Business Insider (“This startup is trying to take down the diamond industry with Leonardo DiCaprio”) reports:
“Diamond Foundry is a startup based in California that claims to be able to ‘grow’ hundreds of real diamonds in just a few weeks. Size can range up to 9 carats per gem.
“Actor Leonardo DiCaprio is just one of many influential investors backing the endeavor that could change the face of the diamond industry as we know it.”
DeCaprio starred in the movie “Blood Diamonds” which explored the violence and oppression that can be endemic within the African diamond industry. Apparently, DiCaprio is participating in this venture as a means to attack the “blood diamond” industry. I.e., if inexpensive diamonds can be produced in laboratories, there’ll be less need for African diamond mines and/or the violence associated with “blood” diamonds.
Diamonds have always been a risky investment because diamonds are actually quite common. However, the diamond industry (especially, DeBeers) has artificially restricted the supply of diamonds by refusing to allow most of its inventory to reach the public. By artificially restricting the supply, the diamond industry has artificially increased the diamonds’ price and profits. The artificial restriction on the supply of diamonds is evidence of fraud. They are telling us that something is far more rare–and therefore far more valuable–than is, in fact, the truth.
However, if the Diamond Foundry has discovered a new technology to “grow” diamonds in the lab, the current diamond industry will no longer be able to restrict the supply of diamonds, the price of diamonds will fall, and the current diamond industry may collapse.
1. As an investment, most retail diamonds are silly because the supply has been artificially restricted. Soon, laboratory-grown diamonds may be as plentiful and cheap as cubic zirconia.
2. Some other gems that are truly rare and not yet susceptible to being “grown” in laboratories may soon become our favorite “rocks”. For a while.
3. However, given that virtually all gems are crystals, and given that Diamond Foundry has allegedly found a way to “grow” one variety of crystals (diamonds), it seems inevitable that every other gem-quality crystal will soon also be grown in large numbers and large sizes in laboratories. Who knows? Within the next few years, we might see bowling balls grown out of a single diamond or ruby crystal.
In any case, given the accelerating rate of technological progress, once science learns how to make large quantities of inexpensive diamonds in the lab, it won’t be long before it also learns how to grow rubies, emeralds and sapphires—by the pound. Maybe by the ton.
The current gem industry could be significantly diminished or even destroyed within the next five to ten years.
There may always be a collectors’ market for the largest, purest and most extraordinary gems. But the retail markets for the smaller (less than 9 carats) gems may tank within the next few years.
Now’s probably not the time to buy your brother-in-law’s jewelry store or a bag of diamonds to preserve your wealth through the Greater Depression.