How common are diamonds really since De Beers keeps supply at artificially low levels? As a ballpark what would they be worth if there was no cartel? 1/10th? 1/5th? I know they are useless (except for industrial purposes) rocks so that is a factor but people will still pay for something that is considered scarce.
How does De Beers stop independent miners from flooding the market?
What about synthetic diamonds, has De Beers done anything to stop these yet? I know synthetics already exist and make up alot of the diamonds that end up on cutting saws, but gem quality synthetics are not far off.
Someone other than myself will have to address the cartel and economic aspects of your question.
But diamonds, as the substance harder by at least a couple of orders of magnitude than any other naturally occurring substance and one of the hardest ones that can be produced, and relatively rare in occurrence, have a major importance in industry. While “diamond dust” – smaller diamonds and remnants from the cutting of diamonds – is relatively common and used as abrasive, industrial diamonds of equivalent-to-gemstone size have a number of important uses and supply does not meet demand.
So the “useless except for industrial purposes” is a bit less than accurate. One might say the same of, e.g., sulfuric acid or tungsten, with about the same misleading implications.
Thats not inaccurate, you just said yourself they are useful for industry. What other use do they have aside from industry? Diamonds are a rock people buy because they are rare, but they may not be nearly as rare as they are artificially made out to be.
You kinda answered your own question there. Those who are not part of the DeBeers cartel are disorganized. DeBeers controls the most productive mines in the world, and have a huge back-supply of gem-quality diamonds. If any upstart tried to sell any quantity of diamonds on the open market at reduced prices, DeBeers just releases enough stones to depress the market, driving the upstart into bankruptcy. The Russians tried this back in the 70s, IIRC. Nobady, and I mean nobody, has the diamond reserves of DeBeers. They can take the hit of depressed prices for a few years…others can’t.
You can find stones that didn’t come from deBeers mines, but you won’t get a bargain price on them. I know…the wife’s engagement ring stone came from an independent mine in Ghana.
There have also been allegations that DeBeers puts pressure on any big diamond purchaser who starts to buy diamonds from independents. Basically with the threat that DeBeers will ‘cut them off’ (refuse to sell to them) if they continue to buy from the independents.
And it would be tough for any big purchaser to depend entirely on the independents, since they are indeed disorganized, and lack the vast stored backup supply that DeBeers has.
You all have read Cecil’s column from last week no doubt. I know that doesn’t
I recall that not too long ago (2-3 years?) that a major vein of diamonds in Russia was discovered. People were touting the downfall of DeBeers until, lo and behold, DeBeers bought the mine for surprisingly little.
An order of magnitude is 10x. A couple make 100x. IIRC diamond is 10 on the Mohs scale of hardness and there are other substances harder than 9 … ah, here we go . Carborundum is 9 and diamond is 10, four times as hard. So not even half an order of magnitude.
Here is an article about the lawsuit they just settled here. They may soon be able to sell direct to the US.
And here is a good summary of how the cartel works.
I will find some numbers and be back. I know their stranglehold over the diamond market has eased in the past few years. With the Russian and Canadian mines and the influx of the synthetics their market share has dropped. A year or two of competition will not hurt them, but if they choose to do business directly in the US, that may change the face of the diamond business.
One more link. This is well written and a quick read for 17 pages and will give a great overview of DeBeers. It is a little old, but the salient points still hold.
In addition to the structure of the De Beers cartel, the main force behind this
dominance for many years has been the role played by governments. It is possible for a cartel to continue if there is a governing body above that can enforce agreement. Through continuously changing its stance toward corporations, the South African government and other governments essentially protected the companies that were providing them with easily and centrally collected tax revenues.
My point was simply that any substance is useful either industrially, ornamentally, both, or neither.
Your question seemed to discount diamond as an industrial substance, focusing on the ornamental value, and I simply wanted to stress that diamond was in fact an important element in industry, over and above the jewelry trade.
Until the advent of lasers, ruby was valuable principally as a gemstone, not industrially. Cobalt has no major decorative uses, but rather is valuable as an industrial substance. I saw you classing diamond as “principally valuable as a gemstone” and wanted to correct that perspective.
As regards hardness, I’m aware that corundum is 9 and diamond 10 on Mohs’ scale – but I seemed to recall that diamond was in fact significantly harder than the implications of the scale, and would actually be somewhere around 26 if the scale were not arbitrary but based on a numeric measure – hence my “orders of magnitude” comment.
Also remember that diamonds are simply carbon, one of the most abundant elements on the planet. And synthetic processes have been created that come very close to creating “real diamonds” (not necessarily so difficult to believe when you realize diamonds are simply a carbon structure, find a way to make an exactly similar carbon structure and you’ve made a truly “real” diamond, just not one that was made in the earth’s crust and extracted via a mine.)
Compared to Au for example, diamonds will probably ultimately prove to be much less useful/valuable because gold is an element with very finite resources and gold has vast importance in industry.
As an example as to how much rarer gold is, all the gold in the world has been estimated to fit into a single cube with a 60 ft. side, that is if the gold is pure (24 carat.)
We have had a few threads about this: and the most fascinating things are the extremely clever way that De Beers has managed to promote diamonds as this ancient, must-have tradition - and also doing its best to suppress any second-hand trade in them - “A diamond is forever” etc. Diamonds as engagement rings are actually a relatively new, 20th century phenomenon.
Many couples make the tragic mistake of falling for this shit and thinking that at least the engagement ring is a sort of investment, that they could sell if times got hard. It isn’t. Diamonds are NOT like gold. Gold - historically - has held its value. It certain countries it’s been an extremely prudent investment, where currencies have collapsed.
But buy any diamond - get the best price you can - then try and sell it to a dealer. You’ll be lucky to get 33% of your original price back.
Yes - flawless, gem-quality diamonds are rare. The bigger, and whiter (yellow “champagne” or “golden” diamonds are literally worthless), and more flawless a diamond is, the rarer and more valuable it is - but this is more than reflected in its price. You’re still looking at a max 33% trade in - unless perhaps you bought a famous gem at auction that had historic value, eg the Koh-i-Noor.
I thought the yellow diamonds were the most valuable.
This article talks about a new way of making virtually flawless diamonds of gem quality. IIRC they state that the yellow diamonds are themost valuable.