Planet Money buys a mystery diamond

Summary

Detailed Summary of "Planet Money Buys a Mystery Diamond" Episode

Podcast: Planet Money
Host/Author: NPR
Episode Title: Planet Money buys a mystery diamond
Release Date: March 26, 2025

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Introduction: The Mystery Diamond Purchase

The episode begins with Jeff Guo introducing a peculiar purchase he made from Alibaba—a $137 diamond that appeared too good to be true. Seeking to unravel this economic mystery, Jeff sends the diamond to his Planet Money colleague, Sarah Gonzalez, sparking the investigation into its authenticity and the broader implications for the diamond market.

Notable Quote:
Jeff Guo [00:25]: "A little while back, I bought something online that frankly seemed too good to be true."

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Unboxing and Initial Impressions

Jeff and Sarah describe the packaging of the diamond, highlighting its deceptive simplicity. Despite the minimalistic white envelope and excessive bubble wrap, the diamond's appearance is strikingly shiny and satisfying, raising immediate questions about its authenticity.

Notable Quotes:
Sarah Gonzalez [00:46]: "It's like a white envelope."
Jeff Guo [01:26]: "Sarah, what is this? Is it a fake diamond or a real diamond?"

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Initial Testing: Clues Point to Realness

To determine if the diamond is genuine, Jeff and Sarah conduct a series of at-home tests:

1. Scratch Test: The diamond easily scratches a glass kombucha jar, suggesting high hardness.
2. Density Test: The diamond sinks in water, indicating high density typical of real diamonds.
3. Thermal Conductivity Test: The diamond feels unusually cool against the skin, consistent with true diamonds' heat conduction properties.

While these tests hint at authenticity, they aren't conclusive, prompting Jeff to seek professional verification.

Notable Quotes:
Sarah Gonzalez [04:06]: "It's not, like, super scientific... But it created, like, a gash in my glass kombucha jar."
Jeff Guo [05:06]: "It doesn't feel hot. Maybe warm."

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Professional Verification: The Gemological Institute of America (GIA)

Jeff takes the mystery diamond to the Gemological Institute of America (GIA), the gold standard for diamond verification. With the assistance of Dr. Ulrika Danensson, a senior manager of diamond research, they run sophisticated tests to confirm the diamond's authenticity.

The GIA's Analysis

Dr. Danensson conducts a series of advanced tests using a spectrophotometer and liquid nitrogen to analyze the diamond's atomic composition. The critical findings include:

• High Clarity: Indicating few imperfections, typical of high-quality diamonds.
• Spectral Signature: Presence of carbon atoms arranged in a manner consistent with genuine diamonds.

Notable Quotes:
Dr. Ulrika Danensson [10:01]: "Way that tells us this is diamond. 100%. This is a diamond."
Jeff Guo [10:24]: "Yes, Sarah, it is official. The Planet Money diamond is a real diamond."

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Natural vs. Lab-Grown Diamonds: Understanding the Difference

Despite the confirmation that the diamond is real, Jeff and Sarah explore whether it is a natural diamond or lab-grown. Dr. Danensson identifies unique imperfections:

• Black Specks: Tiny impurities indicating the diamond's growth environment.
• Silicon Traces: Suggestive of lab-grown processes, as natural diamonds typically contain nitrogen instead.

Additionally, under black light, a faint line reveals the diamond was grown in layers—a hallmark of lab-grown diamonds.

Notable Quotes:
Dr. Danensson [12:19]: "It's that imprint of how it grew... like a fingerprint."
Jeff Guo [14:48]: "We have a Kit Kat diamond. It's got like layers to it."

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The Economics of the Diamond Market

The conversation shifts to the broader diamond market dynamics. Jeff explains that while natural diamonds can retail around $5,000 and lab-grown diamonds around $1,000, his $137 purchase was inexplicably low.

Historical Context: De Beers' Monopoly

Sarah Gonzalez and Jeff Guo discuss how De Beers historically controlled diamond supply and demand through strategic marketing, establishing diamonds as symbols of eternal love. Despite losing its monopoly in the 1990s, diamond prices remained high due to sustained demand, particularly from the burgeoning Chinese market.

Notable Quotes:
Sarah Gonzalez [17:13]: "De Beers, the diamond company, they got us all to think diamonds are special."
Jeff Guo [17:53]: "It's forever. Yeah. So that marketing campaign really, really juiced diamond demand."

The Rise and Fall of Lab-Grown Diamonds

Over the past decade, lab-grown diamonds flooded the market, driven by technological advancements primarily in China. This surge led to a significant price drop, with wholesale prices plummeting by up to 90% between 2022 and 2023. Despite the oversupply, retail prices for lab-grown diamonds remained high—a puzzling economic phenomenon.

Notable Quotes:
Paul Zimniski [22:28]: "There really not anybody there. It's basically machines that are, that are growing diamonds."
Jeff Guo [22:53]: "Since then, the wholesale price for lab grown diamonds has absolutely crashed."

