Million-Dollar Turnovers to Nothing: The Crisis in Israel's Diamond Industry
Israel's diamond industry is in deep crisis due to plummeting demand in the East, market saturation, and the rise of lab-grown diamonds, forcing veteran traders to close their businesses.
"At 55, I have to reinvent myself. I am forced to close a business that loses money every month, and I have no idea what I will do tomorrow," is how a veteran member of the Israel Diamond Exchange describes the freefall of one of Israel's most prestigious industries. Having started in 1994, he reached his peak as an owner of a company with multi-million dollar turnovers, but today he lives on savings while waiting to sell his remaining stock.
He estimates that about 50% of traders have already left the exchange. "When you arrive today, it is pure depression — many offices are closed. I know a dealer who used to sell me merchandise for millions, and today he is a money changer. Others have become taxi drivers. In peak years, a young person could turn over 10 million dollars; today, demand in the East has dropped almost to zero," he says.
Causes of the Collapse
The collapse is the result of a chain of global events:
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The economic crisis in China, where diamonds were a status symbol, led to a loss of public trust as prices plummeted.
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The entry of Indian manufacturers led to long-standing inventory flooding.
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The industry's misguided adoption of synthetic lab-grown diamonds.
"The biggest tragedy is that we misunderstood and adopted synthetic diamonds. If they had honestly said it was a substitute, everything would have been fine. Calling an industrial product a 'diamond' was a huge mistake," he explains. He also points to a lack of government support: while Belgium secured 0% customs duty for exports to the USA, Israeli exporters face taxes that make competition impossible.
"The Great Identity Theft"
Ofir Naim-Doron, a veteran diamond dealer and arbitrator, calls the situation "the great identity theft." He argues that the industry, out of greed, allowed the use of natural diamond terminology, including the 4Cs scale (cut, clarity, color, carat weight), for synthetic products.
"When we rate a natural diamond, we measure a rare phenomenon created by nature billions of years ago. Applying the same scale to a lab product creates a false picture. A resource that can be produced in unlimited quantities at the push of a button will eventually erode to zero. Within five years, lab diamond prices have fallen by 80% to 95%," Naim-Doron clarifies.
Today, the world is moving toward strict legislation: France, India, and Russia are implementing laws that prohibit labeling synthetic stones as "diamonds" and mandate strict terminology to prevent consumer deception.
