Famously stepping into the limelight in 1477, diamonds have since been a highly adored and desired crystal. Despite their high and constantly fluctuating prices, people have accepted them as a luxury purchase. They have no qualms cashing out big bucks to satisfy their heart’s desire. What exactly makes diamonds so expensive?
Diamonds, along with Rubies, Sapphires and Emeralds are four of the most expensive naturally occurring crystals in the world over. Overshadowing the other colored gems, diamonds have their color variations.
Blue, pink, yellow, and black colors are available in the case of diamonds. With mines popping up in new regions across the world and lab-created diamonds cropping up every day, diamond supply has never been this high.
Why Are Diamonds So Expensive?( 9 Reasons)
A combination of market perception propelled by aggressive marketing and a controlled diamond industry make up the sum of reasons why diamonds are so expensive.
Let’s break them down to see exactly why they cost an arm and a leg.
This tagline was popularized by the De Beers Consolidated Mines Limited back in 1947 and it caught on like wildfire. It is interesting to note that the tag was created by a female copywriter and it was not very warmly received by the company’s advertising agency.
Luckily for them, they let it fly and this paid off and still pays off hugely in terms of company sales generated because of that tagline. Being that it is true how diamonds will outlast generations, many people jumped on the wagon and this explains the popular heirloom rings that still get passed down to date.
This notion cemented the idea in people’s minds that diamonds were a once in a lifetime purchase that deserved to be so heftily priced.
The domino effect plays out clearly in this point as with the increase in aggressive marketing, the demand for diamonds has continued to grow.
Coupled with De Beers’ iron fist on the diamond supplies, the demand grows and this deficit increases the diamond’s market value.
A good example of the grip that De Beers has on the diamond industry, is when they bought a newfound mine in South Africa back in the 1800s. The mine posed a huge potential to flood the market with diamonds which would greatly reduce the buying price.
De Beers, having bought the new mines, proceeded to hoard the diamond supply being very careful to limit their release into the market.
You may wonder how and why they can do this and the simple answer is because they own 40% of the entire diamond market share and they have been a monopoly for over 200 centuries.
Though not as rare as rubies, emeralds, and sapphires, diamonds have long been considered the rarest stones in the world with the most dazzling qualities and characteristics.
Again, this is fostered by the aggressive marketing strategies that are geared towards shifting their target market’s perception of diamonds.
Interestingly, these colorful and equally rare gems like rubies had long been the preferred stones for engagement rings and special jewelry. However, De Beers made sure that this trend discontinued to eliminate the competition and secure the maximum profits.
Of course, having moved them out of people’s minds they lost their allure.
4.Quality Diamonds are Rare
You may be surprised to find out (as I was) that most of the diamonds mined from the earth’s surface are rarely good enough in quality to be used in the making of jewelry. This rarity in find makes them relatively more expensive.
This is one of the most important diamond qualities to consider a purchase. The whiter or clear colored the stone is, the more expensive it will be. This is because it is extremely hard to come across a pure white diamond crystal.
Mined diamonds present a yellowish or brownish tint in their form which is classified as an impurity.
A crystal-clear diamond is devoid of all imperfections and inclusions in its form. You know you have a high clarity diamond if you can barely see any harsh lines or black spots in it.
Unfortunately, the creation process of diamonds is very violent and explosive which results in spontaneous creations of these imperfections in the diamonds compounded molecular structure.
The odds of finding such a clear blemish-free diamond with white color are very high and this contributes to the higher asking price associated with diamonds.
Carats are a measure of a scale used to denote different sized and weighted diamonds. The higher the carat value, the heavier and bigger your diamond will be. However, these big rocks are even rarer to come by. Harder still to find them in clear color and clarity.
This in turn translates to their price range which increases with the carat weight.
A raw diamond is formless and shapeless. After mining, the diamond stone must undergo a cutting process to shape it into different shapes and sizes. The cut of a diamond crystal influences and changes its brilliance in terms of reflectivity.
