Why Are Diamonds So Expensive?

By Victoria Simpson on May 24 2020 in Answer

This is a collection of 0.02, 0.03 and 0.04 carat solitaire diamonds weighing in total 5.36 carats, costing just under $4,000. Image credit: Swamibu/Wikimedia.org
This is a collection of 0.02, 0.03 and 0.04 carat solitaire diamonds weighing in total 5.36 carats, costing just under $4,000. Image credit: Swamibu/Wikimedia.org
  • White diamonds are actually not that rare on Earth.
  • Coloured diamonds may be mined out soon, and are worth more than white diamonds.
  • A diamond takes billions of years to form in the ground.

Have you ever purchased a diamond ring? If so, you have likely noticed the price tag that comes with it. Buying a diamond is not like purchasing a new pair of shorts at the mall. Diamonds can be extremely expensive. Knowing this, you may conclude then, that diamonds must be difficult to find on Earth, and this is surely what makes their price go through the roof. If many people want something but it is rare, that item grows in value as it has a high market demand.  

When it comes to diamonds, however, the real situation is a little different. There was a time when these gems were both difficult to find and cumbersome to extract from the ground. According to National Post.com, historically, diamonds could only be found in India and to get their hands on them, workers had to sift the stones out of the banks of rivers, which was not an easy thing to do. 

The global scene is now different, however. More diamonds were discovered, and there are now actually boat loads of diamonds that can be easily accessed on our planet. In fact, you may be surprised to learn that diamonds are presently some of the most common gemstones around. Other precious stones such as rubies, sapphires and emeralds are actually far more rare in nature. 

So, how did the lowly diamond acquire its sky high value? The story has to do with market control and some successful promotional advertising. 

De Beers Propaganda 

De Beers is an international jewellery corporation that focuses on diamond exploration and has been around since the late 1800s. During its beginnings, diamonds went from being a rare commodity to being numerous and relatively easy to come by. This is because, during the late 1800s, a large trove of diamonds was discovered in South Africa. In order to keep diamond prices high, the owner of De Beers at the time, Cecil Rhodes, bought up a majority of small diamond mines in South Africa. In doing so, he developed a monopoly over the diamond industry. This gave him the opportunity to control how many diamonds reached the market in any given year, keeping demand high, and supply low. 

In addition to forming a monopoly, Rhodes also began a strong advertising campaign, by coining the slogan, “A Diamond is Forever,” and popularizing the idea that in order to show your commitment and affection, you should spend two month’s salary on any engagement ring. 

This “propaganda” was extremely effective. It convinced people to pay large sums of money for a seemingly precious jewel that was actually not so special. 

Is a diamond nice to look at? Certainly. Some say, however, that it is never actually worth what you pay for it. In this way, buying a diamond is unlike buying gold, which is seen as a good investment, as well a chance to acquire something pretty. 

Colored Diamonds

The Hope Diamond. Its deep blue coloration is caused by trace amounts of boron in the diamond.

According to sellers in the diamond business, a diamond’s value comes down to what are called the “four C’s”. These include carat, color, clarity, and cut. All of these characteristics are important when appraising a diamond. The carat of a diamond refers to its weight. A stone has good clarity if you can see through it well and it is free of defects, and the cut refers to the diamond’s symmetry and how polished it is. These elements work collectively to determine a diamond’s worth. 

There is another characteristic that is extremely important when appraising a diamond’s value and that is its color. 

As stated above, white diamonds- the ones we typically think of- are not that rare, and as such, their value is inflated on the market. There are other diamonds, however and these are much more valuable, and they actually are quite rare. In fact, some say they may soon be mined out on Earth. Colored diamonds are said to be in short supply on Earth. This group includes those diamonds that are yellow, brown, red, pink, green, blue, and purple. These gems are mined around the world in Angola, Australia, Borneo, Brazil, Central Africa, the Democratic Republic of Congo, Sierra Leone, South Africa, and India. If you do manage to get your hands on one of these, definitely keep it in your possession. Its value will undoubtedly soar in years to come. 

Human-Made Diamonds

Are the only diamonds those we find in the ground? Just like most of the other things in our lives, diamonds are also now made in factories. Surprisingly, man-made diamonds are created in labs, offering an environmentally friendly option in jewellery production. In order to make diamonds, companies take carbon and compress it enough to recreate the process that happens naturally in nature over billions of years. Amazingly, it only takes about two weeks in a lab to make a diamond. Yes, these constructed diamonds are cheaper than those found in nature, but they are still true diamonds, in a sense, and no one will know the difference, sitting next to you on the bus. 

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