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Exploring the Diamond District: Real-World Market Challenges

Jeff ventures into Manhattan's Diamond District to understand retail pricing. He attempts to sell the $137 lab-grown diamond but faces resistance. The store associates reveal a reluctance to buy lab-grown diamonds at such low prices, highlighting a disconnect between wholesale costs and retail markups.

Notable Interaction:
Jeff Guo [29:54]: "So this is a lab grown diamond?"
George Mooks [29:56]: "It's not a natural diamond."

The Puzzle of Pricing and Markups

Despite the wholesale price being under $100, retail stores charge around $1,000 for similar lab-grown diamonds. This discrepancy raises questions about the sustainability and transparency of pricing strategies within the diamond retail industry.

Notable Quotes:
Sarah Gonzalez [24:15]: "There is this like disconnect for me because Paul is saying that the wholesale price for a lab grown diamond like this one is a hundred ish dollars. But if you walk into like any diamond store right now, this exact kind of diamond is not going to cost you $100 at a store."
Sarah Gonzalez [25:05]: "This is the big mystery in the diamond market right now."

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Theories Behind High Retail Markups

The hosts explore potential reasons for the high retail markups on lab-grown diamonds:

1. Collusion: Initially considered but deemed unlikely due to the vast number of independent stores.
2. Consumer Perception: Many consumers are unaware of the actual wholesale prices and perceive higher prices as markers of quality and value.
3. Psychological Factors: The longstanding belief, reinforced by decades of marketing, that diamonds should be expensive as symbols of love and commitment.

Notable Quotes:
Jeff Guo [25:24]: "But that isn't happening. And there are a couple theories why."
Sarah Gonzalez [27:14]: "Yeah, you don't want to seem cheap."

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Conclusions: The Value and Perception of Diamonds

Despite the economic irregularities, Jeff grapples with the personal value attached to the diamond. The inability to resell the diamond at a fair price leads to reflections on the intangible worth of symbols like diamonds, beyond their market value.

Notable Quotes:
Jeff Guo [31:33]: "No matter what anyone else says, this diamond is valuable to me."
Sarah Gonzalez [27:50]: "You just want something sparkly. At the end of the day, isn't that the only thing that really matters?"

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Final Thoughts and Episode Wrap-Up

The episode concludes with a sense of appreciation for the diamond's personal significance over its fluctuating market value. Jeff and Sarah reflect on their journey, acknowledging the complex interplay between economics, marketing, and personal meaning in the diamond industry.

Notable Quotes:
Sarah Gonzalez [33:23]: "I don't know. You should say it."
Jeff Guo [33:24]: "Doesn't matter. No, you take it. This is NPR. Thanks for listening."

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Production Credits

The episode was expertly produced by James Sneed, edited by Keith Romer with assistance from Jess Jing, fact-checked by Emma Peasley, and engineered by Kwesi Lee. Alex Goldmark served as the executive producer, with special thanks to Martin Rapoport.

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Additional Resources

Listeners are encouraged to subscribe to Planet Money+ for sponsor-free episodes, bonus content, and to support the show. Additional episodes exploring related topics, such as the economic struggles of working-class men, are available for deeper insights.

Notable Promo:
Jeff Guo [32:56]: "You can find all five episodes in one playlist, with more playlists coming."

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This episode of Planet Money offers a captivating exploration of the diamond market, blending investigative journalism with economic analysis to uncover the mysteries behind pricing discrepancies and consumer perceptions. Through engaging storytelling and expert interviews, Jeff Guo and Sarah Gonzalez provide listeners with a comprehensive understanding of the forces shaping the value of one of the world's most coveted gemstones.

Transcript

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[Jeff Guo]

This is Planet Money from npr. A little while back, I bought something online that frankly seemed too good to be true. And after seeing this thing with my own eyes, I knew I had to share it with somebody. My Planet Money colleague, Sarah Gonzalez.

[Sarah Gonzalez]

It's like a white envelope.

[Jeff Guo]

I had mailed this thing to her as. As a kind of proposal to, you know, co host this episode about this very strange economic mystery.

[Sarah Gonzalez]

And then more bubble wrap.

[Jeff Guo]

This package had come from the Chinese e commerce website, Alibaba. Alibaba is the kind of place where you can buy like two dozen lawnmowers straight from the factory.

[Sarah Gonzalez]

You gotta pop the bubbles.

[Jeff Guo]

But what I had bought, it's a lot smaller, oh, so satisfying, and a lot shinier.

[Sarah Gonzalez]

Jeff, what is this? Is it a fake diamond or a real diamond? Sarah, this is not a real diamond.

[Jeff Guo]

According to the website that I bought it off of, that is a real diamond. What? It is a one carat, colorless, ideal cut diamond. It's basically an engagement ring quality diamond. That's what they told me.

[Sarah Gonzalez]

Wait, this is like creme de la creme. Top of the top. Like, perfect cut, perfect clarity. Dude, it's sparkly.