Diamond cutting is not an easy task. More than the stones needing to be proportional, they also need to be the perfect weight and clarity. This may lead to the chopping off of huge chunks of diamonds parts to maintain a crystal-clear stone regardless of size.
Other times, the diamond cutter will compromise the clarity of the crystal to make a huge rock with some imperfections. Depending on the current grading systems, market demands, and values, you will pay less for one diamond and more for the other.
These factors make those big diamond stones with proportional, clear, and carat-weighted extremely rare and hence very highly valuable.
5.Depleted Diamond Resources
While it is true that the colorful diamonds such as the pink and the yellow kind are extremely rare at present and it has been predicted that they will be unavailable within the next decade.
The white diamonds, which are more popular, however, are here for a while as far as the statistics show. More diamond mines are being discovered and opened. While the earth is unlikely to produce any new diamonds in our lifetime, the supply of earth-mined diamonds is far from depleted.
What’s more, is the rise of technology and specifically scientific technology. In this new era, lab-created diamonds are the new thing in town. Sharing and possessing all the qualities and characteristics of real diamonds, there is no way of telling them apart.
They have quickly grown into people’s most affordable and ethical diamond purchases. Regardless of their ranking and GIA certification, they cost almost half the value of a real diamond.
6.Mining is Expensive
Setting up a mining plant is not a small feat and is a project that runs into hundreds of millions of dollars.
That’s why it is not within the financial playing field of many of our entrepreneurial shallow pockets. Mining is labor-intensive and requires specialized and expensive equipment and tools to facilitate the process.
Even with all the digging involved, it still takes tons of ore to produce a gem the size of 1 carat. It is possible to go weeks, months, and sometimes years before you hit the jackpot down under.
Big bucks are needed to keep the operation running even in these times and they are cashed in every time a diamond is purchased in whatever city across the world.
Diamonds hold more than their weight.
A diamond ring presented to a lady by her husband represents the couple’s undying love for one another.
Just as diamonds are indestructible and meant to last a lifetime, the couple’s love is sealed with a diamond ring to communicate the same strong message to everyone who notices the shimmery rock on your bride’s finger.
Adding to this, the same diamond can be passed on down the family line to sons and daughters with the full goodwill that they too will find the love of their lives that will last a lifetime.
The fact that diamonds are capable of this generational transition, it makes them very desirable and hence more expensive than other stones.
In this day and age, nothing seems to bring people together than the common love and adoration of a particular high-profile individual.
Be it the Queen of England, an iconic entertainer like Marilyn Monroe, or a movie actress like Grace Kelly, when any celebrity or admired public figure steps out decked in a piece of jewelry, people are keenly watching.
Most ordinary people love to have things in common with their stars. They are so invested in their icon’s expressions of style and fashion that they are willing to go the whole nine yards to get a piece of clothing, accessory, or jewelry that matches their celeb.
Anytime there has been a public display of these high-profile endorsements, there has been observed demand for specific cuts, colors, and carats. This adds to the cost of diamonds.
9.Image is Everything
Following up on the previous point on high-profile endorsements, nowadays, image and presentation is everything.
The more money you have, the more you are expected to spend and in doing so, more connections are available to you.
The world is cut-throat, now more than ever.
Everyone is concerned about the general socially acceptable and expected codes of conduct and many will do whatever it takes to maintain a successful and prosperous image.
One of the easiest methods of displaying your wealth is through material possessions.
Diamonds, being a highly valued gem from centuries past, are the most eye-catching and statement-making crystals that will have people drawn to you.
They create the best ice breakers because they call for compliments from all genders.
By the time you hold your shiny diamond gem in your hands, it has gone through tons of processes to mold it into the very shape that has you smitten.
All these processes, the painstaking efforts exercised by miners and gemological professionals coupled with the heavy-handed control that De Beers has over the market, continues to influence diamond’s expensive price tag.
In the last post, I talked about why pink diamonds are so expensive? Check here to read.