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A Diamond Market No Longer Controlled By De Beers

130 points by lelf 12y ago

FreeKill 12y ago
Interesting, I wonder if this will ultimately lead to a competitive environment where prices decline due to competition? I've read it elsewhere before, but I believe diamonds are only "rare" due to strict control of what comes to market. Will be interesting to see if this affects that strict control. This is especially interesting considering Tiffiany's earning reports this week which showed a substantial part of their post recessions profits is now in the low end consumer goods.
- geon 12y ago
  > only "rare" due to strict control of what comes to market Not only through market control. Diamonds are sort of rare in themselves too.
  - rflrob 12y ago
    Kind of rare, but not enough to justify the sort of price premium they demand, at least according to [citation needed]. Heck, it's probably the same source(a) the Grandparent post is thinking of.
  - tunap 12y ago
    Much less rare since man began producing perfect ones over the last 60 years... I recall reading a decade ago the only flaw with the man-made gems was that they were, indeed, flawless. http://en.wikipedia.org/wiki/Synthetic_diamond http://en.wikipedia.org/wiki/Synthetic_diamond
    - ericfranklin 12y ago
      If looking only at jewelry-quality diamonds, there are millions of carats of diamonds mined per year, while there are generally thousands of carats of diamonds grown per year. In that regard, lab-grown white diamonds are much more rare than mined diamonds. It will take billions of dollars in capital to have a diamond growing facility with enough capacity to output more jewelry-quality diamonds than a single large diamond mine (though I suppose that is less than one WhatsApp, so is within the realm of possibility). The Wired article about synthetic diamonds from 2003 was full of hype and misconceptions. Most all synthetic diamonds grown today are not flawless, and that is not by design. However, in the last couple years lab-grown white diamonds have become much more available in normal jewelry-quality ranges: http://d.neadiamonds.com/lab-created-diamonds/White-Diamonds http://d.neadiamonds.com/lab-created-diamonds/White-Diamonds ^ Disclosure: I'm an owner of D.NEA and have been selling jewelry-quality synthetic diamonds for many years.
      - tunap 12y ago
        Thanks for the additional input, EF. The disparity is much larger than I initially thought. In time, as methods & costs are refined, perhaps the ratio will shrink and reverse. I also believe that is the article I was referring to... IIRC the 'white' conundrum was the big impediment to mass production... much like the recent breakthrough in LED tech's progression to white light. Edit: Great site! Very informative... http://d.neadiamonds.com/white-diamond http://d.neadiamonds.com/white-diamond
- rhizome 12y ago
  This is especially interesting considering Tiffiany's earning reports this week which showed a substantial part of their post recessions profits is now in the low end consumer goods. If the correlation holds, we can expect to see a lot more teal at Target.
- bradleyjg 12y ago
  It's a strange many party prisoners dilemma out there, that is so far without a lot of defections. When the primary and secondary markets join together then prices will come down quite a bit. Right now, taking a diamond out of the store cuts its value at least in half.
  - thruffle 12y ago
    Or even if for cultural reasons the secondary market remains relatively unimportant, you'd expect prices to fall in the primary by quite a bit. Must say I'm surprised that it hasn't happened already. So far no defections seems like a reasonable guess, though I Googled for 10 seconds and couldn't find any further discussion of that guess.
    - SoftwareMaven 12y ago
      It sounds like China is joining the diamond consumer movement, which would increase demand significantly.
- pizza234 12y ago
  I personally think that the price of the diamonds is almost exclusively determined by the marketing success. One very interesting bit in the article somebody's mentioned about De Beers story is that artificial diamonds are already cheaper than natural ones, and virtually undistinguishable. De Beer's response has been to produce machines than can distinguish natural diamonds from artificial ones. My conclusion is that people who wants diamonds want simply something expensive, as status symbol. They don't want a shiny rock at the most reasonable price, otherwise, it wouldn't be a status symbol anymore. If prices would fell, the perception of diamonds would change drastically, and I don't think that the industry (cartel or not) is going to allow that.
