Gold's historic rally through 2025 forced a reassessment of every hard asset in the portfolio construction toolkit. Diamonds were the obvious candidate to examine next: portable, culturally embedded as symbols of permanence, high value per gram. Our team spent three months analyzing whether the "diamonds are forever" thesis still holds for investment purposes.
Our conclusion is clear: it doesn't. The natural diamond market is in structural decline, lab-grown technology has shattered the pricing model, and diamonds fail every fundamental test that a legitimate store of value must pass. Here's what the data shows.
The Numbers Behind the Collapse
Before diving into the analysis, these four figures frame the scale of what's happening in diamond markets right now.
The Natural Diamond Market Is in Structural Decline
A standard 1-carat natural diamond that sold for roughly $6,000 in 2021 now trades around $4,200. De Beers' rough price index fell 20% in 2024, then another 12% in 2025. When you factor in stock rebalancing initiatives where De Beers sold low-demand assortments at steep discounts, the effective 2025 decline was closer to 25% year-over-year.
Q1 2025 was brutal. Average realized price for rough diamonds crashed 38% to just $124 per carat. Sales fell 44% to $520 million. Production was cut 11% and still couldn't stabilize pricing. For the full year, De Beers posted a $511 million loss, dramatically worse than the $25 million loss in 2024.
Anglo American, which owns 85% of De Beers, responded with three consecutive annual writedowns totaling $6.8 billion. The most recent, a $2.3 billion impairment disclosed in February 2026, slashed De Beers' carrying value to $2.3 billion. For context, that book value was $9.2 billion in 2023. Two-thirds of the value evaporated in three years.
The structural point that matters most: De Beers controlled over 80% of global rough diamond supply in the 1990s. That monopoly was the entire foundation of diamond pricing. Today, De Beers controls roughly 30%. The artificial scarcity that underpinned diamond valuations for a century no longer exists. The monopoly is broken, and it isn't coming back.
Lab-Grown Diamonds Shattered the Pricing Model
Lab-grown diamonds are not imitations. They are chemically, physically, and optically identical to natural diamonds. Same carbon crystal structure. Same hardness. Same refractive index. The only difference is origin.
The pricing trajectory tells you everything. In January 2020, the average 1-carat lab-grown diamond cost $3,410. By December 2024, it was $892. By Q2 2025, the wholesale cost for a round, 1-carat, IGI-certified lab-grown diamond had fallen to $191 per carat. One hundred and ninety-one dollars.
Lab-grown diamonds accounted for just 12% of engagement ring center stones in 2019. By 2024, that figure hit 52%. The consumer shift won't reverse. When buyers discover a chemically identical stone costs 83% less, the premium on "natural" origin erodes permanently. Younger buyers show little attachment to the distinction. They're choosing larger, higher-quality stones at a fraction of the price.
De Beers tried to fight this with Lightbox, their own lab-grown line, deliberately priced low to frame lab-grown as "fashion" rather than luxury. The strategy failed. Consumers saw lab-grown as identical to natural and bought accordingly. No amount of advertising spend overcomes an 83% price differential.
Five Reasons Diamonds Fail as Investment Assets
Even before lab-grown disruption, diamonds had fundamental problems as investment assets. Current conditions make them impossible to ignore.
A 1-ounce gold bar is perfectly interchangeable with any other 1-ounce gold bar. A 1-carat diamond is not. Color, clarity, cut, fluorescence, inclusions. Every stone is unique, making pricing opaque and liquidity fictional.
Gold trades 24 hours a day on multiple global exchanges with transparent pricing. Diamonds have no exchange. Pricing depends on dealer relationships and Rapaport sheets most investors can't access. Retail bid-ask spreads run 20% to 50%.
Buy a diamond at retail and it loses 30% to 50% of its value instantly. Try selling a $10,000 ring back to the jeweler who sold it. You'll get $5,000 to $7,000 if you're lucky. No legitimate store of value guarantees capital destruction at the point of purchase.
Gold generates no yield either, but gold has preserved purchasing power over centuries. Natural diamonds are down 30% since 2021. The asset isn't preserving capital. It's destroying it faster than what most investors are trying to protect against.
You can't lab-grow gold. You can't synthesize land. But you can produce unlimited quantities of stones that are atom-for-atom identical to natural diamonds at a fraction of the cost. Diamonds are the only "hard asset" in history that can be perfectly replicated by technology.
The Exception: Rare Colored Diamonds
One segment of the diamond market still holds an investment thesis, and it illustrates precisely why the broader market doesn't work.
Fancy Intense Pink diamonds larger than 3 carats appreciated 443% between 2003 and 2010, outperforming gold (400%), the Dow Jones (60%), and traditional real estate during the same period. The Graff Pink, a 24.78-carat pink diamond, sold for $46.1 million at auction. The Eden Rose, a 10.20-carat Fancy Intense Pink, fetched $13.3 million at Christie's in June 2024, exceeding its pre-sale estimate.
But these are one-of-a-kind historical artifacts. The closure of Australia's Argyle Mine in 2020, which produced over 90% of the world's pink diamonds, created genuine, irreversible supply scarcity. This isn't scarcity manufactured by a monopolist. Some of these stones exist in single-digit quantities globally.
The catch: this market requires $50 million or more in investable assets, deep specialist dealer relationships, and willingness to hold illiquid assets for 10 to 20 years. It's a collector's market, not a portfolio diversification strategy. The existence of this niche doesn't validate diamonds broadly. If anything, it sharpens the contrast.
Where Capital Allocators Should Look Instead
The "diamonds as store of value" thesis is dead for standard investment-grade stones. The forces driving this are structural and permanent. Lab-grown technology will only improve. De Beers' monopoly is gone. Consumer behavior has shifted decisively. The natural diamond industry's response of cutting production and seeking mergers is a managed decline strategy.
For investors seeking hard-asset exposure with genuine capital preservation, three alternatives stand out:
Fungibility, exchange liquidity, central bank demand of 863 tonnes in 2025, and a multi-thousand-year track record. J.P. Morgan projects $6,300 per ounce by year-end 2026. The structural bull case remains intact.
Fractional ownership of physical real estate through blockchain-based tokenization offers what diamonds never could: transparent pricing, secondary market liquidity, verifiable underlying assets, and rental yield.
Holding real assets across multiple legal frameworks reduces concentrated political risk. The Gulf, particularly the UAE, offers zero capital gains tax, USD-pegged currencies, massive infrastructure investment, and regulatory frameworks designed to attract international capital.
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Request Access Explore MembershipImportant: This analysis reflects data and conditions as of its publication date (April 2026). The situations described are evolving rapidly. Facts, prices, and policy positions may have changed materially since publication. Verify current conditions before acting on any information in this article.
Disclaimer: This article is published by Velora Partners for educational and informational purposes only. Nothing in this article constitutes investment advice, a solicitation to buy or sell any asset, or a recommendation regarding any investment strategy. All data and analysis reflect conditions as of the publication date and may change without notice. Past performance is not indicative of future results. Readers should consult qualified financial, legal, and tax advisors before making any investment decisions. Velora Partners and its affiliates may hold positions in assets discussed in this article.
Sources: World Gold Council, LBMA, J.P. Morgan Global Research, De Beers Group Financial Reports, Anglo American Annual Reports, Rapaport, The Knot Jewelry & Engagement Study, Christie's Auction Records, Knight Frank Luxury Investment Index, StoneAlgo Diamond Price Data.