Lab-Grown vs Natural Diamond Value: Is It Still an Investment?

Are natural diamonds a good investment? For most buyers, honestly: no — and I say that as someone who sells them. A generic one-carat natural diamond is worth less today than it was seven years ago, while gold has more than tripled and share markets have compounded away in the background. But "diamonds aren't an investment" is not the same as "diamonds aren't worth buying" — and the difference between the two is exactly what this article is about. After twenty years inside the diamond supply chain, here is the full, honest picture: what happened in the 1980s, what's happening now, where lab-grown fits, and how I'd actually frame the decision.

The 1980s: the last time diamonds were "an investment"

If anyone tells you diamonds are a safe store of value, tell them about 1980. In the late 1970s, with inflation raging, investment houses began selling "investment grade" certificated diamonds to the public as an inflation hedge. A one-carat D-colour flawless stone that traded around US$6,000 in the mid-1970s was changing hands for roughly US$60,000 by early 1980 — a tenfold rise driven almost entirely by speculation.

Then the music stopped. Within about eighteen months the same stone had lost most of its value, and by the mid-1980s it sat under US$10,000 — a fall of more than 80% from the peak. People who bought at the top waited decades and never got their money back in real terms. The lesson wasn't that diamonds are worthless; it's that a market with no exchange, no spot price and a huge gap between buying and selling prices is a terrible place to speculate. That structural truth hasn't changed in forty years.

What natural diamond prices have actually done since

Strip out the drama and the long-run picture is one of decline. A benchmark 1-carat G-colour VS1 natural diamond rose through the post-pandemic boom to a peak in 2021–22 when demand ran ahead of supply — and has fallen steadily ever since, to sit below its 2018 level today. This isn't a soft patch: Rapaport, the industry's price benchmark, recorded an 11.3% drop for 1-carat natural diamonds across 2025 alone, and De Beers reported its average realised rough price fell another 7% that year with its rough price index down 12%, cutting its 2026 production guidance to 21–26 million carats.

Then inflation compounds the damage. A price that's already fallen in nominal terms, over seven inflationary years, is a substantial real-terms loss. So much for "diamonds hold their value": you paid full retail in 2018, and the stone is worth less in dollars today — before you even account for what those dollars can now buy.

Why resale is where the story really bites

Here is the part of the trade most retailers won't spell out. When you buy a diamond at retail, you pay the wholesale price plus cutting, distribution and the jeweller's margin. When you sell that diamond, you get offered the wholesale bid — often 30–50% below what you paid, sometimes worse. There is no diamond exchange where you can hit "sell" at a published price, because no two diamonds are identical. Compare that with gold: the metal has a global spot price, refined bars are fungible, and any bullion dealer will quote you a two-way price on the spot within a percentage point or two. Diamonds are a one-way retail market; gold is a two-way liquid one. That single structural difference explains most of the gap between the two as "investments" — it's not about beauty or rarity, it's about market plumbing.

Lab-grown: wonderful product, terrible store of value

The same benchmark comparison tells the lab-grown story in one line: a 1-carat G VS1 lab-grown diamond retailed for about US$3,625 in mid-2018 and about US$1,615 today — down 55%, with wholesale prices down far more. That's not a scandal; it's manufacturing economics. Lab-grown diamonds are real diamonds (I've covered the science in my honest glossary), and production keeps getting cheaper and more abundant, so prices keep falling.

The honest framing: a lab-grown diamond is a consumption purchase, like a beautiful watch strap or a tailored suit. Buy it for what it is — a stunning, chemically identical stone at a fraction of the price — and assign it a resale value of roughly zero in your mental accounting. On that basis it's a genuinely excellent product. Bought as a store of value, it's the worst option on this page.

