A recent ODBA reader thought this College Humor video was funny and sent it to me for a laugh. I admit the video is well written and produced, however there are some points I want to make that offer greater insight into dispelling the myth of diamonds being the biggest scam of all time.
Diamonds are akin to religion and politics in that they tend to stir up a lot of emotions and confrontational behavior. If you read my article, “The De Beers Monopoly and Continuing Evolution of the E-ring” you’ll know that at one point De Beers did in fact have a monopoly on the international diamond trade market. However, this is no longer the case. In 2001 several lawsuits were filed and in 2012 after multiple appeals the US Supreme Court reached a settlement for $295 million with De Beers agreeing to ‘refrain from engaging in certain conduct that violates federal and state laws’. De Beers still have a major influence on the diamond market today, however they are no longer the sole controlling force.
What remains is the legacy of one of the most genius marketing campaigns from the 20th century, and this I do not deny.
However, let’s take a different perspective on this volatile subject and see it from another angle for a second. Instead of saying Engagement Rings Are A Scam, let’s just focus on jewelry. After all, diamonds are set in jewelry and presented in this manner. Jewelry has been around for nearly 75,000 years with the earliest findings in Africa in the form of beads made from organic shells. In fact, in all cultures worldwide, jewelry has been worn for various reasons, these including functionality (affix clothing or hair), define social status, signify ethnic/religious/social affiliation, talismanic protection, a symbol of personal meaning, or even an artistic display.
We can see that humans have a natural, and in fact, genetic wiring for wanting to display independent and personal emotional bonds to ideas and groups. When we see it from this perspective we can clearly see that wanting to gift a ring as a symbolic gesture of love and commitment wasn’t recently manufactured in the last century.
I do admit that we have been influenced to accept such a high value of diamonds through a bit of genius marketing manipulation. However, there are other reasons for the success and longevity of the campaign that we cannot deny and this has to do with the natural properties of the crystal itself.
Gems can be defined as any material which is used for adornment or decoration, with beauty, durability, rarity, and acceptability being the main value factors. However, no other gem can compare to a diamond in terms of its amazing crystalline structure and the fact that it is the hardest natural substance on earth.
- Have a very high refractive index of 2.42
- Have very high reflectivity (17% perpendicular to the surface)
- There extreme hardness allows for greater polish and sharper facet edges
- High reflectivity and greater polish equal ‘adamantine luster’, which is extremely bright and reflective
- High dispersion of light resulting in ‘fire’ (different colors seen when light illuminates through diamond)
- Diamonds are very stable (they are not affected by acids or oxidation in normal circumstances)
Modern day precision cutting, faceting and polishing brings out this natural adamantine luster that equates to an extraordinary brilliant gemstone. So, when comparing all the other naturally formed crystals and gemstones, diamonds do indeed stand out among the rest. No other gemstone can match this unique combination of hardness and polish.
Diamond Pricing – Understanding The Value Chain
It’s not a matter of gifting a diamond ring to someone that is the scam part that everyone keeps talking about. The fact that women think diamond rings are beautiful and admired is clearly substantiated in my two points made above. However, I do think the ‘scam’ part has to do with the pricing we have given to a diamond. It must be understood that diamonds have a very complicated value chain. In other words, diamonds must pass through many different hands before finally settling on a woman’s finger.
If we break down the journey a natural diamond must take, we see it start it’s life in exploration and production, which leads to the rough diamond market and sales, then we move on to cutting and polishing and it’s subsequent polished diamond sales, and finally we get to jewelry manufacturing and retail sales where the greatest value is added.
There are a lot of hands a single diamond must go through before it reaches the consumer in it’s final polished faceted state set in high end jewelry. Every step of the way people must make a profit from their services. According to a Bain report published in December 2014, diamond jewelry retail has the largest profit share of slightly less than half. Mining accounts for the next largest share of profits ranging from 21-15% with cutting and polishing having the worst margins overall. See more here: http://www.bain.com/publications/articles/global-diamond-report-2014.aspx
So, it is really a matter of greater transparency and standardization. But, we have to understand that diamonds aren’t the only thing that have an inflated price based on perception. They are just one of the easiest that come to mind. Powerful brands do this all day long with marketing being the key driver to making people want to buy something; anything. Real estate, cars, fashion labels, wine, etc. They all have a perceived value we assign for various emotional reasons but whether they are actually worth anything is in the eye of the beholder.
I hope this offers a different perspective to the ‘Diamonds Are A Big Scary Scam’ mantra. If you are a believer of that, then by all means don’t buy a diamond. In the end though, whether you propose with a diamond, sapphire, ruby, emerald, topaz, peridot, or plain gold or silver band (or nothing at all) makes no difference. We give what we are personally attracted to, what we personally attribute value and significance to, and what we hope will bring joy to the wearer.
What do you think? Share your thoughts with me via Twitter, FB, and Google + #RDiamondsAScam
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