[Jeff Guo]

Now, the retail price for a diamond like this, it depends. If it's a natural diamond, we're talking $5,000. If it's a lab grown diamond, we're still talking around $1,000. But that was not what Alibaba was charging.

[Sarah Gonzalez]

So how much did you pay?

[Jeff Guo]

Um, I paid $137. What?

[Sarah Gonzalez]

I mean, it's not a real diamond, right? There's no way.

[Jeff Guo]

Or is there a way? Hello and welcome to the Planet Money Diamond. I'm Jeff Guo.

[Sarah Gonzalez]

I'm Sarah Gonzalez. And Jeff, this is the start of a real mystery here. Or a scam. Is it a diamond? Is it real? How is it $137?

[Jeff Guo]

Well, today on the show, we're gonna answer all of those questions and dive into the economics of sparkly. Sparkly things.

[Sarah Gonzalez]

My favorite things.

[Jeff Guo]

Cause the market for diamonds, let me tell ya, it started to get very, very weird.

[Sarah Gonzalez]

Yeah, no, I think it's just gonna be fake diamond.

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[Sarah Gonzalez]

So, Jeff, when you sent me this diamond that you apparently bought sight unseen off of this website in China for $137, my first thought was, obviously, it's not real. Right?

[Jeff Guo]

Which is why we tried some experiments. So there are, like, tests you can do at home to see if something's a diamond or not. Do you want to try those?

[Sarah Gonzalez]

Oh, yes.

[Jeff Guo]

They're not, like, definitive or anything, but you can, like, get clues. No, not bite it. Don't bite the diamond.

[Sarah Gonzalez]

Like, smash it. The first actual test that you had me try was to try to scratch something really hard with this diamond of ours, right?

[Jeff Guo]

Cause diamonds, which are made of carbon, they are the hardest naturally occurring substance on earth.

[Sarah Gonzalez]

Jeff.

[Jeff Guo]

What?

[Sarah Gonzalez]

It literally created, like, a gash in my glass kombucha jar.

[Jeff Guo]

Oh, my God.

[Sarah Gonzalez]

Test number one, Kind of promising. It's feeling real.

[Jeff Guo]

Test number two, put a diamond in a glass of water. Diamonds are super dense, so they sink. But fake stones, a lot of them will float.

[Sarah Gonzalez]

All right, I'm dropping in the diamond. Let's see if it makes it clink.

[Jeff Guo]

Okay.

[Sarah Gonzalez]

It sank straight down to the bottom.

[Jeff Guo]

All the way to the bottom.

[Sarah Gonzalez]

Wow. It looks even sparklier in water. Test number three. You had me hold the diamond up against my cheek.

[Jeff Guo]

Right. So diamonds are incredible conductors of heat, so they're supposed to feel weirdly cool against your skin. Does it feel hot or cold? No, you feel nothing.

[Sarah Gonzalez]

It doesn't feel hot. Maybe warm. Okay, so the last test, I'm gonna say, not looking good for you, Jeff, but yes, the other two experiments were leaning diamond. Obviously, these tests are not, like, super scientific.

[Jeff Guo]

No, no, no, no. So do you want to know the real answer, Sarah?

[Sarah Gonzalez]

Oh, already? So soon.

[Jeff Guo]

Well, no, no, no. First I gotta tell you a story about how I figured it out.

[Sarah Gonzalez]

Of course. All right, let me get settled in here.

[Jeff Guo]

Okay, so before I ever mailed you the Planet Money mystery diamond, I actually took it on a couple adventures. We started out at the gia, The Gemological Institute of America. They're like the diamond experts. So a couple weeks ago, um. Okay, we're walking into the GIA I went to one of their labs in midtown Manhattan. Wow, this lobby is really pretty. For the diamond industry, the GIA is like the temple of truth. It's where people take their diamonds to get post poked and prodded and given a grade by expert gemologists. I met their executive vice president, Tom Moses. Hi. Hi. Tom Moses. Who was going to take me behind the scenes, which they don't usually do because the GIA inspects millions and millions of diamonds a year. So let's just say we were in the presence of a lot of dollar signs. And I've noticed we have a security guard following us. Do. Is that, is that just for me? Yeah, just for you. No, no, I'm, I, I'm, I'm kidding. Tom kind of was not kidding. The whole time I was there. I had to have a security escort. Anyway, Tom introduced me to the scientist who is going to be taking a look at the Planet Money mystery diamond.

[Dr. Ulrika Danensson]

Ulrike Danensson, senior manager of diamond research here.

[Jeff Guo]

Dr. Ulrika Danens Janensen has a PhD in physics, specifically in diamonds and how to identify them. So if anybody in the world could tell us what we had, whether it was a real diamond or a cubic zirconia or some newfangled, futuristic kind of fake diamond, it was going to be. Dr. Ulrika, should we, should we talk about this mystery diamond that I bought?

[Dr. Ulrika Danensson]

Yeah, please, let's.

[Jeff Guo]

All right. I've been showing it off, so it might be a little smudged.

[Dr. Ulrika Danensson]

That's okay.

