• From a technical perspective, both CVD and HPHT synthetic diamonds have qualities that make them attractive

• Synthetic diamonds offer benefits to cutters and retailers – but consumers prefer natural diamonds for engagements and anniversaries

Most diamond cutters (they liked to be called manufacturers, but now ‘manufacturers’ refers to growers of synthetics) require bank finance for their rough diamond buying.

For far too long, Indian companies have been hooked on government-subsidised interest rates to promote skilled export-oriented employment.

This has led to ‘round-robin IMPEX’: import a parcel of rough, get a low interest loan, smuggle the goods out of the country, re-import the parcel, get a new loan, and repeat over and over.

It’s commonly believed that much of the money sourced this way has funded Mumbai property developments.

Finally, after 20 years, the government and banks are clamping down. In Antwerp, ABN Amro – a major lender to the rough diamond sector – has scaled back its financing.

Firstly, they can stop buying very expensive high colour and clarity large natural rough diamonds because, as the Rapaport price graph shows, other companies are dumping theirs.

Secondly, sell off your natural stock that is high value and slow selling. Thirdly, start polishing high demand rough, like D-J VS2-SI1.

Finally, if you are polishing manufactured diamonds, get rid of your highly paid rough planning team because factory-grown rough does not need hi-tech planning.

Why polish grainy, cheap twinned rough that needs planning to avoid inclusions, when you have a simpler and more predictable option?

When observing the diamond price trends over the past 12 months, it becomes clear that the two big falls reflect larger, high colour and clarity stones sold off cheap to gain cash flow – presumably, in order to pay back dodgy loans.

Like all new Asian diamond markets, Chinese jewellers thought average consumers would buy the same quality stones that the wealthy buy.

Wrong! Chinese jewellers stocked more than 10,000 stores with third-carat D-F VVS goods for the new engagement ring market.

However, just like Japan and Korea, consumers could not see the difference between a G SI1 and a twice-the-cost D VVS.

To meet this new demand the GIA has reduced the carat weight they grade from 0.50-carat to 0.15-carat. Cutters have moved a lot of their production to meet the new Chinese demand, cutting away SI and VS inclusions.

The market has, simply, changed. Argyle is closing at the right time. At around $US10 per carat, most of their off-white output ends up in cheap promotional jewellery.

That means lab-grown diamonds that look far better to the naked eye will have a much greater appeal as they become cheaper than ‘cheap (natural) goods’.

Mahek Mehta, partner at Rajlaxmi Technomech, explains the current problems in Surat, India, where the vast majority of all diamonds are polished: “Due to rising natural rough prices and slow polished diamond sales, many cutters do not find it profitable to manufacture.

“Small and medium-sized companies have moved partially or completely into manufacturing and trading lab-grown diamonds as the investment is less compared with natural diamonds – and [lab-grown diamonds] are a self-funded venture, unlike naturals.”

Mehta adds: “Big companies are investing heavily in technologies for ‘growing’ lab-grown rough. [They] manufacture and sell polished diamonds to prospective wholesalers and retailers focusing on marketing loose lab-grown diamonds and jewellery. This will target a different segment of consumers.”

At the JCK Las Vegas show in June this year, 80 per cent of CVD [chemical vapour deposition] diamonds I checked with an Ideal-Scope or ASET scope had ‘magic’ proportions – compared to less than 10 per cent of natural and HPHT [high-pressure high-temperature] diamonds.

The better cut proportions of CVD results from the depth constraint. Why grow thicker than 3.9mm to achieve a 1-carat round?

Bear in mind that 60 per cent of natural diamonds are much too deep at +4.00mm or +62.5 per cent, according to RapNet. This makes me particularly happy as I have worked for decades to improve the beauty and apparent size of diamond cut quality.

I developed the Holloway Cut Adviser, a tool that provides a visual assessment based upon proportional parameter values of diamonds and gemstones. It is used around a million times a year, mainly by savvy consumers.

This year I added an additional patented online service (hollowaycutadviser.com) enabling anyone to check the apparent size of any round diamond based on the proportions that appear on any grading report.

However, some CVDs were hazy; they grow like carbon rain falling onto a flat crystal substrate, building upwards in layers. Banding in the layers can reduce visible fire and brilliance, so CVD diamonds can be less ‘crisp’ in performance.

A couple of side notes on diamond fluorescence: firstly, stronger blue fluorescence in a colourless (D to Z) diamond is an indication of natural origin.

Secondly, recent research has proven that blue fluorescence does not cause milky haziness or dull a diamond unless it is combined with certain types of inclusions.

Expect to see the value of fluorescent diamond increase – just in time for Alrosa to begin marketing its ‘Luminous Diamonds’.

Finally, the pros and cons of stocking synthetic diamonds versus natural diamonds come down to consumer behaviour.

A woman might buy herself a 2-carat synthetic diamond for $3,000 – but there’s no way this woman will let her partner buy her a ‘fake’!

As a result, a suitor may be pressured to buy a $40,000 2-carat natural diamond engagement ring or anniversary present.

Pun: Syn is short for ‘synthetic’ and is a homophone for sin. It would be a sin for a suitor to offer a prospective partner a syn diamond.

However, when faced with a choice, many customers shopping at High Street jewellery chain stores will take the lab-grown option.

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Australian-born Garry Holloway is a self confessed “cut nut”. He graduated as a Geologist in 1973 and in 1975 he established two fine jewellery stores in Melbourne. While studying for the Diamond Diploma in 1984, Holloway became obsessed with diamond cut research; he invented the Ideal-Scope and Patented Holloway Cut Advisor. Holloway lectures on diamond cut at the Gemmological Association of Australia and works with a group of Russian and Indian researchers known as The Cut Group. Visit: hollowaydiamonds.com.au

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