The Inflated Price of Diamonds

Diamonds are extremely expensive. One carat diamonds are starting at prices of $2,500, and can get as high as $18,000. Just for one carat! We believe that diamonds are extremely rare and valuable, but is that really the case? Let’s see.

A company called De beers controlled most of the diamond supply throughout the 19th and 20th centuries. Because of this, they were able to stockpile diamonds and limit the amount of diamonds that were on the market. That way, it seemed like there were less diamonds than there actually are, and it made them seem like a more valuable item that deserved the higher price. In reality, diamonds are actually the least rare of the precious gemstones.

However, the apparent rarity of diamonds makes people ok with the pricing. The markup on diamonds can be anywhere between 100% to over 300%. And because of the markups, a diamond ring is never worth as much once you buy it, making it a bad investment.

So why are people still buying diamonds if the price is so outrageous? Well, diamonds are a symbol of wealth and power, so having one may make people feel powerful or show off how wealthy they are. They look nice, so maybe having one is simply aesthetic. But those pale in comparison to the sale of engagement rings.

Engagement rings actually weren’t really a thing for most of history. That is, until 1938. Our good friends at De beers wanted to sell more diamonds, so they started running an ad campaign that said “a diamond is forever,” encouraging people to buy diamond rings for their significant other, as that’s the only way to show your love. And they wouldn’t be resold. They used product placement, Hollywood stories, and convinced the public that at least 2 months salary should be spent on the ring. This ad campaign was a brilliant strategy and now the idea that a diamond shows true love is ingrained into our culture and our lives. Even knowing this information, most people still would want a diamond engagement ring.

So, De beers was able to control both supply and demand of diamonds. With a basic monopoly on the product as well as a clever ad campaign, we now see diamonds as a rare, expensive gemstone that is the only thing you can engage with. It’s kind of crazy how some good marketing invented the tradition of engagement rings. So now next time you walk past a jewelry counter and see the absurd prices of diamonds, know that it’s all a lie made up by a corporation to sell more gems.

Sources:
https://www.businessinsider.com/inflated-price-diamond-demand-supply-2014-6
https://www.theatlantic.com/international/archive/2015/02/how-an-ad-campaign-invented-the-diamond-engagement-ring/385376/
https://www.truefacet.com/guide/makes-diamonds-valuable/
https://www.thelist.com/109621/real-reason-diamonds-arent-valuable/