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Is It Panic Or Jumping On The Profit Bandwagon?

It may be a sense of panic or simply jumping on the bandwagon because the margins are excellent, but reports that none other than Signet Jewelers will be selling factory-made diamonds (FMDs) at its Kay and Jared brands is rather distressing.

It's understandable that businesses want to make as much money as possible – that is their rationale, after all – but this is a rather dispiriting development, particularly at a time when the diamond industry is making efforts to tell consumers that rarity has a value.

What will American consumers think when they walk into a Kay and Jared store – brands that they have known all their lives – and be presented with synthetics next to diamonds? I am sure that the synthetics won't be placed right next to the real diamonds, but the mere fact that they are in same store is more than enough for consumers to make the assumption that there is an equivalence there. Buyers will understand the subliminal message that the well-known store is saying that FMDs are good enough to be sold by them, whether or not that is the intention.

Will consumers ask about the journey that the synthetic stone has taken as compared with that of the real diamond? Will the salespeople be required to give that background info – assuming that they even know it?

Do buyers of synthetics know that the production costs of these stones is declining continuously. What this means, in practice, is that they have little inherent value on the day they are bought and leave the store – physical or online – and practically no resale value.

Let us compare that with diamonds from the Earth which are billions of years old and have proved for thousands of years that they retain their value and, indeed, increase in value over time. This is the reason that they are handed down from generation to generation: not simply because of their sentimental value but because of their financial worth as well. I believe it would be fair and accurate to say that this is unlikely to happen with a synthetic diamond.

Will they be told that they are purchasing stones that are mass-produced in factories and made in a month or two using large amounts of electricity in order to create heat and pressure for the production process? Since most synthetic stones are made in China and India, where more than 80 percent of those countries' electricity is created by burning coal, their carbon footprint is, necessarily, high.

Earlier this year, the Diamond Producers Association (DPA) commissioned an independent review from a company called Trucost, which is part of S&P Global. It undertook a world-first comprehensive analysis of the total value contribution of DPA members – the seven largest diamond miners which overall produce 75 percent of global rough supply – to better understand all the material socioeconomic and environmental impacts and benefits of diamond mining.

Its report found that the diamond industry produced $16 billion of value across the world and across the diamond pipeline, including $4 billion in salaries and benefits. The DPA members pay 4.8 times the living wage paid to the average worker. The greenhouse gas footprint per one carat of polished diamond is 160kg CO2e per carat, 69% less than the estimated carbon footprint of lab grown diamond, according to the report.

Clearly, both the natural diamond sector and the FMD makers want to create the best possible impression, but at least the diamond producers have made an effort to show their impact on the environment and can point to work they are doing to reduce that impact.

If someone wants to propose to their partner with a fake stone just because it looks like the real thing and shines brightly, that it their business. But surely they should be made aware that, just like the plasma TV screen they bought three or four years ago, it is going to be pretty much worthless and certainly not the kind of diamond jewelry item that is going to be passed on to their children.