[Jeff Guo]

On the table in front of us was a large microscope hooked up to a television.

[Dr. Ulrika Danensson]

So now taking your mystery diamond and looking at it under the microscope.

[Jeff Guo]

Oh, sorry. I think that's some cat hair.

[Dr. Ulrika Danensson]

Yeah, there's a little bit of cat hair there, a little bit of fluff, but that's not a problem.

[Sarah Gonzalez]

It wouldn't be a Jeff Guo story if cat hair wasn't involved.

[Jeff Guo]

My life is covered in cat hair. So after getting the cat hair off and the fingerprints of basically all my friends and family, Ulrika got her first good look at the Planet Money mystery diamond.

[Dr. Ulrika Danensson]

What I'm seeing here, at least, is that it's very high clarity.

[Jeff Guo]

Oh, that's good, right?

[Dr. Ulrika Danensson]

That's good.

[Jeff Guo]

Ulrika said, yeah, if this is a diamond, it is a very nice diamond. And to figure out if it is a diamond, she was going to pull out all the stops for us, run all of these fancy scientific tests. So she takes me to where the GIA keeps all of its most advanced equipment. It kind of looks like a room where NASA might assemble satellites like the walls are white, the ceilings are white. There's this H vac system that's filtering out every stray pinpoint of dust. And in one corner, there was this big beige cabinet. It was called a spectrophotometer. This machine was going to tell us what kinds of atoms the Planet Money mystery diamond was making. Made of. A real diamond, of course, is made of pure carbon. Now, to get our diamond ready for the big test, apparently we had to make it really, really cold.

[Dr. Ulrika Danensson]

We need to give it a little bath. It's going to go in liquid nitrogen, so. Liquid nitrogen?

[Jeff Guo]

I'm sorry, what? No one told me about this.

[Dr. Ulrika Danensson]

Yep, your. Your diamond is going to take a bath.

[Jeff Guo]

Now, Ulrica has this bubbling thermos of liquid nitrogen. She pours it over our mystery diamond, which is sitting in a little dish, and she loads it into the machine. Inside, a bunch of lasers turn on, and they're just like, blasting our sample, like, pew, pew, pew, pew, pew. Meanwhile, Ulrika is watching a monitor nearby, thinking about it.

[Dr. Ulrika Danensson]

And then the squiggles come up.

[Jeff Guo]

So the screen was showing this squiggly graph. It looked like a bunch of mountain peaks. And somewhere in those peaks was the answer. Ulrika points to one of them.

[Dr. Ulrika Danensson]

This one here.

[Jeff Guo]

She says that specific peak in that specific place, it tells us we have carbon atoms. Carbon atoms arranged in a very special.

[Dr. Ulrika Danensson]

Way that tells us this is diamond. 100%. This is a diamond. So we're not looking at a simulant.

[Jeff Guo]

Okay, so, okay, confirmed. We have a diamond.

[Dr. Ulrika Danensson]

We have a diamond here.

[Sarah Gonzalez]

No.

[Jeff Guo]

Yes.

[Sarah Gonzalez]

This is a real diamond.

[Jeff Guo]

Yes, Sarah, it is official. The Planet Money diamond is a real diamond.

[Sarah Gonzalez]

This is. This is a twist. I wasn't expecting this. But okay, hold on. There are diamonds, right? And then there are diamonds. You know, there's natural diamonds, and then there's like, the lab grown diamonds. So is this. Is this where we're headed?

[Jeff Guo]

Okay. Okay, so it is true that for the last 10, 15 years, people have been growing these beautiful diamonds in the lab. But I just want to be clear. Natural diamonds and lab grown diamonds, they are both real diamonds. They are chemically the exact same thing.

[Sarah Gonzalez]

I mean, tell that to the. To the real diamond crowd. But okay, I will say the big difference between natural and lab grown is still price, right?

[Jeff Guo]

So a natural diamond like this could sell for maybe $5,000, but if it's lab grown, the price is more like $1,000. And Ulrika's machines, they could actually tell us exactly what we had. Because every diamond, it turns out, is unique. It doesn't matter if they look flawless to the naked eye. Ulrika says they all have these little defects, these little impurities, little imperfections.

[Dr. Ulrika Danensson]

It's that imprint of how it grew, how it survived in the earth, or how it was produced in a laboratory.

[Jeff Guo]

Like a fingerprint or like freckles.

[Dr. Ulrika Danensson]

Yes, exactly. The placement of freckles on anyone who has freckles is slightly different.

[Jeff Guo]

So these imperfections can tell you how a diamond came to be. And when Ulrika examined our diamond, she saw three really telling imperfections. Number one, she saw, when she looked at it under the microscope, they're teeny.

[Dr. Ulrika Danensson]

Tiny little black specks.

