Podcast Episode 1: Lab Grown Diamonds, A Deep Dive

Troy: This is Troy with the Modern Jewelry Podcast. I've got a special guest today, Lex Atencio. Lex, welcome.

Lex Atencio: Thank you, Troy.

Troy: So today we’re talking, specifically about lab-grown or also known as man-made diamonds so Lex, tell me why I should listen to anything you have to say about diamonds. Give me a little bit of your back story.

Lex Atencio: You absolutely shouldn’t. I'm the worst person to talk to. No, I have been working with my dad John Atencio for just under 12 years now. But I obviously grew up around the business all the time. My dad started the business in 1976 and I was born in 1988.
So he was well on his way through his jewelry career when I came around and growing up, I was spending time with jewelers. With folks in the office that were bringing in diamonds, I was spending time in the stores. There are a lot of memories of me from other people of me crawling underneath the cases, while diamonds were being sold so I've always just been around it. And I've been in it like I said for 12 years. I've gone to Antwerp to work with a company that we get some of our diamonds from for about six months about eight years ago, so it's very ingrained in that process I learned how to grade rough diamonds, which is a completely separate way of grading diamonds, but primarily I was there to grade. Cut diamonds, I can go into history about them. They're very interesting and what they do, it made diamonds and looking at diamonds. A lot more in-depth, working with them, so I was really thankful to go spend the time in Antwerp, it really helped me understand the industry as a whole a lot better and then just on my side I do work sales, primarily, and I really, really love selling engagement rings and Center diamonds for couples. We sell a lot of different types of jewelry but bridal is something I just really enjoy. You really get to learn about the people that are going to be either buying the ring or receiving the ring and it's a lot of fun diamonds are just very, very personal for everybody, whether it's on an engagement ring or not, and so it's just it's really a lot of fun for me to tie people to stones and stones to people. It's silly to say but it's kind of like Harry Potter where the wand chooses you, you don't choose the wand. You know people are just drawn to different things and it's fun to try to figure that out so yeah that's kind of my take on diamonds.

Troy: Great, thank you for that background. Can you give us just a brief history, assuming that we know nothing, give us a brief history of lab grown or man made diamonds?

Lex Atencio: Sure, so humans have been able to make some form of manmade quote unquote diamonds for about the last hundred years but it wasn't until the 70s, when GE, General Electric, actually made some of the first gem quality bridle quality diamonds In a lab and when I first came into the industry 12 years ago there was very little lab grown diamonds really circulating the jewelry industry because they really didn't have the quality so from the 70s, through the 90s, they really were for industrial purposes, whether it be drills, which is a really common avenue for diamond particles or diamond dust to go towards bad you know non bottle quality diamonds get pulverized and used in that kind of equipment, as well as some computer equipment, so there was a use for lab grown diamonds through the later part of the 1900s but as far as for jewelry purposes, it really wasn't until the 2000s that they started to become something that people would say hey i'd like to wear that or that looks that looks like this, and this is a natural diamond so they've just gotten better and better over those decades and then quickly better and much more popular and much less expensive, I would say, in the last decade and so they've refined a lot of processes to make them more pure physically and visually and they've really taken off, I would say, in the last five years we've carried lab grown diamonds for about the last six years and then really around 2019 and into covid it's shot off like a rocket so they've been around it's not a new technology, it is just like any other technology, though, where they have gotten better and better and cheaper and cheaper until we're here today.

Troy: That's a great insight so with that big change in just the last couple years like you said in 2019. Was there a change in the technology of how they were made or any other change that that would have led to this increase the you know of, or was it simply the market started to accept them more?

