# De Beers, Monopoly, and Diamond Prices **URL:** \ **Category:** Factual Questions\ **Created:** [September 27, 2023, 1:29pm UTC](https://boards.straightdope.com/t/de-beers-monopoly-and-diamond-prices/990777 "2023-09-27T13:29:02Z")\ **Posts on this page:** 20\ **Page:** 1
**Author:** ![Hermitian](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/hermitian/32/470_2.png) [@Hermitian](https://boards.straightdope.com/u/Hermitian)\ **Post date:** [September 27, 2023, 1:29pm UTC](https://boards.straightdope.com/t/de-beers-monopoly-and-diamond-prices/990777/1 "2023-09-27T13:29:02Z")
So it seems like the standard explanation on the internet for decades has been “diamonds are not rare, it is just that De Beers keeps prices high by artificially restricting the market.” This always had me scratching my head because then where are all the diamonds being kept? If De Beers is artificially only letting a small number out, and they have been mining diamonds continuously, there ought to be a big big vault (Scrooge McDuck style) where De Beers executives dive into big piles of them. That seems like a difficult thing to keep a secret and it would need fantastic security. Is there any hint of where all these excess diamonds are? The next thing that has me scratching my head is that the De Beers monopoly has effectively been broken by mines from Canada, Australia, and Russia. Not to mention lab diamonds. If this is so, then why have prices not gone down? Hey, I was promised cheap diamonds if there was competition! I am not a De Beers shill, they are an awful company, but I am just trying to figure out why the common logic doesn’t seem to be matching with reality. ---
**Author:** ![Schnitte](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/schnitte/32/9033_2.png) [@Schnitte](https://boards.straightdope.com/u/Schnitte)\ **Post date:** [September 27, 2023, 1:38pm UTC](https://boards.straightdope.com/t/de-beers-monopoly-and-diamond-prices/990777/2 "2023-09-27T13:38:09Z")
De Beers did keep a large pile of diamonds in vaults underneath its corporate headquarters in Charterhouse Street, London: [NYT story](https://www.nytimes.com/2000/07/13/business/de-beers-halts-its-hoarding-of-diamonds.html), [Bloomberg story](https://www.bloomberg.com/news/photo-essays/2017-03-23/de-beers-diamonds-leave-london-headquarters-in-cost-cutting-drive#:~:text=The%20Vaults,main%20vaults%20in%20the%20basement). It doesn’t take up that much space - diamonds have a high dollar-per-cubic-inch density of value. ---
**Author:** ![ctnguy](https://avatars.discourse-cdn.com/v4/letter/c/6de8d8/32.png) [@ctnguy](https://boards.straightdope.com/u/ctnguy)\ **Post date:** [September 27, 2023, 1:39pm UTC](https://boards.straightdope.com/t/de-beers-monopoly-and-diamond-prices/990777/3 "2023-09-27T13:39:45Z")
As to your first question, yes, at one time De Beers had a stockpile of diamonds in its headquarters at 17 Charterhouse Street in London. Rumor has it that the vault is four levels deep below the building but who knows if that is really true. Supposedly there was at one time $5 billion of diamonds there. ---
**Author:** ![Hypno-Toad](https://avatars.discourse-cdn.com/v4/letter/h/b2d939/32.png) [@Hypno-Toad](https://boards.straightdope.com/u/Hypno-Toad)\ **Post date:** [September 27, 2023, 1:42pm UTC](https://boards.straightdope.com/t/de-beers-monopoly-and-diamond-prices/990777/4 "2023-09-27T13:42:15Z")
I’ve seen footage of the Russian diamond vault. I think it was a Bill Kurtis journalism show, so unless the Russians were pulling a Potemkin village operation on Bill, it was legitimately impressive. ---
**Author:** ![TRC4941](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/trc4941/32/6792_2.png) [@TRC4941](https://boards.straightdope.com/u/TRC4941)\ **Post date:** [September 27, 2023, 1:53pm UTC](https://boards.straightdope.com/t/de-beers-monopoly-and-diamond-prices/990777/5 "2023-09-27T13:53:49Z")
This is probably a dumb question, but who decided diamonds should be so expensive? Are they that rare? I don’t thing they’re very pretty. I’d rather have a colorful gem like a ruby, sapphire or emerald. ---
**Author:** ![Pleonast](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/pleonast/32/1183_2.png) [@Pleonast](https://boards.straightdope.com/u/Pleonast)\ **Post date:** [September 27, 2023, 2:07pm UTC](https://boards.straightdope.com/t/de-beers-monopoly-and-diamond-prices/990777/6 "2023-09-27T14:07:13Z")
> [@TRC4941](#): > > This is probably a dumb question, but who decided diamonds should be so expensive? De Beers. Really, they marketed diamonds and drove up demand. Engagement rings in general and diamond engagement rings in particular are recent phenomena, largely created by De Beers. ---
