What makes diamonds so valuable? Why do they have such an aura? Why are they so coveted? One important factor has been their rarity—and that’s about to change.
High quality synthetic diamonds are around the corner.
First let’s clarify that synthetic diamonds are real diamonds. They are not cheap imitations, made of a completely different material, like cubic zirconium (CZ) or moissanite.
Synthetic diamonds are true diamonds, manufactured in a lab from the same material as natural diamonds dug from the earth. They have the same hardness and brilliance of the mined gems and all the same physical, chemical and optical properties — but a much lower price.
Diamond synthesis has been in the works for over 50 years. The earliest attempts produced diamond dust suitable for use on cutting and grinding tools. Later efforts created gem-quality stones, but the time and electricity required made them more expensive than mined diamonds. The newest methods can produce diamonds suitable for jewelry at a fraction of the cost of natural diamond.
Two Methods: HPHT & CVD
Two competing methods are racing to control the market. One method involves subjecting carbon to high pressure and high temperature (HPHT), basically mimicking the way nature produces diamond. The process, developed by Gemesis, requires about 100 hours for a diamond to develop, compared with nature's 3 billion years. Like natural diamonds, these diamonds may contain impurities.
The other method, called chemical vapor deposition (CVD), transforms carbon into plasma, which then precipitates onto a substrate and is left to grow. It builds up at half a millimeter a day and theoretically can be grown to several inches! The diamonds produced by this method are said to be flawless in clarity, thus competing with the highest quality natural diamonds. They are expected to go on the market early in 2004.
Mined vs. Manufactured: What’s the difference?
"If you give a woman a choice between a 2-carat stone and a 1-carat stone and everything else is the same, including the price, what’s she gonna choose?"
— Carter Clarke, founder of Gemesis
The HPHT process cannot yet produce colorless diamonds but turns out pale yellow stones. Gemesis intensifies the color, then markets the gems as "rare yellow diamonds." In nature, yellow diamonds are indeed rare and therefore extremely expensive, so the synthetic yellows come out far lower in price. (The HPHT process, with its resultant yellow diamonds, is the same one used for diamonds made from human carbon, discussed in last month’s newsletter.) Researchers expect that eventually they will be able to produce colorless diamonds as well.
Most mined diamonds contain impurities (which are reflected in the gem’s Clarity grade). Diamonds produced through the HPHT process also contain impurities, but the CVD process produces flawless diamonds. One expert identified a CVD diamond from Apollo as synthetic only because it was “too perfect to be natural.” The synthesizing process can also control the size and color of diamonds, so gems can easily be produced in matched sets or groupings.
Price is, as Carter Clarke points out, always a crucial issue. At half the price, or a quarter the price, it is bargain diamond jewelry.
What About Rarity?
Natural diamonds, it turns out, are not as rare as they seem. It is a fact of the gem industry that De Beers tightly controls most of the world’s supply of mined diamonds, allowing only a fraction of them to come to market in order to keep their value high.
If high quality synthetics should flood the market, and be accepted by jewelers and the public, natural diamonds would lose value. De Beers is fighting hard to maintain a distinction between natural and manufactured diamonds. It has developed sophisticated machinery to help distinguish natural from synthesized diamond, and is supplying it to major gem labs at no cost. But there is not likely to be a simple device, available to jewelry retailers, to identify synthetics because synthetic diamonds are, ultimately, diamond.
A Glimpse at a Bigger Picture
This is all a great upset to the gem industry, but to the diamond manufacturers, the gem industry is just a stepping-stone. They plan to use their success with gem-quality diamonds to finance a revolution of the computer chip industry.
Diamond’s extremely high thermal conductivity means that diamond could handle much higher temperatures than silicon can. Natural diamond is far too expensive and impure for this use, and there is no way to ensure that one mined diamond has the same electrical properties as the next. But synthetic diamond can be cheaply produced, turned out in consistent quality, and grown in the thin wafers required by the industry. As a market, microprocessing, not jewelry, is the prize.
FOR AGENTS & UNDERWRITING
Having a trustworthy appraisal is especially important for high-value diamonds because of the great difference in value between synthetic and natural diamonds. It is wise to have an appraisal from a CIA™ (Certified Insurance Appraiser™). This is an experienced jeweler who is a graduate gemologist and is also trained in appraising for insurance.
Even though the new synthetics resemble natural diamonds, a CIA has the training and experience to recognize when something is suspicious. He'll be wary of a diamond that is too perfect. He will know when too much of a rare gem, such as yellow fancy diamond, starts showing up on the market. If he suspects the gem is synthetic, he can connect with a larger lab that has equipment to distinguish synthetic from natural diamond.
A synthetic diamond should always be so described on the appraisal — not just on the sales receipt, and not just on a diamond certificate.
Most important, know that synthetic diamond is worth just a fraction of natural diamond. Carefully read all documents on file. Insurers have overpaid claims by thousands of dollars because they missed — or thought unimportant — a piece of crucial information on the appraisal.
On a damage claim for a high-priced diamond, always have the piece examined by a qualified gemologist, such as a CIA™, to determine whether the diamond is natural or synthetic (and to be sure its qualities are as stated in the appraisal).
Synthetic Diamonds and Insuring Tips
Our next issue will discuss the impact of synthetic diamonds (and their marketing) on insurers and will offer advice on how to avoid costly errors.
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