Diamond Prices Fall to Lowest Level This Century, Nightmare for Investment Portfolios
Natural diamond prices have fallen to their lowest point this century, down about 50% from the peak in 2022, with the average price of a 1-carat natural diamond dropping from about $6,000 in 2021 to around $4,200.
The surge in supply of lab-grown diamonds is the main reason, with their prices plummeting over 70% since 2020, further squeezing the demand and pricing space for natural diamonds.
Traditional diamond miners and jewelry retailers are facing inventory backlogs and revenue pressures, while lab-grown diamond producers and low-cost jewelry brands benefit from this situation.
Source: Public Information
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De Beers and other traditional giants previously maintained high prices by controlling supply, but this price collapse continues their passive response to the disruption caused by lab-grown diamond technology, similar to past shocks from synthetic gems to the natural gem market.
On the capital front, mining companies are forced to cut production and recognize impairments (such as Anglo American's multi-billion dollar write-down on De Beers), with funds shifting from natural diamond mining to lab-grown technology and alternative investments, motivated by cost control and brand differentiation to address oversupply.
Similar to the price pressures during the initial rise of lab-grown diamonds in the 2010s, the current diamond industry is in a transformation phase characterized by accelerated technological substitution and a contraction of high-end natural diamonds.
Essentially, this is a technological substitution: lab-grown diamonds are produced at near-zero marginal costs on a large scale, replacing the scarcity pricing of traditional natural diamonds. The mechanism is that technological advancements break the monopoly of natural resources, leading to a transfer of pricing power from mining giants to companies that possess low-cost cultivation technologies, concentrating funds from existing natural assets to incremental technology and brand assets.
ABAB News · Law of Cognition
Technological replication of scarcity will ultimately lose pricing power.
The more severe the oversupply, the more traditional assets become a nightmare.
When emotional value is hyped, technology has quietly rewritten the rules.