[Jeff Guo]

Oh, I see them. Oh, but they're so small. So these specks, most diamonds have them are bits of stuff from the environment that get trapped inside the diamond when it's born, whether that's deep underground or in a lab. Now, the second imperfection she saw was when our diamond was in that fancy liquid nitrogen laser machine. Because no diamond is like 100% carbon. Most natural diamonds, they have a little bit of nitrogen in them. But our diamond, it had something else. It had tiny traces of silicon in it. You could see it on the chart.

[Dr. Ulrika Danensson]

That feature creates this spectral signature.

[Jeff Guo]

And both of these clues, they were pointing in the same direction.

[Sarah Gonzalez]

It's lab grown, not natural.

[Jeff Guo]

That's right.

[Sarah Gonzalez]

So the Planet Money diamond is a real diamond just grown in a lab. And Ulrika is like 100% sure about this.

[Jeff Guo]

She is 101,000% sure. She said the shape of those little black specks and the fact that they were silicon, those are really only things you see in lab grown diamonds. Okay, but now here is the coolest part. There is one more imperfection that Ulrica noticed. And the moment she saw it, she was like, oh, not only can I tell you this is a lab grown diamond, I can tell you exactly how, how they grew it.

[Sarah Gonzalez]

How do you even grow a diamond?

[Jeff Guo]

Is it amazing? There are actually two different ways that people create large diamonds in the lab. So one, you try to mimic how a diamond is made in nature. So you get this giant press. Some of them are 20ft tall, and you just like squish some carbon at really high temperatures. But there's also a newer method that's becoming really popular. It involves growing diamonds layer by layer in what Ulrika says is basically a fancy microwave oven. So when Ulrika put our diamond under this special black light and zoomed way in, she could actually see traces of that process.

[Dr. Ulrika Danensson]

One of the things that you'll notice is that there's a line going through it, A layer.

[Jeff Guo]

Under the black light, you could see a very faint line going through the middle of our diamond.

[Dr. Ulrika Danensson]

So as they were growing, probably they were struggling a little bit with their conditions. They weren't able to maintain it. They had to stop. They take it out, give it a little clean, polish it up, and then they grew a second layer.

[Jeff Guo]

So you're telling me that the top half and the bottom half of the diamond grew at different stages?

[Dr. Ulrika Danensson]

Yes, different stages.

[Jeff Guo]

We have a Kit Kat diamond. It's got like layers to it. Yes, yes.

[Sarah Gonzalez]

So it's not the perfect.

[Jeff Guo]

Whoa, whoa. No, no.

[Sarah Gonzalez]

Perfectly imperfect lab grown diamond.

[Jeff Guo]

I just want to be clear. I just want to be clear here. Okay. The layers are invisible. You cannot see it with the naked eye. This is a high quality diamond that happens to be lab grown.

[Sarah Gonzalez]

Okay. But here's the thing that still doesn't make sense. If you were to walk into a diamond store today and try to buy a lab grown diamond like this one, like our plastic Planet Money lab grown diamond, that would cost you like a thousand whole dollars. And yet you bought this lab grown diamond for $137.

[Jeff Guo]

Yeah. So that. That is the final mystery we're gonna try to figure out after the break. We're talking about the bizarre economics of the diamond. Foreign.

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[Sarah Gonzalez]

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[Jeff Guo]

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[Sarah Gonzalez]

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[Jeff Guo]

So before we talk about how we were able to get a diamond for $137, let's just take a step back to talk about where diamond prices in general even come from.

[Sarah Gonzalez]

Yeah, like why, why do we even pay whatever amount of money for a rock? Basically?

[Jeff Guo]

Yeah, exactly. Like the diamond industry is built around this kind of circular idea that people want diamonds because they're valuable, which makes diamonds valuable because people want them because they're valuable. And the deeper you get into the economics of diamonds, the weirder it gets. So to understand how our Planet Money diamond fits into all of this, we should start with natural diamonds. Like, why are natural diamonds so expensive? The modern version of that story begins with De Beers.

[Sarah Gonzalez]

De Beers, the diamond company, they got us all to think diamonds are special.

[Jeff Guo]

Yeah. So for many, many decades, the De Beers company, they controlled almost all the world's diamond mines. So they were able to keep the supply of diamonds really low. But more importantly, like you said, in the 1930s and 40s, De Beers launched maybe the most genius marketing campaign in history. They convinced all of us that if.

[Sarah Gonzalez]

You love someone, you get them a diamond.

[Jeff Guo]

You better have that diamond ring if you want to get engaged.

[Sarah Gonzalez]

Yeah, the diamond is forever. That's them.

[Jeff Guo]

It's forever. Yeah. So that marketing campaign really, really juiced diamond demand.

[Sarah Gonzalez]

Yeah. And of course, when you have high demand and you have a company that's like keeping the supply of diamonds low, that is obviously going to make the price of diamonds go up.

[Jeff Guo]

Exactly. But now the story gets weirder because by the 1990s, De Beers had started to lose its diamond monopoly. A bunch of competing diamond mines had opened up. De Beers later had to settle an antitrust lawsuit. So they didn't control the supply of diamonds anymore. But diamond prices still stayed high for decades.

