Advertising geniuses have made us believe that diamonds are forever and worth every dime saved. But are diamonds really the best investment you could make? Are diamonds really forever? And is that diamond ring worth everything?
Keep reading as we tell you all the reasons why diamonds are worthless. Last time, we talked about why diamond is so expensive, but this time we talk about the negative sides of diamonds.
Why diamonds are worthless – 10 Reasons
This might hit you real hard, but diamonds actually aren’t forever. The truth is that diamonds actually decay very fast – considerably faster than most other rocks. And according to the former chairman of De Beers, a leading diamond-selling company, diamonds have no intrinsic value.
There’s also the fact that diamonds tend to be quite injurious, specifically in the mining process, faced with bad and environmentally damaging conditions that bring on more harm than good.
Now back to the reasons why diamonds are actually worthless.
1.50% loss of value
While you will save your hard-earned earnings to save for that coveted piece of stone, often thinking that you are making an investment thanks to this precious rock, the truth is that the diamond purchased will lose at least 50% of its value the moment it leaves the jewelers.
Really? How and Why? Well, while the engagements world has made us all believe that the engagement ring needs the biggest diamond stone because diamonds are forever (a symbol of your everlasting love) – thanks to the marketing campaign run by De Beers, the biggest diamonds company, this is all far from the truth.
Marketers and advertisers always sell to us by creating a sense of urgency and making your feel FOMO in case you don’t join in on their trends, and this is exactly what they did with diamonds. During the Great Depression, diamond sales were extremely low, but these guys needed to make profits. So, they enlisted the services of a leading advertising agency, N. W. Ayer & Son, and these guys came up with the tagline – A Diamond Is Forever. This was in 1938, and everyone who heard this believed it. The entire world fell for this agency’s creative genius, and it’s all we’ve believed. Well, until now.
By turning diamonds into the piece of rock that everyone coveted, the marketing campaign was a success, and countless American men had to live up to the societal obligation to propose with a diamond engagement ring. The diamond was made out to be expensive, and the acquisition process stressful. Unfortunately, all these have been for the benefit of corporates making millions off unsuspecting individuals.
How about the loss in value for diamonds once you’ve made your purchase? Well, that has to do with the perceived rarity of diamonds. The ‘diamonds are rare’ statement is a façade made to force us into making these companies richer. Diamonds are not that rare.
Naturally, diamonds are available in a manageable supply, but companies like De Beer don’t want you to know that, and they carefully restrict diamond supply on the market. High demand and restricted supply will automatically make diamonds expensive.
This is just one of the reasons why diamonds will lose value the moment they leave the jewelers store. For close to a century, we’ve been tricked into believing that the coveted piece of high-pressure carbon is the most valuable item on earth, but it’s all utter nonsense!
2. Diamonds lack an intrinsic value – makes them a bad investment.
Intrinsic value is a finance/ economic term which refers to an asset’s value and how that value is driven entirely by the discounted value of all the future cash flows that the asset will generate.
For example, if you buy a car, its intrinsic value is the value you get from renting out the car, and selling that car at the end of its useful life gives you the car’s terminal value. In this case, the car will be an investment. However, if you buy a car but fail to make money from it, somehow, the value of the car would correspond to the car’s resale value. This is because a car is a depreciating asset.
Diamonds are depreciating assets too, and they only masquerade as investments. Contrary to popular belief, jewelry doesn’t appreciate with time, and the idea that you can hedge that piece of jewelry against inflation is false. Gold and silver are the only commodities that appreciate and hold value, which is why you can buy them on all financial markets.
Hoarding a diamond ring is, therefore, not a great idea because the diamond isn’t an investment. The diamonds’ market isn’t liquid, and it isn’t fungible, either. So, diamonds lose value the moment the purchase is completed, and ownership transferred to you.
3. Diamonds are not rare.
As mentioned above, diamonds aren’t rare. The International Gem Society notes that the diamond is actually one of the most popular mined gemstones.
So, the belief that diamonds are rare is just a myth.
But marketers and diamond companies are riding on this technicality – that all the gem-quality stones/ materials are rare because they are naturally occurring materials in limited quantities in the earth’s crust/core.
However, diamonds are the least rate of all the gemstones.
4. Their prices are marked up
To exploit the belief around diamonds being rare and extremely precious, their prices have been marked up.
And though some might argue that the high price tag has to do with the involving mining and processing processes, the markup price for diamonds is outrageous.
The Atlantic reported that the mark up could be super high at between 100 and 200%, with brands like Tiffany & Co. selling diamonds at a marked up price of between 253 and 336%
5. Diamonds are not forever
You might think that buying jewelry that symbolizes your everlasting love is a great idea, especially if you use a diamond to symbolize that love, but the truth is that diamonds do not last forever. Yeah, sorry for bursting your bubble.
Though A Diamond is Forever is this masterful copy created by the N. W. Ayer & Son advertising agency, diamonds decay, and they don’t last forever.
Although diamonds are the hardest stones, they become discolored, they chip, and some diamonds will shatter.
So, before you run to buy that overpriced diamond ring, know that the stone might break apart months or weeks after purchase. A diamond is a fleeting psychological necessity, not an actual one.
6.Not a sign of your financial commitment
De Beers has, without doubt, tried every trick in the book.
In the 1930s, they capitalized on the short-lived law, the Breach of Promise act, which made it legal for brides to sue the man is he left her at the altar.
With this law on their side, men were made to believe that a diamond engagement ring would be the ultimate symbol of their financial commitment.
While this isn’t the law today and women cannot sue for being dumped after the proposal or loss of virginity, the law was equated to the price of the diamond engagement ring.
7.De Beers’ Monopoly Over Diamonds’ Production and Sales
According to the IGS, De Beers maintained a monopoly over the production and sales of diamonds for decades because they managed to gain a monopoly over the market.
The market monopoly means that these guys did some shady things such as the release of a limited amount of diamonds, just enough to meet the demand (to a certain level), but never extra/ too much.
By carefully adjusting the supply of diamonds on the market, the company got to drive the price of diamonds up the roof.
8. Diamonds Are Lab-Grown
Mining diamonds in the treacherous conditions known to us isn’t the only way of sourcing for diamonds.
Diamonds can be made in the lab, as specified by Business Insider, and the synthetic diamonds are not only popular but just as good.
They are also quite affordable. Going by the rarity sentiments, the diamonds would really be worth the high price tag if there weren’t alternative ways of obtaining them.
9. Diamonds will always be available.
If it was possible for diamonds to completely disappear, then they’d be worthy.
It’s worth noting that the elite still wears the diamond engagement rings.
So, even if the lab-grown diamonds become very popular, the truth is that the real diamonds are unlikely to disappear as they remain the most spectacular items of jewelry worn by celebrities.
So, with everyone –rich and famous, and the rest of us, still wearing the diamond rings, the stones shouldn’t be priced that high.
10.No Real Future Value – It’s All A Marketing Trick
From the details above, it’s clear that everything we’ve been told about diamonds and their intrinsic value or the future value is nothing but a lie, a move to make us spend all your hard-earned money.
And if you choose to look at the industrial applications of diamonds (which there aren’t any), it goes without saying that diamonds are worthless.
Diamonds and the beliefs that diamonds are forever have been used as a measure of manhood, a hook to keep men tied down, and something that’s made some men broke.
All of these have happened because of the supposed value held by diamonds. But from the reasons above, it’s clear that diamonds are worthless.
Everything we’ve known about diamonds has been made to force us into believing in the value of diamonds, yet we’d all be better off with high-quality silver and gold engagement rings.
Diamonds will tarnish, crack, and decay.