What Goes Around Comes Around: Are Recycled Diamonds A Major Part Of The Trade?
Since ancient times, about 5.2 billion carats of diamonds have been mined worth around $420 billion. That means there are 1.3 to 1.8 billion carats of polished stones that have been sold for $900 billion to $1.2 trillion. If a diamond is forever, then there are an enormous amount of diamonds out there that could be recycled.
For more than a century the diamond business has been built on the fact that the vast majority of merchandise sold never re-enters the market. A person’s diamond jewelry, with its powerful emotional baggage, is hardly ever sold off, but rather passed on to the children or other loved ones.
But the great financial crisis that struck during the fourth quarter of 2008 was so powerful and the austerity measures and cutbacks in government spending ever since have changed the rules of business. With the recession in the United States and in parts of Europe so severe, the need for ready cash has been translated into selling off valuables, and particularly jewelry.
Just as much gold is sold by private individuals selling off their jewelry to pawn shops, gold merchants and often the neighborhood jewelry store, the same has happened with diamonds. Since it can safely be assumed that a large proportion of the gold being recycled comes from diamond-set jewelry, diamonds are also involved and not just gold. There are potentially significant implications for the diamond trade.
Would someone propose marriage with what is basically a second-hand diamond? Is he going to celebrate a wedding anniversary, or purchase a special gift for a female member of his family with a piece of jewelry that came from an old piece of jewelry?
But the question is: would he know that it was recycled? There is little, if any, possibility of checking a diamond's provenance. Some of the diamonds come from heirlooms where the cut may be out of fashion and so they would be recut to suit today's tastes. The diamond would enter the polished diamond market after being bought by a wholesaler or jewelry manufacturer and would then make its way to the retail sector.
Many members of the diamond trade have stories to tell about diamonds re-entering the business. There are some Indian companies, for example, whose main expertise is buying diamonds from retailers and pawn shops in the United States and other countries. In New York, even close to the diamond district, there are signs offering to buy up diamonds.
Another problem is that it is not known how large an element is composed of recycled diamonds. With recycled gold, industry organizations know how much is coming back into the market because it has to be refined. But how can the number of recycled diamonds be quantified. The industry does not have reliable data and so it's a question of guessing trends.
Another issue is whether recycling has affected the perception of consumers towards the value of diamonds. Industry observers do not believe this to be the case. This is backed up by figures from De Beers in May showing a record $82 billion of diamond jewelry sales in 2017.