**Author:** ![Hermitian](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/hermitian/32/470_2.png) [@Hermitian](https://boards.straightdope.com/u/Hermitian)\ **Post date:** [September 27, 2023, 2:07pm UTC](https://boards.straightdope.com/t/de-beers-monopoly-and-diamond-prices/990777/7 "2023-09-27T14:07:52Z")
Interesting. Both of those links are paywalled, but I’ll take your word for it. So on the second half of my question: If there is competition, how come prices don’t come down? ---
**Author:** ![Si\_Amigo](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/si_amigo/32/2877_2.png) [@Si\_Amigo](https://boards.straightdope.com/u/Si_Amigo)\ **Post date:** [September 27, 2023, 2:21pm UTC](https://boards.straightdope.com/t/de-beers-monopoly-and-diamond-prices/990777/8 "2023-09-27T14:21:28Z")
> [@Hypno-Toad](#): > > I’ve seen footage of the Russian diamond vault. I think it was a Bill Kurtis journalism show, so unless the Russians were pulling a Potemkin village operation on Bill, it was legitimately impressive. So what is Russia, or any other sovereign country, getting by following DeBeers lead? I mean, why aren’t countries like the United States, Saudi Arabia, North Korea, China and Russia messing with DeBeers as a political instrument as they do with oil, rare earth metals, gold and silver? Is DeBeers the Illuminati? ---
**Author:** ![a6ka97](https://avatars.discourse-cdn.com/v4/letter/a/c2a13f/32.png) [@a6ka97](https://boards.straightdope.com/u/a6ka97)\ **Post date:** [September 27, 2023, 2:23pm UTC](https://boards.straightdope.com/t/de-beers-monopoly-and-diamond-prices/990777/9 "2023-09-27T14:23:56Z")
Multiple layers of middle men each taking their own cut? A local jewelry store owner claims he makes a trip to Antwerp Belgium each year to visit the diamond brokers apparently to get the best prices for his customers by cutting out the middleman. ---
**Author:** ![Hypno-Toad](https://avatars.discourse-cdn.com/v4/letter/h/b2d939/32.png) [@Hypno-Toad](https://boards.straightdope.com/u/Hypno-Toad)\ **Post date:** [September 27, 2023, 2:24pm UTC](https://boards.straightdope.com/t/de-beers-monopoly-and-diamond-prices/990777/10 "2023-09-27T14:24:26Z")
I suspect that it’s certain specific people in those countries that are getting something rather than the country as a whole. Could be straight up bribes or maybe a stake in DeBeers, which would give the decision maker an interest in keeping DeBeers profitable. ---
**Author:** ![Babale](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/babale/32/15666_2.png) [@Babale](https://boards.straightdope.com/u/Babale)\ **Post date:** [September 27, 2023, 2:26pm UTC](https://boards.straightdope.com/t/de-beers-monopoly-and-diamond-prices/990777/11 "2023-09-27T14:26:46Z")
> [@Hermitian](#): > > So on the second half of my question: If there is competition, how come prices don’t come down? If you flood the diamond market, your diamonds are worthless now, too. The barriers to entry are high enough and the number of competitors small enough that they can act as a cartel rather than a monopoly to similar results. ---
**Author:** ![Si\_Amigo](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/si_amigo/32/2877_2.png) [@Si\_Amigo](https://boards.straightdope.com/u/Si_Amigo)\ **Post date:** [September 27, 2023, 2:28pm UTC](https://boards.straightdope.com/t/de-beers-monopoly-and-diamond-prices/990777/12 "2023-09-27T14:28:56Z")
I suspect that the difference between pretty diamonds and the other commodities I listed are that they are of actual use for something. It’s like pretty diamonds are the original NFT’s or Bitcoin. ---
**Author:** ![Schnitte](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/schnitte/32/9033_2.png) [@Schnitte](https://boards.straightdope.com/u/Schnitte)\ **Post date:** [September 27, 2023, 2:30pm UTC](https://boards.straightdope.com/t/de-beers-monopoly-and-diamond-prices/990777/13 "2023-09-27T14:30:06Z")
There’s a non-paywalled Getty Images collection of photos of De Beers’ London headquarters (which, incidentally, is within five minutes’ walk from where I live, so I’ve often walked past it - but I’ve never been inside): [Where De Beers Sa Hid Its 5 Billion Diamond Stash Photos and Premium High Res Pictures - Getty Images](https://www.gettyimages.co.uk/photos/where-de-beers-sa-hid-its-5-billion-diamond-stash) As to the second question: Diamonds have long been associated with wealth in many cultures. They could certainly be cheaper than they are if competition were more open, but their high price is not entirely artificial; they’re not that cheap to produce - you have to move an awful lot of dirt to find gem-quality diamonds. In particular the large ones; their pricing is very progressive: A two carat diamond will cost far more than twice what a one carat stone costs. ---
