In recent years, diamonds have lost a lot of their luster.

Data from the diamond trading platform Rapaport Group shows that natural diamonds have depreciated by more than half over the past five years. Today, the average price of a 1-carat diamond is $3,898, which is 51% lower than the average price of $8,007 in 2021. The Diamond Standard Index index, which tracks the prices of so-called “investment-grade” diamonds, hit a record low of 2,490 points at the beginning of August. This week, the index has been hovering just above 2,500 points.

Multiple factors are pressing down on diamond prices, including an oversupply of mined diamonds that has flooded the market in recent years. While the industry is trying to digest this excess inventory, another trend has exacerbated the problem: the rise of lab-grown diamonds.

Diamond Standard CEO Cormac Kinney said to CNBC: "Natural diamonds are facing a lot of pessimism. In 2023 and 2024, after overproduction during the pandemic, there was a large backlog of excess inventory in the market; at the same time, lab-grown diamonds led to a decline in sales."

Laboratory-grown diamonds are gemstones produced by applying high temperature and pressure to carbon seeds on the surface of the earth, or by using carbon-containing gases in a vacuum chamber. Their chemical and physical properties are identical to those of natural diamonds. Although they are cultivated on the earth's surface, their appearance and touch are exactly the same as those of diamonds formed deep within the earth.

The key difference between the two lies in price. A search on the online market for CNBC versus Brilliant Earth shows that a laboratory-grown diamond that is nearly colorless, has a “very slight flaw” in clarity, and excellent cut can be sold for as low as $450. In contrast, a natural diamond with the same specifications costs around $2,800 to $3,200. The price difference is largely due to the resource intensity required to mine natural diamonds, as this process involves a large amount of fuel and labor.

According to Brilliant Earth, the alternatives cultivated in the laboratory are cheaper than natural diamonds for every carat weight. The price of synthetic diamonds can sometimes be 90% lower than that of mined diamonds, although the specific price difference depends on the size, cut, and color of the diamond.

This has prompted consumers with limited budgets to turn to cheaper synthetic diamonds for engagement and fashion jewelry, thereby putting further pressure on the prices of natural diamonds. The Knot According to Real Weddings Study, in 2025, engagement rings using lab-grown diamonds accounted for 61% of all engagement ring sales, a 239% increase from 2020.

Fortune Business Insights It is estimated that by 2034, the market size of lab-grown diamonds will grow to nearly $92 billion, an increase of over 200% from $29.46 billion in 2025.

"You shouldn't buy diamonds with the idea of them having financial investment properties in mind."

—— Casale Jewelers Owner Cory Schifter

The owners of Casale Jewelers, headquartered in New York and New Jersey, Cory Schifter, stated to CNBC that lab-grown diamonds "provide people with the opportunity to buy what they want at the price they are willing to pay, without having to do a lot of embellishment around the main stone just because it is only 1 carat but they want it to look like 3 carats."

“They can use the extra funds that they would otherwise spend on a 5-carat natural diamond for their wedding, or to buy a house, or for whatever else they want to do,” said Schifter.

The shift towards cultivating substitutes in laboratories could further drive down the price of natural diamonds.

However, the natural diamond industry has already noticed this and has begun to take measures to boost the weak diamond prices.

Anglo American, a subsidiary specializing in diamond mining, sorting, and grading, announced in July that it would suspend production at its flagship Venetia mine in South Africa for over two years. This move will limit supply and may drive up prices. Meanwhile, at least two diamond mines have announced that they will permanently close in 2026.

Kinney to CNBC indicates that there have also been significant disruptions in supply, as two of the mines have applied for bankruptcy, and De Beers itself has announced the closure of one of its largest mines. Therefore, what we are seeing in the wholesale market now is that the prices of diamonds of certain qualities are rising, and I believe this is the beginning of a recovery cycle.

Betting on the boom in lab-grown diamonds

It is not yet clear whether the measures taken by industry giants will be able to stop the decline in the natural diamond market, but one thing is certain: lab-grown diamonds have become a long-term trend.

Moreover, investors indeed have ways to participate in this trend.

Raymond James analyst Rick Patel rated Signet Jewelers as "outperforming the market," believing that this company will benefit from the current craze for lab-grown diamonds.

Patel said, "Laboratory-grown diamonds actually greatly contribute to the performance of Signet, especially in the field of fashion jewelry. Products that contain laboratory-grown diamonds have an average retail price per piece that is about three times that of other fashion products without laboratory-grown diamonds. This means that the more laboratory-grown diamond fashion jewelry they sell, the more they can increase the average retail price per piece, thereby helping to boost sales within the same store."

Signet did not respond to questions regarding the profit margins of lab-grown diamonds versus natural diamonds. However, data from the global investment company Gordon Brothers shows that the gross margin for lab-grown diamonds typically ranges between 60% and 65%, which is higher than the 40% to 45% gross margin for natural diamonds.

Patel pointed out that brands under Signet, such as Kay Jewelers and Zales, are increasingly incorporating laboratory-grown diamonds into simple designs like tennis bracelets, with the aim of increasing revenue per sale. He added that this move could boost the stock price of the parent company of this jewelry brand.

“For example, if you have a gold-plated tennis bracelet without any gems,” said Patel, “if you add some lab-grown diamonds to it, you can sell it for a higher price, and consumers will also find it more valuable.”

In addition to Signet, Brilliant Earth is also another way to participate in the trend of laboratory-grown diamonds. Pandora also has its own line of laboratory-grown diamond products, which allows investors to get a taste of this gemstone craze as well.

Since 2026, Signet has risen by 21%. On September 9th, following the company's upward revision of its annual profit forecast and driven by strong demand for wedding and fashion products, its stock price recorded its best single-day performance in nearly four years, soaring by about 24%. Brilliant Earth has fallen by 20% since the beginning of the year, but it has risen by 27% in the past three months.

Pandora, which is listed on the Copenhagen Stock Exchange, has risen by nearly 19% since the beginning of this year. Although the stock is not listed on U.S. exchanges, American investors can buy and sell it through over-the-counter trading.

Analysts and insiders in the diamond industry suggest that rather than investing in actual natural diamonds or lab-grown diamonds, it might be better to consider these stocks.

Due to the lack of a standardized spot market for diamonds, they are generally difficult to consider as an investment asset. This is because no two diamonds are exactly the same, making it challenging to assess their value on a comparable basis.

The diamond market still faces liquidity issues. According to a report from the Gem Market CaratX in February 2026, a diamond may remain on the secondary market for over a year, depending on its quality. Moreover, according to several jewelry merchants' websites, once a diamond is sold, its price is often only half of the initial retail price or even lower.

The Schifter of Casale Jewelers to CNBC means: "You shouldn't buy diamonds with the thought of their financial investment value in mind. Better invest your money in silver, or even in the S&P 500 index."