[Sarah Gonzalez]

Yeah. Why is that?

[Jeff Guo]

I'm so glad you asked because I called up the expert. Can you just say your name for us and what you do? Yeah.

[Paul Zimniski]

So my name's Paul Zimniski and I'm an independent diamond industry analyst.

[Jeff Guo]

Paul Zimniski is like the diamond markets guy. He travels the world visiting mines and factories, collecting data on supply and demand. Paul says right around the time that De Beers was losing control over the supply of diamonds, they found a big new way to juice demand. They took the same classic playbook. You know, a diamond is something you give to someone because you love them, all that stuff. And, and they deployed that playbook in a huge untapped market. A country with more consumers than anywhere else in the world.

[Sarah Gonzalez]

China.

[Paul Zimniski]

China, you know, culturally, Chinese consumers really didn't buy diamonds prior to, say, the 2000s. So they were kind of marketing that as a new area to drive diamond demand. And, you know, it started to really catch on.

[Jeff Guo]

So in large part thanks to these new Chinese customers buying, buying into the story of diamonds and also buying a lot of diamonds, Paul says diamond prices actually hit a new peak in the 2010s.

[Sarah Gonzalez]

Okay, so now lab grown diamonds, though, they enter the mix.

[Jeff Guo]

Yeah.

[Sarah Gonzalez]

Does that not bring the price of natural diamonds down?

[Jeff Guo]

Yes, but here's where the diamond story gets even, even weirder. So these high quality, lab grown diamonds, they started hitting the market in a big way about a decade ago. And people did worry at the time, are these going to crash the price of diamonds? But because scientists like Ulrica can actually tell a lab grown diamond from A natural diamond instead. What happened is the diamond market split into two different markets. So if you look at the market for natural diamonds over the past 10 years, the price has come down maybe.

[Sarah Gonzalez]

20% because people who would have bought natural diamonds started buying the lab grown ones.

[Jeff Guo]

Yeah, that is a big part of it. But then you look at the market for lab grown diamonds and that has been just on a wild ride. So at first, lab grown diamonds were pretty expensive. Paul says if you went to the jewelry store, the lab growns, they were only 10% cheaper than natural diamonds.

[Paul Zimniski]

Essentially they were selling, you know, a lab diamond having the same maybe meaning, if you will, of a natural diamond.

[Jeff Guo]

So they were piggybacking off the sort of a diamond is forever and super expensive marketing stuff from De Beers.

[Paul Zimniski]

Absolutely, that's the way I see it. They're essentially riding on their coattails.

[Jeff Guo]

Like you remember the marketing for this, Sarah, right.

[Sarah Gonzalez]

It was like, be ethical.

[Jeff Guo]

Yeah. This is not a blood diamond. This came from a lab. Yeah. But the more and more people that started to buy lab grown diamonds, the more companies invested in perfecting the technology to make them to grow them bigger and cheaper. A lot of those breakthroughs were happening in China since China was already the world leader in making diamonds for industrial purposes. So Sarah, let me show you something that blew my mind. Remember Alibaba, the Chinese website where I bought the Planet Money diamond? Well, they don't just sell diamonds there. Take a look at this page.

[Sarah Gonzalez]

Okay, I see a machine. I see like a big machine with like knobs all over. It kind of looks like a big giant like ice machine.

[Jeff Guo]

Oh, it's a different kind of ice, Sarah. This is a chemical vapor deposition machine. This is basically one of those fancy microwaves Ulrich was talking about.

[Sarah Gonzalez]

Oh, so you can buy the thing to make your own diamond for just $158,000?

[Jeff Guo]

Yeah, yeah.

[Sarah Gonzalez]

Steal.

[Jeff Guo]

Do you want to buy one?

[Sarah Gonzalez]

No, I'd rather just buy $158,000 worth of diamonds.

[Jeff Guo]

I mean a lot of people don't did think this was a steal. Paul says over the past couple years, companies in India and China have been buying tons of these kinds of machines, building big new factories. Paul's actually visited some of them.

[Paul Zimniski]

There's really not anybody there. It's basically machines that are, that are growing diamonds. They'll just be, you know, rows and rows of them.

[Jeff Guo]

All these automated factories with their rows and rows of diamond making machines led to a huge upswing in the supply of lab grown diamonds.

[Paul Zimniski]

I would describe it as like a bubble and Production a bubble new supply. That really became clear in I would say 2022 and 2023.

[Jeff Guo]

Since then, the wholesale price for lab grown diamonds has absolutely crashed. In just three years, it's fallen like 90%. It's been this cataclysm for the diamond industry. Paul says some lab grown companies are going bankrupt also. You know how diamonds are also used a lot for industrial purposes? Some companies are actually pivoting back to that, just making diamonds for like saw blades and drill bits.

[Sarah Gonzalez]

Diamonds are a construction worker's best friend.

[Jeff Guo]

You know they are.

[Sarah Gonzalez]

Okay, so this is how you got our diamond for so cheap. You got it wholesale, direct from the supplier?

