Nature Versus Science

RAPAPORT… As Gemesis produces tens of thousands of synthetic diamonds per year, and smaller companies like Chatham Created Gems & Diamonds and Apollo Diamond try to step up their output of the same via one process or another, how do sellers of natural diamonds feel about the impact of synthetics?

“Everybody has his or her point of view, depending on where the person stands in the industry,” said Avi Simkhai, account executive at Kanton Diamonds in New York. Though he admitted that the market for natural diamonds is quiet at the moment, Simkhai emphatically denied that this is because of Gemesis. Despite the assertion by De Beers Chairman Nicky Oppenheimer that synthetic diamonds represent a grave challenge, Simkhai believes that synthetics have limited appeal in a market where the traditional concept of a diamond as something brought out of the earth and cut and polished still resonates with so many people. “Nicky Oppenheimer has more to worry about than me, but I think that women who buy diamonds want to buy the real thing — it’s like the difference between a real painting and a fake painting,” Simkhai said.

In agreement with Simkhai was Alex Twersky, president of Finesse Diamonds in New York, who stated: “I don’t think synthetics are a definitive threat, because they still represent a very small part of the market. The success of diamonds in general has rested on a powerful branding campaign that associates diamonds with love and anniversaries.” Twersky added that to many people, a synthetic diamond simply does not honor those things properly. He offered a metaphor for the choice facing diamond buyers: “Do you want to have a natural child or a cloned child?” he asked.

Josh Weinman, president of Taché Diamonds, speaking from the Antwerp-based company’s Long Island City office, was also dismissive of the synthetic diamond industry. “I don’t worry about it,” he said. “It’s much the same as when cultured pearls came on the market, people were worried, and that just kind of dissipated. People who want the real thing want the real thing — would you propose to a woman with a box that says ‘dirt-cheap diamond’ on it?” Weinman predicts that synthetic diamonds will in fact displace a portion of the natural diamond market in the years to come, but not a huge share of it.

“I don’t think they’re a threat, because people want the real thing!” said Sharon Aharoni, manager of the Alito brand for Philadelphia-based GN Diamond. Isaac Bloomenkrantz, one of the principals of A.S. Diamonds in New York, agreed that “I don’t think lab-created diamonds are a threat, since just about anybody wants real diamonds” when given a choice. Quite a few of the merchants in Manhattan’s diamond district echo this sentiment.

An Unsure Marketplace

But a different prediction came from Jit Jariwala, one of the principals of Jewel Goldi Inc., the New York-based jewelry division of Shree Ramkrishna Export in India. “Cultured diamonds will change the market in a couple of years when they get cheaper than natural diamonds,” Jariwala said, citing a shrinking supply of rough for natural diamond wholesalers. “The supply of natural diamonds is limited, and the DTC [Diamond Trading Company] is showing interest in ‘created’ diamonds, so maybe in two to three years, we’ll see a significant difference in the sales of natural diamonds.”

When RDR spoke with Mike Rabbanian, one of the principals of the Los Angeles– based International Diamond Club, Inc., he expressed concern over the growing presence of synthetic diamonds in the market, and said that he does not feel assured that the smaller stones he gets from his suppliers are in fact mined diamonds, as they purport to be. While the major gem labs make the labeling of synthetics on their surfaces a requirement for grading them, this obviously does not help ensure the provenance of diamonds bought from overseas.

Drawbacks to HPHT

“I think there will be more success for synthetics among crooks who are mixing in synthetics with melees and other natural diamonds,” Derek Parsons, president of the Miami-based British Diamond Import Company, said. He also suggested that synthetics may find a strong niche among people who are uninformed about diamonds or who are desperate to save a bit of money. “But I don’t feel as threatened as some of my colleagues,” he continued. “There have definitely been failures with HPHT [High Pressure-High Temperature] in recent years [with regard to diamond enhancement], and that’s something you have to put under the microscope when you think about synthetic diamonds,” Parsons concluded.

The Marketplace

• Sales of marquises are quiet.
• 2-carat+ radiants and cushions of higher clarity, G-H, are selling heavily.
• 3-carat-and-up stones, VS1 and VS2, are selling decently.
• Large stones priced above $100,000 are selling very well.
• Heart shapes and ovals are reportedly not meeting strong demand.
• Princesses of 1 carat and up are still selling well, but slowing down a bit compared to six months ago.