Diamond-makers mining for new markets have made a lucrative discovery: the younger generation is crazy about diamonds. From the ostentatious bling flashed by hip-hop artists like P. Diddy to the colored gems seen on supermodels like Heidi Klum, diamonds are taking on a new sparkle in the world of fashion.

According to industry watchers, the diamond fad isn't just for celebrities. Young brides across America are showing a new willingness to break the bank to brandish rings twice the size of what their parents wore. The Gemological Institute of America has reported a 41 percent jump since 2000 in the number of two-carat-plus diamonds that it processes. And while size matters to today's young consumers, fancy colors are all the rage; rare grades of pink and yellow diamonds are showing up in stores with greater frequency. Diamond-makers mining for new markets have made a lucrative discovery: the younger generation is crazy about diamonds. From the ostentatious bling flashed by hip-hop artists like P. Diddy to the colored gems seen on supermodels like Heidi Klum, diamonds are taking on a new sparkle in the world of fashion.

But can anyone really afford these fashionable little stones? Conscientious shoppers convinced that the current diamond renaissance is little more than a debt trap might be surprised at a new development in diamond pricing: Discounters are getting in on the action. Wholesale-club operator Costco delighted customers recently by offering a 10.6-carat, yellow-diamond ring for $180,000--about $84,000 below the ring's estimated value. Sam's Club responded with a 3.74-carat pink diamond pendant set in platinum and priced at $560,000. While such "discount items" are out of range for the average consumer, other price-sensitive luxury offerings are gaining momentum. Punk-fashions pioneer Vivienne Westwood is reportedly designing a line of affordable jewelry for the masses, starting as low as $525.

Applying "low-price" strategies to high-end goods is sure to capture the attention of consumers. And if the cost-slashing business model used successfully on duct tape and kitchen wares can work equally well with luxury goods, companies like Costco and Blue Nile will be giving reputable jewelers like Tiffany a run for their money.