This time of year nearly every other radio or TV ad is for a jewelry store, which brought the above question to mind. Why do diamonds cost so much? Why are they the most expensive kind of gem?
I used to think it was because they were considered “rare”, but it seems like there are jewelry stores on every corner these days, so it’s not like they are hard to find. Then, I thought it had something to do with them being the hardest substance, but that doesn’t seem like it would make that much of a difference in buying a ring or necklace.
From what I’ve heard on this, diamonds may as well be simply hunks of glass or rock (or zirconias!)… The general thought is that they’re so expensive because they’re incredibly rare. Not So!
Apparently, the world is actually literally “drowning” in diamonds, but for some reason, the jewellers (or whoever!) of this world tend to “hold back” their supplies, hence increasing the demand, so because demand is high, the prices are elevated as well.
Things are valuable because we decide they’re valuable. It’s arbitrary. That’s pretty much the only answer there is for most prestige goods (goods whose sole purpose is merely to mark the owner’s exalted status). It’s not like diamonds are that useful, or gold so nutritious and filling.
Well, it’s not entirely arbitrary. Prestige goods are usually:
Rare.
Durable.
Visually conspicuous.
Or so says my archaeology textbook, and I’d say it’s spot on. Prestige goods usually have at least 2 of these qualities, and many times all of them. Take, for example, silk, ivory, bright feathers (see the Aztecs), gold, amber, glass vases, shell, copper (prehistoric Old World and pre-Columbian New World), jade, and so on.
Debeers I believe does most of the diamond mining and keep few on the market and the prices for them high
I saw john stossel showing women a zirconia and a diamond and having them choose which one is the diamond and I think it came at 50% chosing the wrong one
he also asked them why diamonds were so valuable and just about all of them said they were rare, which they’re not, but the fact that they think so makes them valuable
Also people will pay more for things out of the ground. Rubies and Sapphires can be made that even experts find almost impossible to detect without the most sophisticated equipment. But people like the “real” thing (e.g. out of the ground.)
I was watching a PBS show on DeBeers and they said the Russians were very close (if not already there) at making diamonds that can’t be distingued from real ones. DeBeers disputed this but said if the day ever came they would simply put a marking (very tiny unnoticable marking that had to be read specially) on their diamonds to “prove” they were “real.”
In what sense are diamonds valuable? On a per-unit basis many things cost more, e.g. SUVs, Senate seats, condominiums in Manhattan.
On a per-weight basis there are also a host of more expensive things: GIFT embryos, antimatter, the first batch of even the most ordinary of modern medicines, rocks from the Moon, paintings by Picasso. . .
The only basis I can think of on which diamonds are expensive is in comparison to other rocks. In which case, well, diamonds cost way more in labor to dig out of the crust than nearly any other rock. So, ipso facto, they cost more.
I think that almost everyone would consider those things expensive as well. Diamonds are expensive on a per-weight basis relative to things people actually buy, other rocks included.
The interesting thing about diamonds value is that unless you are in industry and involved in cutting or drilling, diamonds are totally useless. And in industry you can use just about any size and quality of diamond, you are not restricted to big shiny chunks.
Their value is therefore totally in people’s minds. Sure, they are shiney and pretty if you like that kind of thing, but so are many other far cheaper things.
I understand all of the above postings. Artificially decreased supply leads to an artificial demand. I also saw the documentary where a diamond inspector smuggled a camera into just one of the many warehouses that DeBeers stores their raw diamonds. There were literally thousands of crates, stacked to the ceiling, full of diamonds. And DeBeers owns several of these warehouses around the world.
But, I don’t think that the essential question has been answered.
At the risk of getting flamed for trying to simplify this down to a stereotype, a majority of these gem quality diamonds are bought by men. These men buy them to please their women. The women put a lot more importance on a diamond than just artificial demand. I’m sure a woman doesn’t look at her brand new engagement ring and say, “Wow, Honey. What a great financial investment!”
So the demand is driven by women who desire these diamonds.
I’m not even sure diamonds are the most expensive gemstone per unit of weight. According to most gemology books I’ve seen, good-quality rubies are worth more than good quality diamonds.
But haven’t diamonds been valued for hundreds, if not thousands, of years? The Russian royal family had plenty of diamond jewelry and diamond-encrusted robes, and Marie Antoinette came to grief partly over a diamond necklace.
Diamonds are pretty and sparkly, that’s why people like them. They want “quality,” so they prefer real diamonds over fake (please note the quote marks!!!).
