From Greek mythology, to Marilyn Monroe’s Hollywood and clever marketing by De Beers, diamonds have long been lusted over.

But the shiny stones have recently been losing their shimmer as prices have been in a tailspin.

“The current softness in natural diamond prices is primarily a correction, following what I would say is a record run up in prices that we saw in 2021 and 2022,” said New York City-based independent diamond analyst, Paul Zimnisky.

When COVID shut the world down from enjoying experiences, those who could afford it, went shopping.

That demand pushed diamond prices higher.

“All of the moons were pretty much aligned for diamonds, and it was a really strong period,” Mr Zimnisky said.

“Almost every category of natural diamonds went parabolic to the upside, due to supply shortages, following the stimulus, especially in the US, during the pandemic.”

Prices for a cut, one carat, natural white diamond, rose 5.8 per cent in the 2020 calendar year then soared 17.4 per cent in 2021, according to the global RapNet Diamond Index (RAPI).

“Now we’re on the other side of that … we’re experiencing a demand shock in the other direction,” Mr Zimnisky told The Business.

The post-war jewelery industry in the US capitalized on hapless brides with advertising campaigns like "Diamonds are forever".

The slogan “diamonds are forever” was coined by De Beers in the post-war jewelery industry.(Supplied)

Prices started to plunge in 2022, with the RAPI wiping off 10.7 per cent for a one carat stone that year.

This year has been much worse.

From January 1 to November 1, the price of a one carat diamond has fallen twice last year’s figure, wiping off 21.3 per cent.

In total, the price of a one carat diamond has seen a 32 per cent decline in less than two years.

For a half carat stone, prices have fallen to almost 40 per cent.

Diamond prices fall as interest rates rise

Central bank interest rate hikes to cool rising inflation has been a big driver of the price plunge.

“Diamond prices have reacted according to the changing fundamental picture,” Mr Zimnisky said.

The correction started just as central banks began hiking rates.

“Diamond prices certainly are highly correlated with GDP growth,” Mr Zimnisky, a former Wall Street analyst, added.

Six diamond rings with different shaped stones sitting side by side.

One carat white diamond prices have fallen 30 per cent in the last two years.(Supplied: Rohan Jewellers)

Perth-based jeweler Rohan Milne has experienced the diamond downswing, and while he says there have been “significant drops here”, the price plunge hasn’t been as bad as in the US.

“They’ve seen upwards of 20 per cent or more drop, potentially, but I think here, we’re probably not seeing such big fluctuations in the price, just because the Aussie dollar has sort of cushioned some of that,” Mr Milne told The Business.

“When the Aussie dollar drops, at the same rate as say, the price of white diamonds in US dollars, we don’t see that big fluctuation because we’re still buying it in US dollars — so that sometimes keeps pace.

“That’s always been the case with gold as well.”

A man with a black apron stands in a jewelry workshop

Perth jeweler Rohan Milne has seen the effect of the diamond downswing firsthand.(Supplied: Rohan Jewellers)

The lab effect

A flight to affordability has been a feature of the diamond market for years, and that’s seen the rise of lab grown, also known as, synthetic diamonds.

In 2018, the biggest diamond trader in the world, De Beers, announced it would start selling the manufactured stones.

“The market was quite astonished that here was the company that spearheaded, maintained and promoted natural diamonds, and yet they had a spin-off of the synthetics,” diamond consultant, John Chapman said.

A baling man in a blue shirt uses a loop to inspect a diamond he is holding with tweezers.

Diamond expert, John Chapman has been working with the precious gems since the 1980’s.(
ABC News: Rachel Pupazzoni

Mr Chapman is a physicist and diamond analyst, who used to work for the Australian diamond company Argyle and is now respected worldwide for his expertise in the precious stones.

Mined, or natural, diamonds were made under extreme pressure at the earth’s core, sent to the surface by a volcano hundreds of millions of years ago (or in the case of the Argyle diamond mine in northern Western Australia, 1.3 billion years ago), buried under the earth’s surface and then dug out of the ground by miners.

Synthetic diamonds can be made in a matter of days – and to the untrained eye, it’s near impossible to tell the difference.

Mr Chapman said the rise in popularity for synthetic stones, bought at a much more competitive price, has also impacted the price of natural stones.

“It’s compelling for a consumer to be able to have something on their finger or in their ear, which to the unaided eye, or even with an aided eye, you can’t tell the difference. So that’s what the industry is up against”

A hand with some pliers picks up a seed of a LGD

Lab grown diamonds are produced from a seed and are near-impossible to differentiate by an untrained eye.(Supplied: De Beers)

Mr Chapman said the marketing juggernaut that was the entry of De Beers — the company that devised the concept of spending two months’ salary on a diamond ring — into manufactured diamonds may have been another marketing ploy.

“There are a few thoughts about what their strategy was there, because they were quite cheap, even for synthetics, they were at the lower end,” he explained.

“There was some speculation that it was a strategy to undermine all the other producers who would have to match their prices, and as a result, probably went broke — and therefore, it might have been a way to destroy the synthetic market.”

Whether there’s any truth to the speculation or not, lab grown diamond prices have indeed, crashed.

Mr Zimnisky’s data shows that in 2016 a one carat lab grown white diamond cost $US5,450 compared to a naturally occurring one carat diamond that sold for an average of $US6,538.

That price difference has now grown much wider.

In 2023 a one carat lab grown white diamond costs $US1,355 while a natural diamond sells for an average of $US4,726.

“The price differential between natural and man-made diamonds is so wide that the products are beginning to attract different customer bases,” he said.

De Beers has now exited the synthetic diamond engagement ring market.

Two images, a side view and a top down view, of the same gold ring with a white oval diamond

Both diamonds and gold are traded in US dollars.(Supplied: Rohan Jewellers)

A league of their own

Amid the downturn, there’s one corner of the market that defies the trend, because it’s a league few can afford to be in.

Pink diamonds from Rio Tinto’s now closed Argyle diamond mine in the Kimberley continues to fetch higher prices.

“Back in the day, when they were actually producing, they would say that they would produce a handful of pinks, cut, each year,” Mr Milne said.

“That’s rarity within rarity, no matter what, so you can start to see why they cost so much.”

The Argyle diamond mine accounted for more than 90 per cent of the world’s supply of pink diamonds during its nearly 40-year life.

But less than one per cent of the diamonds mined at Argyle, were pink.

Two years ago, Rio Tinto announced the final tender of the most prized pink diamonds, a year after the mine’s closure.

By ting