Two Different Diamond Markets

Life is full of contradictions, and the truth is often more nuanced than the headlines suggest.

Two lab grown developments reported in recent days appear to point in opposite directions.

The first was in India, where home minister Amit Shah said the market for lab growns, by volume, could eventually reach nearly 50 times the size of the current diamond market.

The second was in the US, where Signet, the world's largest retailer of diamond jewelry, said customers were now "gravitating more to natural diamonds than they have been recently," especially in higher-priced goods.

Both can, of course, be true at the same time. One is pure speculation, the other is just a snapshot of current market behavior.

But they do highlight the growing split taking place in the diamond industry between natural and lab grown.

Shah is describing a possible future in which lab growns become vastly more important in volume.

He was speaking at the 52nd India Gems and Jewellery Awards ceremony in Mumbai on September 13.

The Indian government's Press Information Bureau quoted him as saying: "Era of lab-grown diamonds is now set to emerge, with the market expected to grow to nearly 50 times the size of the current diamond market."

It's not clear if he meant the total current diamond market, or the lab grown sector alone, but either way it's a remarkable claim.

Fifty times the current lab grown market would be 1.25 billion carats, based on an IMF estimate that 25 million rough carats were produced for jewelry in 2025.

Fifty times the current natural and lab grown markets combined would be a staggering 6.19 billion carats, based on Kimberley Process data showing natural diamond production of 98.8 million carats in 2025 and the IMF estimate of 25 million rough carats of lab growns expected to be produced for jewelry.

Shah was urging Indian companies to seize what he described as a major opportunity, saying they should control the entire ecosystem, from manufacturing the machinery used to produce lab growns through diamond production, jewelry manufacturing, branding and international retail.

His 50-times figure was a statement of ambition rather than a conventional market forecast. Nonetheless, it is a remarkable indication of how some policymakers view the potential scale of lab grown diamonds.

It hints at a world in which lab growns become so cheap that they routinely adorn phones, watches, handbags, you name it.

But it sits alongside a very different signal from the world's largest diamond retailer, as published on September 15.

Joan Hilson, chief operating and financial officer at Signet, was commenting on the strategy of repositioning Blue Nile from an aggressive discounter to a high-end, premium retailer focused primarily on natural diamonds.

Responding to a question from National Jeweler about a resurgence in natural diamond demand, she said: "We're seeing a trend of natural diamonds. The customer [is] gravitating more to natural diamonds than they have been recently."

Still addressing natural diamonds, she continued: "What we're also seeing is that diamonds at higher price points and higher carat weights are becoming more attractive to customers."

All of this adds up to two very different future diamond markets.

One in which lab growns could become so cheap and abundant that they are mass-produced for products far beyond jewelry - from electronics and industrial tools to watches and consumer goods.

And another, in which scarcity is the selling point as natural stones become increasingly concentrated at the luxury end.

Have a fabulous weekend.