Lex Atencio: No, I definitely think it was both of those things but in terms of the technology there's really two ways to make a lab grown diamond there's HP HT which is high pressure high temperature and there’s CVD which is chemical vapor deposition. HP HT seems more rudimentary, seems more basic, they essentially have these huge vices that they'll put a diamond seedling, which is essentially just a bunch of carbon into these these huge vices that will just generate extreme amounts of force to compact a diamond and they'll heat it up so it's very, very similar to what is occurring in the earth so they've figured out ways to use fewer chemicals in that process to avoid contamination and they've gotten better at creating these forms and these vices and that in turn creates a more pure and better looking diamond in terms of chemical vapor deposition; it's not like what happens in the earth it's essentially a plasma chamber with super heated superheated carbon kind of flowing around it looks like a stand up freezer that you'd find in someone's basement or garage is about that size or like a washing machine dryer side by side, about that size and it's got like a plasma reactor inside that's slowly growing over the course of about 30 days a diamond from scratch, they do have an issue with that to where whatever the surrounding material is for this cage that's holding this plasma, it will kind of take some of those atoms and put it into the diamond and so again as technology has gotten better they figured out different materials to use or not use so that they don't get into whatever they're trying to build up as far as the the lab grand diamond so they've just gotten much more successful at creating diamonds that don't have the impurities that they that they generally had, and I think that that's just been something over time the market has asked for more lab grown diamonds and therefore there's more people getting into the industry and when the more people getting into it there's more innovation so that definitely has a sort of synergistic quality. So it's both of the things it's the technology getting better and it's the demand increasing.

Troy: That's so fascinating to hear about this technology so am I to understand that just one of these machines going for 30 days will only create one diamond or does it create one large diamond that's then cut into smaller diamonds.

Lex Atencio: I've only ever seen the output from a CVD chemical vapor deposition machine and it looks like, in my memory, do you ever have you ever played with one of those things that is four by four maybe five by five little set of squares number one through 21 through 25 and you move it around like a little puzzle and it's got a little, you have to slide them around they can go up down left to right does that make that ring any bells to you try.

Troy: Yeah yeah you're trying to get it into a certain pattern.

Lex Atencio: Yeah, you want to put it in sequential order. It looks about like one of those so it's a small little tray that grows you know, a square of square diamonds so like three by three, four by four or five by five, and it will grow them in this sort of it's not particularly pretty it looks like a black kind of just looks burnt and goopi you know you're talking about something that's heated to 1500, 2000 degrees Fahrenheit and things get burned and there's impurities that burn off and get on there, but it looks I mean more or less like very ugly ice cubes in an ice cube tray much smaller, obviously I would say, the whole thing is maybe half the size of a credit card. So it'll grow those just ugly stones, which is how they come out of the ground as well they're not pretty stones, they don't look anything like they do once they're cut and then they send them off to a cutter and it's the same cutter that will cut a natural diamonds as well, everything after that point is and we will obviously I'm sure talk about this is identical to a diamond so they are diamonds, and that is very true and how they cut it and the steps afterwards and obviously, to the end consumer there, they are a diamond. A lot of people have that question “is that, is that a fake diamond”? It's not a fake diamond, it's a diamond one is just made in the ground one is made by humans.

Troy: understood and man i'd love to go down this technology rabbit hole. I’m a science NUT so I'll spare the audience that but I do want to cut to the chase and you've kind of already started to address it, but how different are lab grown diamonds from naturally created or mined diamonds?

Lex Atencio: They are not. That’s the simple answer so we have two gemologists on our staff and it's no shade thrown against them, they can't tell the difference. GIA which stands for the Gemological Institute of America, they are the most well known gem grading laboratory. In the world they're very, very strict. They only recently started accepting lab-created diamonds into their facilities, because they had to figure out the technology to tell them apart from natural diamonds so these are people that are at the top of the top in that industry and they needed to develop new ways of testing to tell them apart, so they are effectively the exact same thing, there is no difference you're looking at carbon versus carbon they wear the same they look the same they are atomically identical, the only way that we tell them apart and the industry as a whole like I said, there is some very expensive equipment that gets 99% positive results, so there is still 1% false positive or false negative with these pieces of equipment and I can explain where that 1% comes from but other than that the industry requires that the lab grown diamond producers inscribe on the girdle, which is the very, very edge of the diamond something to signify that this is the lab grown diamond so that anybody else can tell it apart because it's the same.

Troy: understood and I'm going to sound like I'm beating a dead horse here but you've looked very closely, probably at thousands of diamonds, in your career with a trained eye, can you spot any difference in the ones that you've seen?

