The Trillion Dollar Diamond Heist

      A Summer of diamonds. On June 2nd 2024 it was announced that De Beers, the diamond giant, was getting out of the lab-grown diamond industry with their LightBox brand that they had been running for 6 years, and that they were slashing the prices of lab grown diamonds from $1,500 a carat down to $500 a carat, and when I went and looked at the LightBox website I found that they were selling near-white diamonds. This was a surprise to me because the last time I checked around 10 years ago there were no near-white or white lab grown diamonds. Since the 1990s people have been talking about lab grown diamonds, and there were always Russian startups talking about how they could do it, but it never panned out.

     Apparently the problem was that they were trying to do it too quickly, they were trying to grow diamonds in the span of a day or less by manipulating the pressure, the temperature, changing ways to apply the pressure, changing everything except for the amount of time they waited. There are two main ways that diamonds are produced in labs, either with traditional High Pressure and High Temperature aka HPHT, or with lower temperature Chemical Vapor Deposition aka CVD. After the diamond embargo on Russia made half of all diamond cutters get laid off in Surat, India, they doubled down and built 4,000 additional CVD reactors bringing their total to 8,000. To grow very large carat CVD diamond cubes requires up to 7 months, but the stones can then be cut into 30 to 50 carat diamonds with many smaller diamonds being cut from the excess.

     So I ordered a dozen items sold as diamonds on eBay including rough diamonds, loose cut diamonds, and finished jewelry, with all of the rough and loose diamonds specifically ordered from Surat India, and all items claimed to be either “CVD Lab Grown” or “CVD Lab Created” diamonds. Most sellers of jewelry contacted immediately and said that the item would not pass a diamond tester, offering to cancel the order. I took them up on their offer. Over the next month as the items arrived I built my own diamond lab by purchasing a cheap diamond tester, a cheap moissanite vs diamond tester, a 40 X Jeweler's loupe with LED and UV lights, a scale that could measure to 0.001 grams known as a microgram scale, and examples of cubic zirconia and moissanite. Moissanite fools all diamond testers that cost all the way up to about $500, even if they say that they can tell the difference between moissanite and diamond, or if that is their only purpose, but you can easily tell a diamond from a moissanite with specific density testing.

     Specific density testing was invented by Archimedes in ancient Greece when a king asked him to figure out if a crown that he had purchased was solid gold or maybe gold filled, but he didn't want to cut into the crown, and when Archimedes got into a full bathtub and the water overflowed he realized that different densities would displace different amounts of water. He cried out, "Eureka!,” leapt out of the bathtub and ran through the streets naked. To do specific density testing with a diamond or a small stone requires a microgram scale, a small cup, some dental floss and if you want, a pencil. First put the stone in question on the scale and measure it 3 times, enter the consistent number in a calculator and hit the divide key, then place a small cup on the scale half full of water, turn the scale off and on again, and tie a small slip knot loop around the stone and suspend it in the water. Don't let it touch the bottom or sides and you are measuring just the displaced water. Wrap the floss around the pencil 4 times and set the pencil between 2 boxes to hold the stone steady if needed. Don't breathe on the scale, and repeat the tests 3 times, drying the stone off in between tests and turning the scale off and on again each time. Divide the first number by the second number and that is the specific density.

     The specific density of moissanite is 3.25, the specific density of diamond is 3.5, the specific density of sapphire is 4.0, and the specific density of cubic zirconia is close to 6.0. Every single thing I was sent from Surat India was a fake diamond. They were all diamond simulants. I was sent moissanite as cut loose diamonds, sapphires as rough diamonds, and the one piece of finished jewelry tested like cubic zirconia on the diamond tester. Not a single one of the dozen would ever admit to what they had sent, and only one seller asked for their stone back and provided free return shipping. The others all told me to keep them and everyone returned all of my money.

     So then I did what I had been avoiding, I bought a diamond from Luvansh, I bought a loose 1.19 carat D VS1 pear cut diamond, and when it arrived 2 days later it passed the specific density test. And I paid $209 with no tax and FedEx 2nd day by noon included (value $10), while I had paid $89 for one of the fake cut stones because I thought I could cut out the middle man. I can't. Luvansh is about a half block from the diamond district of New York, so they have the right location and connections. You can buy loose diamonds or finished diamond jewelry, and unlike other places that will sell Lab diamonds, they exclusively sell Lab diamonds with a minimum standard of G color and SI clarity for diamonds under about 5 carats, and their prices are as fair as the Amish, they sell 1 carat total weight diamond studs in 14 K gold for only $349, and all of their other jewelry is very reasonable, typically half to 1/10th the price of other companies, and they have about 3 threads on Reddit where others say that for the last few months at least, they are the best place to buy diamonds and diamond jewelry.

     What does that do to the price of diamonds that come from mines? Well you certainly won't find any news articles about this, but the cost of traditional diamonds that come from mines has fallen to 50% of what it was just 3 months ago. Look it up yourself. Go to some place like Blue Nile and look up your stone in your engagement ring. Whatever it was worth 3 years ago or even 3 months ago, it's now worth half as much. A pear shaped diamond of similar quality to what I bought for $200 still costs close to $5,000 from a mine, but 3 months ago it would have cost $10,000. It is an enormous loss of wealth that is not being covered at all in the media, but here are the numbers: Americans buy about 40% of all of the diamonds that are sold, mostly in jewelry, and 2 years ago nearly 120 billion dollars worth of diamond jewelry was sold in the world. So nearly $50 billion worth of diamond jewelry has been sold every year in the US, let's say over just the last 50 years. That would be $2.5 trillion worth of diamond jewelry, let's round down to 2 trillion dollars, and I am saying that it all lost half its value in just the last 3 months.

     That is over a trillion dollars worth of value that just disappeared off of women's fingers, ears, necks and wrists in only 3 months, and nobody is talking about it, and the wholesale cost of lab diamonds keeps falling. The least expensive 1 carat diamond on the Luvansh website is currently priced at only $149, down from $169 last week, and down from $450 two years ago. Since lab diamonds are indistinguishable from diamonds that come from a mine once they are cut and set, soon insurance companies will start replacing diamonds that came from a mine with a diamond that came from a lab, because they are the same thing, and origin is like sentimental value, not really a concern of the insurance company, so the cost of diamonds from mines may continue falling. Currently diamonds from mines cost about 10 to 30 times as much as lab diamonds for the exact same shape, carat, color and clarity, which may eventually eliminate diamond mines entirely, but over the near future expect the value of mined diamonds to continue falling more than the 50% they have already fallen in the last 3 months because lab diamonds are currently 3% to 10% of the cost for the exact same thing.