rob also attended the Jewelers’ Security Alliance (JSA) lunch, where it was reported that last year was the worst for crime that they have seen in a very long time. On the lighter side of things, Rob enjoyed Joe Piscopo’s performance at the 24 Karat Dinner (lots of Sinatra).

At the Jewelers Vigilance Committee (JVC) luncheon, Jeffrey Fisher was presented the Stanley Schechter Award in a warm, emotional ceremony. The speaker at the luncheon was James O’Brien, U.S. sanctions coordinator. He made a bit of news in his speech. He gave an effective, folksy speech about the U.S. efforts to put sanctions on Russia. He’s now involved in one of the largest sanctions packages in U.S. history.

Stricter Russian Diamond Sanctions on the Horizon

The office of U.S. Sanctions wants to put further restrictions on Russian diamonds to close the “substantial transformations” loophole, which allows Russian diamonds that are cut and polished elsewhere to come into the U.S. While they may not eliminate the legal doctrine of substantial transformations, they may put further restrictions on Russian diamonds including requiring sellers to make a declaration that the diamonds they are are selling are not from Russia. This would be a big change in the market.

In a brief interview following O’Brien’s speech, Rob asked what happens if people don’t have the proper information about Russian origin. O’Brien said that you can get into a lot of trouble if you aren’t honest with customs. There are still questions about many of the details, including what the size cut-off would be for these sanctions, and what type of proof would be required. Rob warns that the changes are on the horizon, and it will have a big effect on the industry.

Rob gives a little context for these changes: Belgium has been under pressure to block imports of Russian diamonds. But Belgium’s argument has been that Russian diamonds just go to Dubai and then the U.S. then Belgium is losing out. But if the U.S. market is closed off, then they are on an even playing field with the U.S. If it isn’t enforceable, there’s no point. But it’s also possible that the way these sanctions are increased could potentially shut down production. This will be presented at the G7 Conference and then put into action after, though the timing isn’t clear yet. Rob hopes there will be a clear set of rules that are attainable and easy to follow.

Lab-Grown Diamond Prices

Victoria asks Rob to chart when we started to see the prices of lab-grown diamonds fall. Rob notes that it has been a steady progression, and an expected one, though it may still be shocking to see now that it’s a reality. He remembers checking the price of a high-end lab-grown diamond and then seeing it thousands of dollars lower just three days later. The market is flooded right now. Though people say that the prices we are seeing now are the bottom, and lab-grown diamonds will no longer profitable if they get lower, it could still happen. As people exit the business, they dump their goods for even less.

Quality Variances in Lab-Grown Diamonds

Victoria has been writing JCK Special Report newsletter articles on lab-grown diamonds. She watched a great presentation on quality in lab-grown diamonds, which was led by the COO and CEO of Ada Diamonds, a direct-to-consumer lab-grown diamond brand. She learned a lot! The presenters explained that they started noticing a bigger distinction in the quality of lab-grown diamonds in 2019. They showed examples of lab-grown diamonds that all had—in theory—the same color and clarity grades, but had very obvious differences. They explained the quality characteristics and issues in terms that were easy for lay people to understand.

The overall message is, as this market has grown, and as people rushed to fill demand—which skyrocketed during the pandemic—growers prioritized speed to market. And when you cut corners in the growing process in order to get goods out the door, there are quality issues that show up in the diamonds. Victoria’s article, “Why Not All Lab-Grown Diamonds Are Created Equal,” goes into more detail about the presentation and her takeaways.

Rob’s reaction is that this is a sign of the maturation of the lab-grown market. For a long time, the discussion around lab-grown diamonds has focused on whether they are the same as natural diamonds. While Rob agrees that they are diamonds, they are a different product, with a different market and different characteristics. This doesn’t make them less than. The trend is to offer less information in lab-grown reports, which makes them cheaper. If a report costs more than the diamond being sold, it’s not worth it! Rob believes consumers deserve to have more information about what they are buying, especially when it comes to color tinges that you can see with the naked eye.

Victoria notes that Ritani sold a $99,000, 26-carat lab-grown diamond online. It’s fascinating that there’s still high demand for these diamonds. Getting to a larger size is much easier with lab-grown diamonds. It is more accessible now than it used to be. The person Victoria interviewed at Ritani predicted that it will be much more common to see big diamond jewelry flashing at the grocery store. And it won’t shock anyone anymore! It's interesting to ponder what that will mean for the natural diamond industry.

Bank Issues and Impact on the Jewelry Industry

First Republic Bank made news when Silicon Valley Bank and Signature Bank had their issues. But has there been any impact on the jewelry industry? Every time a bank fails, the price of gold seems to get higher. It’s concerning for the industry, in terms of the overall economic picture. The irony is that so many diamond banks or diamond divisions of banks have already closed but didn’t get the same helping hand that the tech sector did. Victoria and Rob make a note to revisit the topic later and watch this space.