Q. You recently published an article in IDEX about lab-grown diamonds being offered with GIA natural diamond certificates. How can that happen?
It was exactly nine years ago this week that I reported on Alibaba sending promotional emails to millions of potential diamond buyers, offering “CVD Lab-Grown Diamonds with GIA Natural Diamond Certificates” as a “Top Product of the Week.” The supplier, based in New Delhi, was essentially selling a counterfeit product bundled with a genuine GIA certificate—akin to offering a fake Rolex with a real Rolex authenticity guarantee.
The details were explicit: the seller claimed a weekly supply of 10,000 carats of CVD diamonds, priced at $100 per carat and up. Every stone above 0.15 carats came with a legitimate GIA report intended for a natural diamond. Working with the cooperation of both Tom Moses at GIA and the FBI in New York, I posed as a potential buyer and requested a list of certificates before making a multi-million-dollar purchase. I received a list of hundreds of genuine certificate numbers.
The question was, where did these certificates come from? Many exported diamonds to China did not require GIA certificates, because local regulations mandated a Chinese lab report for domestic transactions. Meanwhile, in the U.S., when a jeweler sells a tennis bracelet with 25 or 50 stones, customers typically do not receive 25 or 50 individual GIA reports. As a result, there is a market for these “dead” or redundant certificates, selling for $50–$100 each. Many chain stores use their own guarantees or certificates. Whenever a certificate has been separated from its diamond, it becomes worthless and useless. Keeping it in a drawer can only endanger your business.
I proposed a solution: simply shred these unneeded certificates and report the shredding to the GIA. They will keep a list of certificates removed from the business. Tom Moses was receptive and even seemed willing to consider offering an incentive for returning them. However, there are much bigger problems at hand. Not long ago, Chinese police confiscated 20,000 counterfeit GIA certificates—high-quality fakes, according to the GIA. If public trust in GIA certificates erodes, the consequences for the entire industry could be dire.
Q. How prevalent do you think this phenomenon is?
A prominent Indian diamantaire told me he believed it was not very widespread and was unaware of any recent practices. I suggested he check his company’s internal controls, because it might be that staff or secretaries are selling these surplus certificates on the side.
Every member of a WFDB exchange should do a quick audit of their certificate inventories. In most cases, it will be a false alarm but verifying costs nothing and can protect a company’s reputation. If a certificate your company originally ordered resurfaces alongside a synthetic diamond, the fallout could be disastrous.
Although I’m retired now and not as connected to the day-to-day market, I know this has been happening for at least a decade. It could blow up if the economy weakens or if divorces prompt people to resell jewelry. The industry should not wait for that day.
Q. You write that this is an issue the industry can prevent at no cost. If that’s the case, why isn’t it being done?
I’m not the best person to answer why common-sense measures aren’t always taken. But by highlighting the problem, the WFDB is already taking an important step. You started the ball rolling with the previous interview with Tom Moses. The WFDB membership, who constitute the majority of GIA’s clients, are the most vulnerable. By the way, this also applies to certificates from other labs, not just the GIA.
Q. According to your article, there is a mountain of “GIA certificates for potentially fraudulent use.” What is the source of these certificates?
They are likely sitting in the drawers of secretaries or staff members in large diamond companies. Based on my experience, the biggest hot spots used to be Hong Kong and Mumbai, though they could be anywhere by now.
Q. What do you think about the Kimberley Process?
The Kimberley Process (KP) was never intended to be a permanent institution, yet it’s still running after two decades. It has become a traveling roadshow for mid-level government officials of almost 90 countries to meet in exotic locations a few times a year — often without any meaningful agenda. WFDB members bear massive administrative costs that may have limited or no tangible benefit. In some source countries, bribes will help you to get the description you want. Meanwhile, there are no active conflict diamond hot spots, and the KP’s definition of “conflict diamonds” has become almost meaningless. The entire scheme is kept alive by arguments that it provides “prevention” or “consumer confidence,” but you’d be hard-pressed to find two consumers who know what the KP is without looking it up.
Q. Aren’t you being a little too harsh in your views?
No. Consider the current situation with G7 sanctions on diamonds from Russia. Theoretically, the KP could be used to enforce these sanctions—at least among countries that choose to comply—but instead, many nations are scrambling to find ways to prevent Russian diamonds from simply being routed through India or Dubai. It’s worse: look at up to date statistics. Russian diamonds are shipped to China – and then, through the KP system, get into the world. New trade routes may remain operating also after sanctions are lifted. The entire KP process is divisive and inefficient. With the current geopolitical landscape, it’s entirely possible that these sanctions get lifted before any new trade systems are even set up.
Q. Are you optimistic about our business?
Yes, I am. Paradoxically, I think lab-grown diamonds are one of the best things that ever happened to the trade. In the past, diamantaires behaved like addicts, lining up for De Beers sights even when they knew they would lose money. De Beers’s “Supplier of Choice” strategy forced many to venture downstream—an area outside of their expertise—into branding and retail partnerships. Wasting hundreds of millions on brands that failed. Who benefited? De Beers because also failed brands generated positive natural diamonds market visibility.
Synthetics gave our industry a real choice. The first one in almost a century. Ultimately, business success is about profitability, not whether a diamond is natural or synthetic. That’s especially true for retailers. Diamond prices are unlikely to skyrocket again; diamonds will increasingly be priced on a cost-plus basis, just like most other products. We’re already seeing hybrid pieces: a natural center stone paired with lab-grown side stones. Over time, the difference between natural and synthetic will matter less and less.
Diamonds will remain popular and possibly become even more so as they become more affordable. When De Beers realized this, they introduced Lightbox, but they arguably undermined their own business model in the process. Fifteen years ago, I told diamond mining investors in Toronto (PDAC) that diamond exploration budgets would dry up, because it makes little sense to invest hundreds of millions in search of new deposits, only to spend a decade getting licenses and conducting feasibility studies — all while the final market price remains unpredictable. In conclusion, we should focus on positive promotions for diamonds rather than negative campaigns against lab-grown stones. There is room for everyone, each with a distinct business model. If the trade functions like a normal business — transparent, cost-effective, and customer-driven — then great things will happen. Diamonds will have a future even after the natural mines are exhausted.