[Jeff Guo]

Yeah, exactly.

[Sarah Gonzalez]

And the normal wholesale price for a diamond is something like $137, I guess.

[Jeff Guo]

Well, you know, I did ask Paul about that. So how much do you think I paid for it?

[Paul Zimniski]

I would say the wholesale on that diamond is under $100.

[Sarah Gonzalez]

$100?

[Jeff Guo]

You said under $100. What? Yeah, apparently this is so you overpaid.

[Sarah Gonzalez]

For extra sparkly lavender battery made in a microwave diamond.

[Jeff Guo]

I know. Apparently this is like an open secret in the industry. Literally nobody that I talked to was surprised at all that I'd somehow managed to buy this diamond for $137. Apparently it was not even that good of a deal.

[Sarah Gonzalez]

Okay, but there is this like disconnect for me because Paul is saying that the wholesale price for a lab grown diamond like this one is a hundred ish dollars. But if you walk into like any diamond store right now, this exact kind of diamond is not going to cost you $100 at a store. It'll cost you like a thousand dollars.

[Jeff Guo]

Yeah, exactly. That is the biggest mystery in the diamond market right now.

[Sarah Gonzalez]

The markup.

[Jeff Guo]

Yes.

[Sarah Gonzalez]

I think we should buy one of these diamond making machines.

[Jeff Guo]

Yeah, I know, that's what I'm saying. So this is the big puzzle right now. Because for natural diamonds, the typical markup, like in a retail shop it's maybe 30%. But for lab grown diamonds, the markup right now is like 600%.

[Sarah Gonzalez]

Okay, logically this should not happen, right? Someone else should just open a store next door, sell the lab grown diamond for a lot less than $1,000, like $500, $300. They would still make a huge profit and then everyone else would cut their prices and all the prices would go down.

[Jeff Guo]

Right. But that isn't happening. And there are a couple theories why. So theory number one is maybe there's collusion, right? Maybe there's some conspiracy among diamond stores to not lower their prices but there are so many diamond stores, you know, in person. You can also buy them online. So it's kind of hard to imagine that they would all agree to this.

[Sarah Gonzalez]

Yeah, that doesn't seem like the likely scenario here.

[Jeff Guo]

Yeah. Yeah. So theory number two. This is about something maybe going on with customers. Think about when you buy a diamond, right. For most people, it's maybe once or twice in your life. So the price of diamonds is not like the price of gas. You're not paying attention to it all the time.

[Sarah Gonzalez]

Right. People don't really know what the price of diamonds are until they're at the store buying it. And when you see, oh, this one is $3,000 less than a natural diamond, you think like, wow, what a steal. You don't know that it should actually be even cheaper than that.

[Jeff Guo]

You don't know that it's actually $100. Yeah. So part of this is that the price of these lab grown diamonds has been changing so quickly, the wholesale price, but eventually you would expect consumers to catch on. And for the prices to come down.

[Sarah Gonzalez]

PSA news you can use. You're paying too much for your lab grown diamonds.

[Jeff Guo]

Well, unless you believe in the final theory. Theory number three, and this goes back to why diamonds are so expensive in the first place. You know the whole story that De Beers sold us decades ago, how diamonds are supposed to be this expensive symbol of love and affection. So there's a big difference between buying someone an engagement ring that costs $5,000 versus $99.

[Sarah Gonzalez]

Yeah, you don't want to seem cheap.

[Jeff Guo]

Yeah. You know, I think it's just psychologically hard to let go of the idea that a diamond should. Should be expensive. Like, on some level, it just doesn't seem right that you can just order a diamond like this for $137. I mean, just look at it. It's a diamond.

[Sarah Gonzalez]

I'm just gonna say this would not matter to me personally if it's as sparkly as the diamond I'm looking at right now. Like, I don't care if it's natural lab made. Don't you just want something sparkly? At the end of the day, isn't that the only thing that really matters?

[Jeff Guo]

Okay, so, Sarah, you know, I did try to embody that mindset. I did try to imagine this diamond as, you know, just a commodity in the cold, hard marketplace.

[Sarah Gonzalez]

Wait, what are we doing with our diamond? Did you try to sell our diamond?

[Jeff Guo]

Well, okay, okay, let me tell you one last story. So when I was in New York, I took our little diamond out for a walk in the diamond district to see its family. Great street lamps are shaped like diamonds. It's pretty cool. The diamond district is this one block in Midtown Manhattan where like 90% of the diamonds that come to the US pass through. It's like the Ellis island of diamonds. I was walking down the street and I saw so many shops selling diamonds, but also. But also buying diamonds. You guys buy diamonds? Yeah. Diamonds? Yeah. Where can I. I followed this guy wearing a sandwich board. It said, we buy diamonds, we buy gold. And he led me to this dark, kind of dirty stairwell. Just go up the stairs. Yeah. Okay. Oh, oh, here. Oh. Push, push. Okay. I walk in and the door actually locks behind me and they have me go into this small back room. The shades were down and there were these three kind of big looking guys just sitting around.

