Diamonds have lost more than half their value in five years, and the thing that replaced them has lost three quarters of its own. The Diamond Standard Index, which follows investment-grade stones, touched 2,490 in early August, the lowest reading it has ever recorded, and sat just above 2,500 this week. Rapaport's trading data puts the average one-carat natural diamond at $3,898, down 51 percent from $8,007 in 2021. De Beers realised an average of $105 a carat on rough stones in the first half of this year, a third less than a year earlier.
The usual explanation is that shoppers switched, and they did. CNBC priced the swap directly: a one-carat lab-grown stone, near-colourless, very slightly included, excellent cut, listed at $450 on Brilliant Earth. The same specifications in a mined stone ran $2,800 to $3,200. What that comparison hides is that the $450 is not a stable number either. Wholesale prices for synthetic stones have fallen more than 75 percent since 2022 — a steeper drop, over a shorter period, than the one wrecking the mined market.
So this is not a competitor taking a market's value. It is a competitor destroying it on the way through. Mined supply is finite and slow; manufactured supply is neither. A mine is a hole with a fixed grade of rock in it, and when demand rises you cannot simply dig faster. A production line responds to demand by adding another line, and every unit of added capacity pushes the price nearer the cost of making the thing — which, for a process that is mostly electricity and time, keeps going down. Diamonds did not acquire a rival. They acquired a manufacturing sector.
Although the furnace is not carrying all of this on its own. Cormac Kinney, who runs Diamond Standard, describes an industry that had already overproduced during the pandemic and was sitting on an inventory overhang through 2023 and 2024 before the substitution really bit. De Beers' own half-year report points the same way: demand for larger, higher-quality natural stones held up, while the pressure concentrated on smaller and lower-grade goods — precisely the segment a factory competes in. Some of what looks like technological defeat is a warehouse that got filled too full.
Which leaves one lever, and it is the oldest one in this business. De Beers said in July it would stop production at Venetia, its flagship South African mine, for more than two years. At least two mines have announced permanent closures this year and two have gone into bankruptcy. Withholding stones to support a price is the strategy that built the modern diamond trade, and it still works, on other miners.
Shutting a mine takes stones off the market. It does not take away the machine that makes more of them, and the machine gets cheaper every year it runs.
Mined supply is finite and slow; manufactured supply is neither.