Lex Atencio: I can look at an instagram ad and tell my fiance who, full disclosure, my fiance I proposed to her with a lab grown diamond but I can look at an instagram ad that she pulls up and says, look at this beautiful diamond I go that's actually a cubic zirconia or that’s a moissanite I can tell from a picture, a lot of times that those are the case and I can certainly tell in person, the difference between a diamond, a moissanite and a cubic zirconia. I cannot tell the difference between a lab diamond and a natural diamond and nobody can, it's not anything to do with my expertise. If you're just looking physically with your eyeballs there's not going to be any difference at all.

Troy: Got it, so I guess first off congratulations, I assume, she said yes?

Lex Atencio: She did, thank you. Yes.

Troy: Because you called her fiance, Okay and what drove your decision to go with the lab grown diamond for her?

Lex Atencio: So, to me, the difference between a lab grown diamond and a national diamond for someone trying to decide between the two is going to come down to the romance factor and the price. So by romance factor I mean does the fact that it comes out of the ground or on the flip side is the fact that it comes out of a lab make you feel positive or negatively so some people like the fact that a diamond coming out of the ground took hundreds of millions or billions of years to be formed in the earth, and you know the, I think it's Carl Sagan. I could be completely wrong that “We all come from space dust”, you know, this is a piece of our history on this planet on someone's hand. I mean it is really incredible that we have a stone that speaks to us and our lizard brains, which really is really what it is, I mean there is not a lot of logic behind how much we like jewelry and how much we like diamonds, but we like sparkly things, and if you really want that sparkly thing to be, have its history, coming from the earth then I absolutely cannot fault you for that, and on the flip side you might feel like the fact that it comes out of a laboratory quote unquote is either something that's pretty cool that we can, we've learned how to do that as humans, and we can replicate this natural hardest natural material known to man. We can replicate it in 30 days coming out of a lab that's pretty neat or some people might go “That's kind of cheesy. I don't like that. It makes it feel less special to me that it came from a lab”. So that's something that you can’t argue with and it's very emotional. There's not a lot of logic in jewelry for us as humans in general, it doesn't do anything for us other than makes us feel good and so if you want it to come from the earth or come from the lab that's a very personal decision and the other one like I said is price lab diamonds continued to be less expensive than natural diamonds and I think that that trend is probably going to continue. There's going to be an equilibrium that we hit at some point but natural diamonds are more expensive, there is a lot more cost to the consumer, but, as well as the planet, and so I guess their third one, is how do you feel about the ecological factor of where you're getting your diamond. We're constantly fostering natural resources for our own benefit, as humans so there's really no way around that but, if you want to avoid that as much as possible, obviously diamonds that come from the earth you're not going to do it nicely, there's only a couple handful of places in the world where diamonds show up in like river beds and things like that, it does exist, and you don't have to tear the river beds apart, you can go panning for diamonds, panning for gold, so you can find that, but the average person is not going to come across a diamond like that. On the flip side a lab diamond is certainly not free of its physical costs to the planet, they are extraordinarily energy intensive to create regardless of if you get CVD or HP HT and so that energy is going to come from somewhere there's simply not enough solar energy, that these facilities could capture that could offset what they need to create these diamonds and so fossil fuels are going to be used to create them not to make anyone feel bad about their lab diamond but it's still a very taxing process for the earth, one way or the other. So I try to be very upfront about that fact the FCC has also come after quite a few companies in the US for saying that their lab diamonds are ECO friendly, for the reasons that I stated they’re really, they're not super ECO friendly but you're not also scarring the earth trying to pull them out of you know a tunnel that's a mile deep so I think it's back to do you care where it comes from, and do you care about the price which people are going to care about those two things and there's no right or wrong answer for either one.

Troy: Those are all great insights and I had never really you know thought through the ecological impact not, not to mention that the human impact as i'm sure lots of people are involved in finding and mining diamonds and that there's obviously that factor as well. Yeah so let's talk customers. Do you see more and more customers choosing lab grown diamonds and is it couples choosing together, or is the end buyer the one making the decision on whether to go with lab grown so?