**Author:** ![FlikTheBlue](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/fliktheblue/32/10972_2.png) [@FlikTheBlue](https://boards.straightdope.com/u/FlikTheBlue)\ **Post date:** [September 27, 2023, 2:32pm UTC](https://boards.straightdope.com/t/de-beers-monopoly-and-diamond-prices/990777/14 "2023-09-27T14:32:59Z")
> [@Pleonast](#): > > De Beers. Really, they marketed diamonds and drove up demand. Engagement rings in general and diamond engagement rings in particular are recent phenomena, largely created by De Beers. To me that sounds like it’s the customers that ultimately drove the price up. It’s one of those things where people are showing off their wealth based on how much they payed for something. In other words, they’re valuable because they’re expensive, not the other way around. ---
**Author:** ![Hypno-Toad](https://avatars.discourse-cdn.com/v4/letter/h/b2d939/32.png) [@Hypno-Toad](https://boards.straightdope.com/u/Hypno-Toad)\ **Post date:** [September 27, 2023, 2:46pm UTC](https://boards.straightdope.com/t/de-beers-monopoly-and-diamond-prices/990777/15 "2023-09-27T14:46:32Z")
Here’s a link to a good online book about the history of Diamonds: [Prologue - The Diamond Invention](http://www.edwardjayepstein.com/diamond/prologue.htm) ---
**Author:** ![bob\_2](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/bob_2/32/3341_2.png) [@bob\_2](https://boards.straightdope.com/u/bob_2)\ **Post date:** [September 27, 2023, 3:44pm UTC](https://boards.straightdope.com/t/de-beers-monopoly-and-diamond-prices/990777/16 "2023-09-27T15:44:46Z")
> [@FlikTheBlue](#): > > they’re valuable because they’re expensive, not the other way around. As you will discover if you take a $5k diamond to a jeweller and ask them to buy it back. ---
**Author:** ![Darren\_Garrison](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/darren_garrison/32/92_2.png) [@Darren\_Garrison](https://boards.straightdope.com/u/Darren_Garrison)\ **Post date:** [September 27, 2023, 4:00pm UTC](https://boards.straightdope.com/t/de-beers-monopoly-and-diamond-prices/990777/17 "2023-09-27T16:00:12Z")
One nice feature of diamonds (for the industry) is even though a diamond is forever, a big chunk of them only spend a half century or so above ground. Just think of how many millions of cut diamonds are right now wrapped around rotten meat six feet down. You want to mine diamonds? Mine graveyards. ---
**Author:** ![Chad\_Sudan](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/chad_sudan/32/4509_2.png) [@Chad\_Sudan](https://boards.straightdope.com/u/Chad_Sudan)\ **Post date:** [September 27, 2023, 4:04pm UTC](https://boards.straightdope.com/t/de-beers-monopoly-and-diamond-prices/990777/18 "2023-09-27T16:04:16Z")
How come more people don’t seek out diamonds on the secondhand market (even if some fraction are interred with their owners)? ---
**Author:** ![Hari\_Seldon](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/hari_seldon/32/5173_2.png) [@Hari\_Seldon](https://boards.straightdope.com/u/Hari_Seldon)\ **Post date:** [September 27, 2023, 4:13pm UTC](https://boards.straightdope.com/t/de-beers-monopoly-and-diamond-prices/990777/19 "2023-09-27T16:13:48Z")
> [@Hermitian](#): > > Both of those links are paywalled Here is a non-paywalled version of the Times article: > **[De Beers Halts Its Hoarding Of Diamonds (Published 2000)](https://www.nytimes.com/2000/07/13/business/de-beers-halts-its-hoarding-of-diamonds.html?smid=url-share)** > > De Beers Consolidated Mines will retreat from 70-year-old practice of manipulating prices by hoarding world's diamonds, and charge into ad-driven game of selling stones as branded luxuries; analysts link anemic stock performance and concern that... ---
**Author:** ![hogarth](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/hogarth/32/1773_2.png) [@hogarth](https://boards.straightdope.com/u/hogarth)\ **Post date:** [September 27, 2023, 4:23pm UTC](https://boards.straightdope.com/t/de-beers-monopoly-and-diamond-prices/990777/20 "2023-09-27T16:23:46Z")
> [@Si\_Amigo](#): > > It’s like pretty diamonds are the original NFT’s or Bitcoin. Also worth mentioning Veblen goods. > **[Veblen good](https://en.wikipedia.org/wiki/Veblen_good)** > > A Veblen good is a type of luxury good, named after American economist Thorstein Veblen, for which the demand increases as the price increases, in apparent contradiction of the law of demand, resulting in an upward-sloping demand curve. The higher prices of Veblen goods may make them desirable as a status symbol in the practices of conspicuous consumption and conspicuous leisure. A product may be a Veblen good because it is a positional good, something few others can own. > Veblen goods are named ... [Next page](https://boards.straightdope.com/t/de-beers-monopoly-and-diamond-prices/990777.md?page=2)