The comparison you actually asked about: lab + invest the difference

So let's run the strategy honestly. Say you're choosing between a AU$15,000 natural diamond ring and the visually identical lab-grown version at around AU$3,500. Put the AU$11,500 difference into a diversified index fund returning a long-run average of about 7% a year, and in ten years it's roughly AU$22,600; in twenty, about AU$44,500. Put it in gold and you're holding an asset that peaked at US$5,405 an ounce in January 2026 after one of the great bull runs of the modern era — the World Gold Council still ranks it among the top-performing assets of the past year even after a 7% pull-back this half. Neither path is guaranteed — gold corrects, markets crash — but both are liquid, two-way markets. The natural stone, on the same timeline, has already gone the other way: down in dollar terms since 2018, and further still once inflation is counted.

On pure spreadsheet logic, lab-plus-invest wins, and I'd rather tell you that plainly than watch you discover it at a resale counter in fifteen years. (The obligatory caveat, sincerely meant: I'm a gemmologist, not a financial adviser — nothing here is financial advice, and gold and shares carry their own risks. For actual investment decisions, talk to someone licensed to give them.)

The case that survives the spreadsheet

And yet — natural diamonds are not gold bars, and people don't buy them as gold bars. Three things the spreadsheet misses.

Some diamonds really are collector assets. Argyle pink diamonds have appreciated dramatically since the mine closed in 2020, top fancy colours set auction records, and important large stones with fine provenance behave more like art than like commodity goods. I've written about the pink diamond market separately — but note these are five- and six-figure certificated rarities, not engagement-ring stones.

The supply story is real. Argyle is gone, major mines are ageing, De Beers is cutting production, and no significant new deposit has been found in decades. That doesn't guarantee price rises — demand matters too — but natural supply genuinely is falling in a way lab-grown supply never will. Scarcity is the one card natural holds that manufacturing can never take away.

An heirloom isn't an asset class. Nobody inherits an index fund with a lump in their throat. A natural stone bought for a marriage, worn for forty years and passed to a daughter has done its job completely even if it never earns a cent — and it will always be worth something, which is more than most things we spend money on. The mistake isn't buying natural; it's buying natural while telling yourself it's an investment.

What I tell clients at Lucano

Buy the ring for meaning, not for return — natural if permanence and rarity matter to you, lab-grown if the spreadsheet does (both are graded identically; my clarity guide applies to each). If investment is genuinely part of your motivation, keep it out of the jewellery box: see a financial adviser about the gold and the shares, and let the diamond be jewellery. And one quiet footnote worth knowing: the 18k gold in every Lucano ring is refined by ABC Refinery, Australia's only LBMA-accredited independent refiner — the same bullion standard central banks demand. Your ring will never be a share portfolio, but the metal it's made of is the real thing, from a supply chain we can actually prove. If you'd like to talk through natural versus lab-grown for a specific piece with real stones on the bench, book a bespoke consultation.

Diamond value FAQ

Do natural diamonds appreciate in value?

Generally the opposite lately. A benchmark 1ct G VS1 rose in the 2021–22 boom but has since fallen back below its 2018 level, with Rapaport recording an 11.3% drop for 1-carat natural in 2025 alone — a real-terms loss once inflation is added. Rare fancy colours and important large stones are the exception, not the rule.

Do lab-grown diamonds hold their value?

No. The same benchmark lab-grown stone has fallen about 55% at retail since 2018, and production economics point one way. Buy lab-grown for beauty and value-for-money, with no resale expectation.

Is gold a better investment than diamonds?

Structurally, yes: gold trades on a global spot price with tight two-way markets, while diamonds carry large retail markups and steep resale discounts. Gold's price still swings — it fell 7% in the first half of 2026 after its January peak — so it's no sure thing either. General information only, not financial advice.

Should I buy lab-grown and invest the difference?

If maximising long-run wealth is the goal, that logic is sound and I won't pretend otherwise. If what you want is a rare natural object with permanent intrinsic scarcity and heirloom weight, buy natural — just buy it as jewellery, not as an asset.

What happened to diamond prices in the 1980s?

An investment mania drove a benchmark 1ct D-flawless from about US$6,000 in the mid-1970s to roughly US$60,000 in early 1980, before an 80%+ collapse over the following few years. It remains the definitive lesson in treating retail diamonds as speculative assets.

This article is general information about the jewellery market, not financial advice. Figures are approximate, in US dollars unless noted, and current at July 2026.