[George Mooks]

What's this old thing you got, bro?

[Jeff Guo]

This? That's my microphone.

[George Mooks]

You recording?

[Jeff Guo]

Yes. Is that okay?

[George Mooks]

I don't know. I mean, I prefer not. But if you recording, whatever, I don't care.

[Jeff Guo]

The guy behind the desk said his name was George Mooks. How do you spell that?

[George Mooks]

Now you're gonna ask me for spelling of my last name, bro? What do you.

[Jeff Guo]

I report, I gotta ask.

[George Mooks]

Come on, talk to me. Show me what you got.

[Jeff Guo]

All right, all right, all right, all right, all right, hold on. I handed over the Planet Money diamond, told him what kind of diamond it was, how many carats.

[George Mooks]

So this is a lab grown diamond?

[Jeff Guo]

Yes.

[George Mooks]

It's not a natural diamond.

[Jeff Guo]

No, I got you.

[George Mooks]

So you need to go to somebody that buys lab grown diamonds.

[Jeff Guo]

You don't even buy lab grown diamonds.

[George Mooks]

I mean, I do, but honestly speaking, I really don't because I don't have a customer for labs.

[Sarah Gonzalez]

Oh, oh, he didn't want our diamond.

[Jeff Guo]

Okay, no, he didn't even want it. Okay, so you wouldn't. So you wouldn't even buy this?

[George Mooks]

Not for me, my friend.

[Jeff Guo]

Not for you.

[George Mooks]

Cannot offer you anything. He's left for me.

[Jeff Guo]

But just then one of the other guys who's watching our conversation gets up from the couch and comes over.

[George Mooks]

Let me ask a question.

[Jeff Guo]

What do you want for that? Well, I. I paid 1 37. What do you pay?

[George Mooks]

You paid $137?

[Jeff Guo]

Yeah.

[George Mooks]

How much? You ask him?

[Jeff Guo]

This is one carat. Yeah. You're not going to get $50 today. You don't think so, like anywhere on the street?

[George Mooks]

Oh, nowhere. What you looking for?

[Sarah Gonzalez]

The stupid guy here, they're all smart.

[Jeff Guo]

Don't worry about.

[George Mooks]

Okay, he's telling you from experience.

[Jeff Guo]

Now this second guy, he said his name was Solomon. No last name. Are you. Are you the owner of this? No. CEO?

[George Mooks]

You like a KGB digging FBI over here?

[Jeff Guo]

I'm a reporter. I'm a reporter, so. All right. Come to do business here. I have no time for report. Okay. And you know what, Sarah? As I was standing there in that little room, seeing our diamond in the hands of some stranger, I realized something. I realized maybe I didn't want to sell this diamond.

[Sarah Gonzalez]

I don't know. I don't know if you didn't want to so much as they were not going to let you.

[Jeff Guo]

Fair. Fair. Fair enough. Fair enough. Anyway, I got our diamond back from Solomon. All right, thank you so much. Appreciate it. And I got out of there. Thank you.

[Sarah Gonzalez]

I'm glad they didn't let you sell it, because I have actually grown kind of fond of our little Planet Money diamond. Jeff, how dare you try to sell it.

[Jeff Guo]

I mean, I kind of feel the same way. You know, that's what I was thinking in that room. Like, me and this little diamond, we've been through things. From the lasers and the liquid nitrogen to our romantic tour of the diamond district. No matter what anyone else says, this diamond is valuable to me. There is a new perk for Planet Money plus supporters. You can now listen to some of our classic series from the Planet Money archive, like when we bought some gold to understand why it's been used as money for thousands of years. You can find all five episodes in one playlist, with more playlists coming. If you're already a Planet Money plus supporter, check them out. Also. Thank you. If you're not, sign [e-mail] you also get bonus episodes, sponsor free listening, and you know you're supporting the work of Planet Money.

[Sarah Gonzalez]

This episode was produced beautifully by one of the sparkliest producers in the business, James Sneed, Planet Money's true diamond. It was edited by Keith Romer with help from Jess Jing, fact checked by Emma Peasley and engineered by Kwesi Lee. Alex Goldmark is our executive producer.

[Jeff Guo]

Special thanks also to Martin Rapoport. I'm Jeff Guo.

[Sarah Gonzalez]

I'm Sarah Gonzalez. Yeah, go for it.

[Jeff Guo]

You say it, right?

[Sarah Gonzalez]

I don't know. You should say it.

[Jeff Guo]

Doesn't matter. No, you take it. This is npr. Thanks for listening. Are we overlooking the challenges facing men without college degrees? Richard Reeves thinks so. There are a lot of guys out there who are actually poorer than their dads. Reeves heads the American Institute for Boys and Men. Have we updated our view about the role of men as crit quickly as we've changed the economy around them. And the answer is no. That's from a recent Planet Money bonus episode, a look at the economic and cultural struggles of working class men. To hear it and get sponsor free listening, Sign up for NPR just go to plus.NPR.org.