Lex Atencio: Like I said we've carried lab diamonds for about six years, I believe, and we have just seen steady growth of those sales. You know it started off very small. It started off when you bring it up with someone they would for lack of a better word flinch “What? I don't want a fake diamond” Well it's not a fake diamond and so people were really hesitant at first, it was a much more difficult conversation, and today fast forward there are about 50% of our overall diamond sales for bridal diamonds for Center stones so now, when we bring it up people have, for the most part at the very minimum they've heard of lab diamonds and they're interested in hearing more, up to, people have done all of their research and they say “I don't even want to hear about an natural diamond. I'm here to talk about labs” so customers are definitely becoming more educated about them. So I would say on a personal level anecdotally I bring it up. If somebody wants to hear about it and is interested, I will talk to them about lab diamonds if they don't have any interest in it, then I don't push it if it's a guy coming in, and we have that conversation I do always tell them that they should probably have a conversation with their significant other if they're in a place to do that. If it's something that they've been talking about, if it's a surprise that's obviously probably not going to happen, but you don't want to give something to the person that you want to spend the rest of your life with if they're totally against it one way or the other, so some spouses are going to be very pro lab and like “oh yeah let's have that conversation” if that's how you want to go great and others are very negative natural, some people have heard the lab diamonds enough that they go “I don't want something to come from the ground” and don't even look at it, so it really goes both ways, but I do think it's something that you should try to have that conversation with that person, if possible, to say “Hey is this something you're open to because I want you to be as happy…” you know you don't want to give someone a ring they look down at and don't feel amazing about. You want the whole product to give them that sense of I mean you're professing your love through a small piece of metal and a stone and so you want to make sure that you're not doing something that they don't look down and feel that love completely.

Troy: Yeah that's a great insight and I think it totally makes sense that every customer and every couple is going to have you know preconceived ideas and notions about them so it's good to, you know, find out what those are and help them, you know, find a diamond that's in line with what they're shopping for and we're definitely focusing a lot on you know engagement rings and diamonds, but talk to me about where you're seeing popularity and for example tennis bracelets and stud earrings are you seeing the growth there as well, for lab grown?

Lex Atencio: We are definitely seeing the growth there. The hard part about lab grown diamonds in other pieces of jewelry, so we are continuing to grow our selection of products that have lab grown diamonds. It's not as easy as doing a Center stone on an engagement ring because, as I mentioned, the only way to tell them apart is to inscribe the girdle and so there have been bad actors in the industry that have tried to sell lab grown diamonds as natural diamonds, the first case of someone being caught doing that was in 2013 not with us just in the United States and so we want to be very, very careful that our customers are getting what they paid for, and if they've paid for a natural diamond that they're not getting a lab grown diamond because lab grown diamonds are less expensive, you know they're not holding their monetary value which I would like to talk about later on, as well. They’re not holding that value like a natural diamond is, and so we have segmented our production to make sure that the jeweler's that are working on our pieces aren't going to have any sort of overlap or contamination of natural and lab grown diamonds and so we're only starting out very small with our other products that have lab grown diamonds. Just to make sure that we do it in a way that we don't accidentally have crossover so for our tennis bracelets and our studs, for example, we have two different settings depending on if it's a natural or a lab grown diamond it's coming from two separate jewelers that don't have the crossover and that way we can tell them apart in our consumer can tell them apart and not have to go try to get down and see this inscription on each diamond and obviously the smaller and smaller you go as far as the diamond size, the harder and harder it's going to be to see that inscription so we haven't done what's called mili diamonds any diamond that's under .2 carats, a fifth of the carat we don't have any diamonds in our jewelry that are going to be lab grown diamond that are that small just because we don't want to have like I said that risk of contaminating or having cross contamination of natural and lab grown diamonds so it's a little bit of a sticky situation but we're doing our best to provide quality products with both diamonds to our consumers.

Troy: That's really great to hear that you're you know approaching that with that much seriousness and commitment I can't imagine any dollar amount that's worth losing the trust of your customers, especially in a business, such as yours, where customers keep coming back, and you know it becomes a family tradition, you know these are passed down as family heirlooms. Yeah, I'm sure you want to maintain that trust.

