This episode explores the surprising economics of the diamond market, specifically focusing on the dramatic price discrepancies between lab-grown and natural diamonds. The hosts begin by showcasing a lab-grown diamond purchased from Alibaba for $137, far below its expected retail price. Against this backdrop, they conduct home tests and then send the diamond to the Gemological Institute of America (GIA) for expert analysis, revealing it to be a high-quality lab-grown diamond with unique imperfections indicating its manufacturing process. More significantly, the discussion pivots to the historical influence of De Beers in controlling diamond supply and shaping consumer perception, and how the rise of lab-grown diamonds has created a bifurcated market. For instance, while the price of natural diamonds has decreased due to competition, the price of lab-grown diamonds has experienced a wild fluctuation, with a recent 90% crash in wholesale prices due to overproduction in China. This leads to a discussion of the massive markup (600%) in retail prices for lab-grown diamonds, exploring potential explanations like collusion or consumer unawareness. Ultimately, the episode highlights the disconnect between the wholesale and retail prices of lab-grown diamonds, leaving the listener to ponder the future of this rapidly evolving market and the enduring power of marketing in shaping consumer perception of value.
