DISCLAIMER: GoldInvestors.news is not a registered investment, legal or tax advisor or broker/dealer. All investment/financial opinions expressed by GoldInvestors.news are from the personal research and experience of the owner of the site and are intended as educational material. Although best efforts are made to ensure that all information is accurate and up to date, occasionally unintended errors and misprints may occur.

Natural diamonds have surrendered more than half their value during the past five years as excess supply and cheaper laboratory alternatives reshape the market. Rapaport Group data shows an average one carat stone now costs $3,898, down 51% from its average price of $8,007 in 2021.

The Diamond Standard Index, which follows prices for so called investment grade diamonds, fell to 2,490 in early August, its lowest level on record. This week, the index was hovering just above 2,500.

A glut of mined stones has weighed heavily on prices after excess production reached the market. Efforts to remove that inventory are underway, but the expanding supply of lab grown diamonds has added another formidable challenge for natural stones.

“There’s a lot of doom and gloom about natural diamonds,” Diamond Standard CEO Cormac Kinney told CNBC. “There was a very large overhang of excess inventory back in 2023 and 2024 after excess production during Covid, and then [there’s been] the falling sales due to the lab-grown [diamonds].”

Lab grown diamonds possess the same chemical and physical properties as natural diamonds. Producers create them by applying heat and pressure to carbon seeds or by using gas containing carbon inside a vacuum chamber, producing stones that look and feel identical to diamonds formed within the Earth.

Price provides the crucial distinction. A nearly colorless laboratory diamond with very, very slightly included clarity and an excellent cut can sell for $450 on the Brilliant Earth online marketplace, while a natural stone with identical specifications ranges from $2,800 to $3,200.

Mining natural diamonds requires considerable fuel and labor, helping explain the price difference. Brilliant Earth says laboratory alternatives cost less at every carat weight, with a man made stone priced as much as 90% below its mined equivalent depending on size, cut and color.

Consumers under financial pressure have increasingly chosen these cheaper stones for engagement rings and fashion jewelry. Engagement rings featuring laboratory center stones accounted for 61% of engagement ring sales in 2025, an increase of 239% since 2020, according to The Knot 2026 Real Weddings Study.

Fortune Business Insights projects the lab grown diamond market will reach nearly $92 billion by 2034. That would represent an increase of more than 200% from its 2025 value of $29.46 billion, strengthening a trend that could place additional pressure on natural diamond prices.

Natural diamond producers are responding by restricting supply. De Beers Group said in July that it would suspend production at its flagship Venetia mine in South Africa for more than two years, while at least two diamond mines announced permanent shutdowns in 2026.

Kinney said disruptions in supply are already changing parts of the wholesale market. He reported price appreciation for certain diamond qualities and said he believes those gains could represent the beginning of a recovery, though it remains unclear whether industry measures can reverse the broader decline.

Investors seeking exposure to the laboratory trend may find more practical opportunities in jewelry stocks. Raymond James analyst Rick Patel has an outperform rating on Signet Jewelers, citing the company’s exposure to rising demand for laboratory diamonds, particularly in fashion jewelry.

According to Patel, Signet products containing a laboratory diamond generate about three times the average unit retail value of fashion products without one. Signet brands including Kay Jewelers and Zales are adding the stones to simple products such as tennis bracelets in an effort to increase the value of each sale.

Gordon Brothers data shows laboratory diamonds generally produce gross margins between 60% and 65%, compared with margins of 40% to 45% for natural stones. Signet did not answer questions about its margins on natural and laboratory diamonds.

Signet shares have gained 21% in 2026 and surged about 24% on Sept. 9 after the company raised its annual profit forecast amid strong bridal and fashion demand. Brilliant Earth is down 20% for the year but has climbed 27% over the past three months, while Pandora is up nearly 19% since the year began.

Industry insiders and analysts favor those stocks over buying diamonds directly because the stones lack a standardized spot market and can be difficult to resell. “You shouldn’t be buying a diamond thinking that there’s a financial investment [aspect] to it,” Schifter told CNBC. “Go invest your money in silver or even the S&P 500.”

DISCLAIMER: GoldInvestors.news is not a registered investment, legal or tax advisor or broker/dealer. All investment/financial opinions expressed by GoldInvestors.news are from the personal research and experience of the owner of the site and are intended as educational material. Although best efforts are made to ensure that all information is accurate and up to date, occasionally unintended errors and misprints may occur.