Investment Thesis on Lab-Grown Diamonds: Rethinking the Value of Luxury

At Solitique, we do not say ‘Invest in a lab grown diamond’, we say ‘Invest with a lab grown diamond’. Dive in to see what we mean.

Whether you’re a value-conscious investor, a modern bride, or a retail buyer exploring alternatives, understanding the true value of diamonds is essential. 

For generations, diamonds have been synonymous with eternal value and status. But as the market evolves and lab-grown diamonds enter the scene, a new set of questions emerge: does the traditional sparkle of a natural diamond still shine as a wise investment?

Table of content: 

1.The Mined Diamond Market: A Glimpse Through the Years

Historically, mined diamonds have been valued primarily because of their scarcity, elegance, and the intrigue related to their origin. 

However, surprisingly, the price of mined diamonds has been stagnant over the past two decades. Don’t take our word for it, let the numbers speak.

Source: Diamonds: Two Decades of Stagnation

Even with years of marketing focusing on scarcity and exclusivity, the monetary value of natural diamond prices has been largely unchanged. This lack of appreciation raises questions about whether natural diamonds can be a sustainable long-term investment or not. 

2. Investment Thesis: A Comparative Analysis 

Let’s break down the numbers. For a 1-carat diamond with the same cut, color, clarity and carat, the difference is dramatic:

• Mined Diamond: Rs. 5,00,000

• Lab Grown Diamond: Rs. 50,000
  
  

Buy the lab grown diamond for Rs. 50,000 and invest the difference amount of 4,50,000 in high performing financial instruments of your choice - Gold, ETFs, Index Funds, Fixed deposits.

Investing Rs. 4,50,000 in index funds, which give an annual return of 10% will more than offset the value of lab grown diamond you purchased!

For instance - let’s see how ₹4.5 lakhs in stocks compares to ₹5 lakhs in natural diamonds since 2020.

Source: Bloomberg, Yahoo Finance

In just five years, the reinvested capital not only surpasses the cost of a lab-grown diamond but also outperforms the negligible gains in natural diamond prices.

What are you waiting for? Shine bright and build your wealth! 

3. Expert Insights

Industry experts have publicly debated the merits of various asset classes. Here’s what seasoned investors think about diamonds as a long-term asset.

• Radhika Gupta, MD and CEO of Edelweiss Asset, has shown a distinct inclination towards equity markets rather than commodities such as natural diamonds. She believes that the flat trend of diamond prices, along with the uncertainties in the resale market, renders them less appealing as an investment.

• Abhishek Kumar, a Sebi RIA makes a stunning point that diamonds lack true investment value and resilience compared to gold. With lab-grown diamonds flooding the market at a fraction of the cost, their glamour is rising, but prices—and returns—are falling

• Deepak Shenoy of Capitalmind highlights the suspicious resale of diamonds, noting that even sellers hesitate to buy them back. In India, jewellers often offer only exchanges or store credit—not cash, creating a liquidity challenge.

4. Resale Value and Market Regulation

A critical factor that often tilts the investment balance is the resale value of an asset. However, the market for reselling natural diamonds lacks proper establishment and regulation, creating difficulties for investors in achieving liquidity. 

Conversely, asset classes like equities, gold, and fixed deposits offer higher liquidity and operate within well-regulated frameworks—ensuring that investors can buy or sell transparently, securely, and with ease. 

Final Thoughts

While mined diamonds may hold emotional cultural prestige, their appeal is diminished by two significant factors: stagnant price movements and an unregulated resale market. 

On the other hand, lab-grown diamonds present a contemporary alternative: they deliver the elegance and visual charm of natural diamonds for significantly less cost. The substantial savings achieved by opting for lab grown diamonds can be reinvested into assets that have traditionally provided higher returns, boosting your net worth.

By challenging conventional investment wisdom, this thesis encourages a fresh look at what it means to invest in beauty - and to invest in the future!

Make the most astute financial choice with Solitique Diamonds.

Do explore our Solitaire and Statement Collection.