Just a few days ago I was talking to a customer in the store about my early days in business. He told me that I should tell more people about the story I was discussing with him.
The story started when my customer asked me about some radio ads that a competitor of mine was running on several radio stations. They are famous for their yelping, but this radio ad took a different turn and I find it very misleading. While I don’t like to bash my competitors, they should be held to the same standard that all jewellers are held to.
But I will circle back to talk about my competition.
This is the story I mentioned to my client about when I started in business in 1980. I was pretty naive about what many of my vendors were telling me at the time. Back then cubic zirconia was very new and the main option for a diamond alternative. They were touted as almost impossible to tell the difference from a diamond, as being as tough as a diamond, as being difficult to make…all false. The only truth they spoke was that the price was on the rise. I recall suppliers telling me that they were going up in price by the day and the price was up to almost $80 for a one carat cubic zirconia. “I should buy some and put them away as an investment,” was the common remark. They did go up and up, to almost $140 per carat within months.
They were being offered in magazines and on TV as an investment vehicle. I did not invest a penny into them. I just felt something didn’t sound or feel right about them. First, I wasn’t sure where I would sell them. Yes, I was in the jewellery business, but I wasn’t selling any cubic zirconia at the time. They were an oddity that was getting some interest but no real sales. The other big factor for me was that I knew they weren’t rare when suppliers could offer me hundreds of them. Lastly, if an item is man-made, then as long as someone is making a profit, they will continue to create as much as they can. Simple rules of economics tell us that if supply surpasses demand then the price will drop.
Guess what happened to cubic zirconia? The price started to fall and then it crashed. The same year I was offered these baubles for $140, they went down to $40-$50. A year later, they were around for $20. Today, I still offer them for about $15 to 20 for a one carat cubic zirconia.
Now let me circle back to my competition. Recently, the radio ad I heard was about the man-made or laboratory grown diamonds they are offering. The competitor seems to be moving in the direction of offering just the laboratory grown diamonds, or at the least featuring them heavily. I listened to the radio narrative and my blood started to boil. The first thing that was said was that these man-made diamonds don’t carry any of the social issues that mined diamonds have. I know that the urban myth prevails about “blood diamonds” but there is so much information in all the good that diamond mining has done in many countries, yet it gets ignored because the mis-information seems to have more cache. Just check out the new report that came out about the impact diamonds have in many countries.
The other point my competitor was emphasizing was the carbon foot print of man-made diamonds is so much smaller. The current information within the jewellery trade suggests that remark is not accurate. Think about it. If you need lots of pressure and extremely high temperatures, you need energy. Energy burns carbon in some form. The problem is that the companies that manufacture man made diamonds are not giving out all the information about their carbon footprint and often omit some factors that they count in the carbon footprint for naturally mined diamonds. The best articles I have read suggest the carbon footprint for the two streams of production is not that much different. The social cost of man-made diamonds is not squeaky clean in many countries as it uses resources and infrastructure that are required by other industries that cannot compete. To be honest the plasma chamber needed to make man-made diamonds costs about $200,000 (US) and requires some serious carbon footprint. Keeping it running also results in a carbon footprint. All these companies are doing (like so many other manufacturers) is to move the postal code of their energy needs.
The story just isn’t that cut and dry. While I would bet that mining will always leave a bigger carbon footprint, the man-made diamond industry is not being as transparent.
But I have a real bone to pick with my competitor. Now that they seem to be moving to the man-made option and are critical of the carbon footprint and the social impact left by mined diamonds, why did this suddenly change? Are they saying that all the mined diamonds they sold before were bad? Sure sounds like it. If that is the case, then they should be issuing apologies and taking back the diamonds they sold to trade for their man-made options.
Lastly, back to my cubic zirconia story. If a company can make as many man-made diamonds as they want, what makes them rare? What keeps the price firm? When it comes to the man-made diamonds, I have seen crazy dips in price over the last two years. The dips have all been downward. I will offer these diamonds for sale, but I won’t carry them in stock in my store. My feeling, and so far, it has been true, the price I pay today will likely drop by the time I sell that diamond. There isn’t any shortage of man-made diamonds. Recently DeBeers started offering man-made diamonds for $800 per carat (US dollars). Just two years ago my selling price was about $6000. Sorry but if it is man-made then the price will continue to drop as more and more is being manufactured.
I would like to see how my competitor can sell their man-made diamonds for thousands of dollars when the same thing is offered for a $800 from DeBeers?
Man-made diamonds will have a place for consumers. It will act as a nice place holder until a naturally mined diamond can be purchased or the man-made diamonds will be used to make jewellery that most people refer to as costume jewellery. All I know is that I am going to follow my intuition just like I did 40 years ago with cubic zirconia.