With Valentine’s Day around the corner, I thought I would dig around the ol’ internet to learn more about diamonds. I am not yet engaged or married, so to say the least my exposure to diamonds can be summed up by:
1) ads -diamonds are forever…right?
2) socially- when friends and family get engaged we all look and admire the rock!
3) I went shopping with a good friend while he learned more about engagement rings.
4) movie-blood diamonds
Not exactly an expert, but I actually want to gloss over and entirely skip, the whole how to buy or look for a diamond/engagement ring post and get into the more interesting part.
I want to write/learn more about the marketing of diamonds and the industry as a whole. I want to understand the history of diamonds and its link in the mind of consumers. I want to know if diamonds really are that precious. What gives them their value?
So, without further ado, let’s get this puppy started.
*note: I’ve made the decision not to get into the discussion of conflict diamonds (blood diamonds) as this post was aimed at looking at the marketing and psychology of diamonds. For more, the reader can easily find some information on conflict diamonds on the web.
**note: I intend to entirely skip over the industrial uses of diamonds.
What is a diamond?
A precious stone consisting of a clear and typically colorless crystalline form of pure carbon, the hardest naturally occurring substance.
Okay, I’ve heard of carbon…but remind me what carbon is.
A widely distributed element that forms organic compounds in combination with hydrogen, oxygen, etc., and that occurs in a pure state as diamond and graphite, and in an impure state as charcoal. Carbon is one of the most common elements in the world!
So a diamond is pretty much carbon in it’s most concentrated form. FACTOID: your body is made up of 18% carbon. You know if I were the industrious type, I might try to sell my body for profit…..
Anyways, okay so now we know what a diamond is, what makes it so valuable? Is it because of it is rare?
Short answer- NO. Well, it is no rarer than other precious gems. UGH, so why is it so valuable?
Because the entire diamond market is essentially controlled by one single entity. De Beers. It’s a cartel. Now, I don’t know about you but when I see cartel, I’m thinking drug cartel. But in actuality, a cartel is defined as an association of manufacturers or suppliers that maintains prices at a high level and restricts competition. So it can be legal.
I don’t want to trivialize the fact that its not actually that easy to come across diamonds, it takes a tremendous amount of work (both natural and industrious). So in order to balance this post, here is how diamonds are formed and found. From How Stuff Works:
Diamonds form about 100 miles (161 km) below the Earth’s surface, in the molten rock of the Earth’s mantle, which provides the right amounts of pressure and heat to transform carbon into diamond. In order for a diamond to be created, carbon must be placed under at least 435,113 pounds per square inch (psi or 30 kilobars) of pressure at a temperature of at least 752 degrees Fahrenheit (400 Celsius). If conditions drop below either of these two points, graphite will be created. At depths of 93 miles (150 km) or more, pressure builds to about 725,189 psi (50 kilobars) and heat can exceed 2,192 F (1,200 C). Most diamonds that we see today were formed millions (if not billions) of years ago. Powerful magma eruptions brought the diamonds to the surface, creating kimberlite pipes.
Back to De Beers. De Beers is based out of South Africa. I want to highlight the following from How Stuff Works ( I could paraphrase but I think what they wrote is excellent so here it is:
De Beers stockpiles diamonds mined from countries around the world and releases a limited number of diamonds for sale each year. De Beers produces half of the world’s diamond supply and controls about two-thirds of the entire world market, according to a Washington Post report. At times, just to keep prices up, De Beers has bought tremendous numbers of diamonds from countries attempting to inject large quantities into the market. If De Beers were a U.S.-based company, it would be in violation of antitrust laws for fixing the prices of diamonds.
The secret to De Beers’ success is a marketing campaign that has permeated our culture –convincing every woman that she should receive a diamond ring from her fiancé and convincing each groom-to-be to pay “two-months salary” for that ring to show how much his love is worth.
Prior to the 1930s, diamond rings were rarely given as engagement rings. Opals, rubies, sapphires and turquoise were deemed much more exotic gems to give as tokens of one’s love, according to the book “Twenty Ads that Shook the World” by James B. Twitchell. Twitchell goes on to describe how De Beers changed the world diamond market.
This idea of connecting diamonds to romance was captured in a brilliant ad campaign begun in the 1940s, causing demand for diamonds to increase. Surely you’ve heard the De Beers advertisement that “A Diamond is Forever.” This ad campaign, which was created by the N.W. Ayer advertising agency in 1947, transformed the diamond market. In 2000, Advertising Age magazine named the ad campaign the slogan of the 20th century. De Beers infiltrated Japan with the same ad campaign in the 1960s, and the Japanese public bought into the idea as much as the Americans did.
Later ads by De Beers told consumers to hold onto their family’s diamond jewelry and to cherish it as heirlooms — and it worked. This eliminated the aftermarket for diamonds, which further enabled De Beers to control the market. Without people selling their diamonds back to jewelers or to other people, the demand for new diamonds increased.
Okay, sooo what does this mean. Am I not going to buy a diamond engagement ring for my gf? Well to be honest, I think it would be cool to get her another gemstone but I’m not sure that’s what she wants. In any case, you pick your battles, and this probably isn’t one I want to venture in. But it doesn’t hurt to understand why atleast, I’m a sucker.