Lex Atencio: Yeah.

Troy: Your father has been, you know, in this industry for, is it 46 years now.

Lex Atencio: 46 years yep.

Troy: So another question with regards to you know I hear celebrities oh so and so got you know their fiance a four carat pink diamond or yellow diamond. I've heard of salt and pepper diamonds, so all different kinds of chemical makeups to these diamonds. Is the same thing possible with lab grown?

Lex Atencio: I would say, in practice, it is possible. It's not quite the same though as natural. So I have seen, there are fairly easy processes right now in creating lab grown diamonds that can be either pink or blue which does occur in nature, very, very, very rarely pink and blue diamonds are extraordinarily expensive diamonds do come naturally in every color of the Rainbow just like sapphires do and different shades or different colors of those natural diamonds fetch different prices so red is the most rare the most expensive, followed by pink and blue and then there's greens and purples and then yellow which is fairly common. Naturally, is something that a lot of people have probably seen, at least in a natural state. So, in terms of lab grown diamonds like I said pink and blue is physically possible in some part of the manufacturing process. I don't know exactly how it works, but it is doable and they're out there, they are working on other colors. Other colors do currently exist, but their coatings so they coat the diamond in a chemical that will make it appear yellow or green or orange whatever color you want, but it's not a permanent. It's a coating and it can come off in heat, it can come off and sun, so I would not recommend if you see a colored lab grown diamond out there that's not white blue or pink, probably stay away because it's not going to last. The pink and blue is the actual physical attribute of those lab grown diamonds. They are working on different colors. I don't quite understand the technology of how they're making it work but they're certainly with yellow being the second most popular colored natural diamond. I know that they are working on trying to make that happen.

Troy: Great, thank you for that insight. So Lex, tell me what do you think the future will hold for lab grown diamonds and really diamonds in general?

Lex Atencio: I think that really brings up a good question and that's value. People will come in and want to talk about the resale value or the diamond holding value or a store value. As I mentioned, natural diamonds are holding their monetary value better than lab grown diamonds which continue to drop in price, just like any other technology, the more it's produced, the better we become at it, the more demand there is they're going to come down in price. Whereas natural diamonds are a finite resource and so they do hold their value monetarily better but whenever that question comes up with a customer I tell them the value of a diamond is not monetarily. You are buying this as a show of love and that's really all it is. The value is how good it makes you feel or how good it makes your spouse feel or whoever's receiving it. That's where the value is, and so you know if you bring money into that you're not really thinking the right way to be completely honest. It's a little bit like a car, as soon as you drive it off the lot it's depreciated so a diamond is very similar you're not going to get out what you put in unless like a car you're talking about something that's extraordinarily rare. So yeah your 1969 Ferrari, is going to be worth more today than when you know your uncle bought it in 1969 but the same will be said about a blue diamond or a pink or red or a giant diamond that goes up for auction, but other than that you're not buying a diamond because you want to get the money out of it later in life. We have a really great program at John Atencio where, if you buy a Center diamond with us, a diamond for an engagement ring, we’ll take it back from you at 100% of what you paid for it towards a new diamond so people do upgrade I would say upgrades happen maybe 50% of people will upgrade and they usually do it somewhere between 5 and 20 year anniversaries and so that's a pretty common thing and we’ll give you what you paid for it towards a new diamond which is really in my opinion, the best you could get because you're just not going to sell it on the open market to someone who's going to pay what you paid for it unfortunately. With lab grown diamonds, because the price is less than a natural diamond. You can get a lot more bang for your buck. So if you spend $10,000 on a natural diamond you’re maybe getting a carat and a quarter roughly carat and a half, maybe natural diamond if you were to spend $10,000 on a lab diamond you're looking at probably about three carats so you're getting a lot more size for the same amount of dollars and there's value there obviously a perceived value because it's a larger diamond, and so what we're finding is people come in with a budget and we we talk through that budget with them. There's a lot to diamonds that we haven't talked about which are the four c's color, cut, clarity and carat and those four c's are identical between lab grown diamonds and natural diamonds and so again, all things apples to apples you're going to get a larger diamond with the same color and clarity than you are a natural diamond and so the future of lab grown diamonds as I mentioned there's going to be an equilibrium. I don't think we've hit that point yet the prices continue to go down, they're not in freefall by any means, but it's a steady decrease in price at some point it's going to level off because the supply and demand will have an equilibrium and so I guess a more interesting question to posit would be, what is the future of natural diamonds, now that lab diamonds are becoming more popular because I do believe that obviously lab grown diamond sales are cutting into what was historically a market that only had one type of diamond and that's natural there's obviously different places in the world. That natural diamonds come from, but now that there's a competitor are the prices of natural diamonds also going to come down to become more competitive with lab grown diamonds? I personally believe yes. We haven't seen that. Actually the price of natural diamonds has gone up a little bit in the last couple of years so that's just my personal belief that they will. We're talking about a technology and as we get better at any technology, the price comes down. It's going to continue to do that, the question is, what is it going to do to the natural resource that it competes with.

