Diamonds for most Americans evoke visions of luxury and romance and are almost always the traditional go-to precious stone for engagement rings. The good news is that no matter how strapped for cash you are, you could probably afford one right now.

 

Chances are, I don't have to sell you on diamonds, since most Americans are in love with this precious gem and always have been. Diamonds make men into heroes, while nothing says to a woman ‘"I am deeply loved" than a sparkling stone that required millions of years to make.

 

Americans account for 50 percent of all diamond sales worldwide. Sales grew 4.5 percent (to $36 billion) last year. The good news for you this holiday season is that diamond prices have consistently declined since 2011. In fact, the wholesale price of a diamond right now is close to its 2002 level. Can you say that about any other product?

 

But remember that not all diamonds are the same. The four Cs — color, clarity, cut and carat weight — will still determine the price you are going to pay. A dealer will tell you that there are diamonds and then there are "diamonds." The kind you see on Madison Avenue in the plate-glass windows of Bulgari or Cartier are still wildly expensive, but most of us could never afford those stones anyway. No, we shop at the discount stores or local jewelers, and there you will find great prices on most polished stones.

 

There are reasons for this. While demand for diamonds has been increasing, there is and has been an increasing glut of supply in the polished stones market, especially in smaller gems, worldwide. Companies, and in some cases, countries, have benefited from modern methods of production. This has made mining these stones easier, faster, and cheaper. Competition among companies in the sector for market share has also exploded. An attitude of "produce at any price" has permeated the industry, resulting in everyone getting hurt.

 

Companies such as De Beers, a unit of Anglo-American Corp., which is considered the premier diamond company in the world, at one time could dictate not only the price of its diamonds, but the amount of stones each of its distributors must buy. No longer.

 

Those distributors who cut, polish and trade the rough diamonds have been squeezed the most. They are in the middle, between the mines and the end buyers, the retail jewelry chains. These chain stores, aware that there is a mountain of these gems available, have reduced the inventory they are willing to hold at any one time. In addition, not only have they held the line on price, but have actively negotiated prices downward as the glut grows worse. 

 

As a result, the middleman's profits have evaporated. Banks have stopped offering lines of credit to them. The situation has gotten so bad that distributors have simply refused to buy any more diamonds from the mines. And just when the industry thought it couldn't get any worse, lab-grown diamond popularity has emerged.

 

Ever since the movie "Blood Diamonds" dramatically revealed the downside of diamond mining (child labor, pollution, etc.), more and more millennials are opting to buy the more politically correct alternative to earth-mined diamonds. It also helps that they are cheaper than their earth-bound cousins. So far, sales account for only 2 percent of the diamond market but it is growing quickly.

 

The technology is such that most lab gems are on the smaller size (1.5 to 3 carats) and are in the E-F color range with VS quality. And no, you may never see them displayed in Tiffany's, but then again, as technology improves and consumer preferences continue to change, you just might. All of which just presents yet another hurdle for the people who mine, polish and sell "a girl's best friend."

 

And while I do not revel in an industry's misfortunes, it does present an opportunity for you, the reader. Sure, you may find that buying that diamond still sets you back a bit more than you were originally willing to spend, but take it from me, she/he is worth it. The returns on your investment are going to last you a long, long time. And Black Friday is just around the corner!