And they now can get them at E-bay. The battle for the priciest rings (so the biggest caratweight) now seems to have been shifted to the box the ring comes in. Fancy jewellers are extremely reluctant to give out empty jewel boxes.
One of the things the article says is that the idea of “diamonds keep their value” is one that is purposely installed in the public’s mind, althoug it is factually untrue.
Or how about this brilliant gem of marketing strategy, that was coined when Debeers again wanted to market more bigger stones (after decades of marketing smaller diamonds from Russian mines, for which the "eternity ring " was invented:
So actual gem-quality diamonds, (not the silicon carbide ones) can be cost-effectively maufactured?
I’d always heard that it was too expensive to make them of significant size and that Debeers was scrambling to buy up the patents for any technology that might be used to mass-produce them.
Am I mistaken, misinterpreting, or just out of date?
I really would like to step in to say that “gem quality synthetic diamonds” aren’t going to break the DeBeers cartel. We have these already. It’s cheaper to make fancy colored synthetic diamonds than it is to mine them. I expect DeBeers will begin deprecating colored diamonds soon, even though they are rare in mined diamonds and should be more valuable.
Anyway, the problem with synthetic “gem quality” diamond is that, though it is transparent and sparkley, there are numerous lattice defects making the quality production output too low for industrial use. The lattice defects tend to improve “fire” though, making them more suitable for jewelry.
Point being: What will drive DeBeers out of business is when “gem quality synthetic diamonds” are available on the market as repurposed waste stream from the profitable production of optical/electronic grade synthetic diamond. As long as the main market for synthetic diamonds is jewelry, a market DeBeers controls, they will be able to undercut or devalue the product of any upstart competitor.
A used diamond is worthless because diamonds are used as a proxy for worth. A man who gives a fiance the exact same stone will get one reaction if she knows he paid six month’s wages for it for a brand new diamond, and another if she knows he got for $500 from a homeless guy to whose wife it used to belong.
Keeping diamonds expensive retains their value as proxies for this concept. It’s great for DeBeers. The intrinsic (industrial value) of an ugly stone is no less than a perfect one.
Women want expensive diamonds. The cartel is in the business of providing expensive diamonds, and keeps that meme alive, although it doesn’t require much to do so.
And the result is that women get what they deserve. Young husbands with enormous debts incurred for worthless trinkets. You can’t fight that.
Consider aluminum-in the 19th century aluminum cost more than gold-it was so expensive to refine. Then the technology advances, and aluminum suddenlt became dirt cheap. The same hing will happen to diamonds-and DeBeers will be powerless to prevent it!
It has happened several times. DeBeers can undercut any competitor in the diamond gem market. Whenever a new technology comes along that can produce synthetics cheaper than mined diamonds, DeBeers increases the supply of mined diamonds, lowering the price below the level at which synthetic diamonds can compete. They’ve done this with non-cartel mines, too. You either get out of the gem business or join the cartel.
If some truly revolutionary way of making diamond in high volume for relatively low cost comes about, that could put DeBeers in hot water. It’s more likely to come about as a result of a still-fairly-expensive process that produces industrially useful gem-quality diamond… with the gem market being a minor player in the profitability of the production line. It won’t matter what DeBeers does to manipulate the prices in gem markets.
The Monopoly is on shaky grounds for a number of reasons.
I can’t cite and please note that all the following is my imperfect understanding of hearsay, not fact: the cartel, while controlling a significant portion of extraction, does not control a majority of it. It still manages to make most extractors play by their rules by offering to be a guaranteed taker of production: if you sell to them they will buy everything you generate. If you sell to others at any point, they will not, and they could mess up your market. Because they extract and buy way more than can be sold while holding pricing steady, much ends up in inventory. Whill this allows the above " mess up your market" it has another effect, on which more shortly.
There were times when extractors tried to go around the cartel. I believe Australia and one or 2 west-african countries tried to in the 90’s. The extractors in question tended to generate smaller diamonds, and supposedly in retaliation the cartel flooded the resellers market with smaller diamonds, creating price erosion on that front only, leaving the significantly more lucrative .5 carat plus market unaffected. In the end, the cartel regained some control, but not complete - some of these smaller stones routinely go outside of cartel controlled channels, mainly to India and to a lesser extent Israel. The collapse of the Soviet Union also means that cartel control of former SU extracted diamonds is less than complete - stuff tends to disappear in the Rodina and show up outside the cartel. Also, with the concern regarding “blood diamonds” the cartel is less free to buy these, and so they escape their control of the extraction side as well.
But a bigger problem than this for the cartel is the tremendous increase in extraction. The Soviets entered the cartel in volume in the 70’s and severely strained the ability to market this all, but in recent years there has been a positive torrent of new production. (I don’t have the numbers, I’m sure time and Google-fu could dig this up) The massive amounts of diamonds in inventory are not there as a possible weapon to retaliate against messing with cartel non-compliance, they are in fact a huge headache. They are tying up staggering amounts of working capital, and have forced them to seriously reconsider the entire cartel arrangement as return on capital is at levels at which most industries would call it quits. Voluntary production curtailment haven’t gone over well, many players on the extraction side aren’t exactly interested in long-term planning. That leaves selling more diamonds. There’s a reason that the “past-present-future” commercials are so omnipresent, but in the end, there’s only so much crap we will buy. They’re also trying hard to broaden internationally. The U.S. have been their no.1 market since the thirties (hey, we respond to advertising), but they’ve made inroads in Japan and are apparently making headway in China, though the parallel supply chains may be benefitting from that as much or more as/than the cartel. In the long run, the question is wether enough stones can be sold to keep pace with extraction. Odds are that in the long term this will not work. The only thing left then is to differentiate between a, say, Debeers diamond and others (as they’ve succesfuly done relative to estate diamonds) While a case can be made that certified blood-free diamonds are worth extra, no such case can be made for non-DeBeers diamonds from say Canada or Australia, and the thing will come tumbling down. At that point, there is no sense in continuing the massive marketing either, so likely there will be a time where diamonds are cheap but you won’t want them anyway…