Troy: Alright, thank you for those insights. I definitely feel like what you've covered has really brought me up to speed on lab grown diamonds, so I guess just one last question and a simple question, who should buy a lab grown diamond?

Lex Atencio: I don't think there's an easy binary answer for that. This type of person should buy this and that type of person should buy that. Back to a car and I bring this up when I talk to customers who are looking to buy with me. If you talk about a car or home a home is probably going to be the biggest asset that anyone is going to own in their lifetime. A car is generally the next one, although not everyone owns a car a lot of people lease a car. It's not the same, but you understand the point and a diamond ring is going to really be tied or may you know kind of go back and forth, depending on the person between their second or third biggest asset and so they're going to own this outright and it's a very expensive product, just like a car and just like a house and so when you talk to someone or or someone's looking at buying an engagement ring with a diamond. The conversation in my mind is very similar to a car and a house, so you can say to somebody you know you've got $500,000 you want to spend on a house, do you want a two bedroom one bath condo downtown with no garage or do you want a three bed, three bath out in the suburbs with a two car garage? They're going to cost 500,000. Maybe not in Denver anymore but they're going to cost $500,000 but they're very different and so what's important to you and the same with a car, if you want to go in, you can go buy a car a steering wheel and four wheels, but you might want to have five kids and get a minivan or you’re a bachelor and you get a convertible so it really just depends and again there's no right or wrong answer. It's something that’s very personal to the person who's purchasing it and what's important to them? What their budget is? What they want to again feel with the piece of jewelry that they're giving to whoever they're giving it to and so there's so many factors that play for people when they make that decision of whether to go lab or natural and that's what we're all here at John Atencio to to work with either the consumer or our partners in the industry to educate people and make them feel comfortable and make sure that they're getting something at the right value that makes them feel they’re with a trusted place with a trusted product and they feel great giving it to a loved one.

Troy: Well, I appreciate that so much Lex. You know it is a process, and I think you would be a great sherpa to have along on that journey as people are people are shopping, so if any of the listeners want that help want to shop with you or another member of the, the John Atencio team, how would they go about doing that?

Lex Atencio: Well, we have our physical stores here in Colorado. We are a Denver company. My dad started it in Fort Collins, Colorado in 1976 after he finished up at CSU, and we still maintain a store up in Fort Collins will always have one up there, but our headquarters is in Denver. So we have six doors along the front range here in Colorado but like I said, we do have really great partners out in the rest of the United States that the carrier pieces and just like our commitment to having the best products and the best diamonds, whether that's lab or natural we're really focused on having the right partnerships at other jewelry stores as well, and so wherever we're carried, I feel very confident that you're in the hands of someone who's going to treat you right and guide you and have the right product mix, whether it's jewelry or diamonds, for you to choose from.

Troy: Well, thank you so much Lex I have learned so much today appreciate all your time.

Lex Atencio: No, I appreciate you Troy. This was a lot of fun and I hope to continue talking to you, whether it's diamonds or other jewelry related topics. This was a blast and I look forward to talking to you next.

Troy: Thank you so much.

Lex Atencio: Thanks Troy.