  - ridgeguy 12y ago
    I agree. Synthetic diamonds are available and generally run about 25% less per carat than an equivalent quality natural stone. This pricing is high in view of the relatively low production costs. Gemesis and other companies were successful in driving down the cost of capital equipment for making diamonds by the older high pressure, high temperature process. Chemical vapor deposition of high quality diamonds is well established and doesn't cost much at all. Market pricing for aesthetic applications of diamonds continues to be only loosely related to cost of production. I think this will continue until the Maker movement decides it would be cool to have diamond doorknobs, at which point the price will drop to something more closely related to the cost of arranging sp3 bonds between carbon atoms under metastable conditions - i.e., not much. edited for a typo
    - ericfranklin 12y ago
      As a producer of synthetic diamonds (http://d.neadiamonds.com http://d.neadiamonds.com), I can say the production costs for jewelry-quality diamonds are not as low as people seem to think. It is one thing producing brown/yellow diamond powder/grit for cutting tools, but is orders of magnitude more difficult growing a large single-crystal diamond colorless and clean enough to set into jewelry. The capital equipment for HPHT and CVD are both still quite expensive. It is possible to find some used BARS presses for reasonable prices, but you will be hard-pressed to make a large colorless diamond with one of those machines, even if you know the right "recipe" to use. Gemesis has many of these BARS presses and they have only been able to produce orange yellows and to treat CVD material with them. CVD does grow more crystals per machine cycle, but also has much higher labor, power and support costs than the latest generation of HPHT machines. CVD diamonds also typically grow as a brownish or grayish color and have to be HPHT-treated (different process than HPHT-growing, but can be done in the same machines) at additional cost to whiten them, healing defects in the crystal lattice. The cost to grow a rough white diamond is generally comparable with the cost to mine one from the ground. From there, the cutting, grading, logistics and jewelry all cost essentially the same. Lab-grown diamonds are a raw good, more similar to steel, than they are an assembled good, like a TV or laptop. There will certainly be more improvements along the way, but diamond synthesis only occurs under certain conditions defined by nature. Changing the crystalline structure of carbon is a bit more involved than heating up some filament for a 3D printer.
frozenport 12y ago
>>Historically the diamond industry was structurally flawed -the De Beers monopoly controlled prices. Nonsense! With no utility, De Beers' monopoly is the only reason why these objects have value.
- airblade 12y ago
  That's incorrect. On the gem side, the vast majority of people wearing diamonds would tell you they have utility. On the industrial side, diamond is a fascinating material with physical properties at the extremes, e.g. hardness, thermal conductivity, electrical conductivity, etc etc. It is vital in many applications where there is simply no other material which could fulfil the physical requirements.
  - frozenport 12y ago
    >>people wearing diamonds would tell you they have utility Fashions change, yet people believe that diamonds have permanent value ('is forever'). In contrast to bullion, this is relatively recent development with little ties to traditional banking practices. >>On the industrial side, diamond is a fascinating material These can be made on demand, and cutting diamonds cost something like $1 per carat. Nobody is raging against the crystal lattice.
    - argumentum 12y ago
      > Fashions change, yet people believe that diamonds have permanent value ('is forever'). In contrast to bullion, this is relatively recent development with little ties to traditional banking practices No, actually diamonds (and other gems) have had artistic/cultural/symbolic value for as long as civilizations have existed. I.e. the "crown jewels", the "hope diamond" and more: http://en.wikipedia.org/wiki/List_of_diamonds http://en.wikipedia.org/wiki/List_of_diamonds They simply do wonders with light and are aesthetically pleasing when well cut. Not to mention they are incredibly hard to destroy.
      - deleted 12y ago
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lotsofmangos 12y ago
Hang on, De-Beers loses control of the diamond market and then the price goes up? This doesn't look like the market has started being rationally driven by supply and demand, this looks like someone even more nutty than De-Beers has successfully staged a coup.
- privong 12y ago
  It could be because DeBeers had the capability (and motivation) to carefully control and stabilize mining operations to keep supplies relative constant. In the absence of that careful control and mediation, if the supply is prone to wild swings the price would swing. I could envision a scenario in which uncertainty in the market for a desired item (without an alternative product) could result in a higher than average price due to speculation and nervousness about the supply.
- sogen 12y ago
  Heck, I expected, as I'm sure everyone else, that the chart would show prices going down, not UP!?! As others commented, crazy times for something of such little value...
- pyre 12y ago
  Some of those high prices seem like the result of speculation, or people pouring their money into 'something physical' the same way that market volatility sometimes ends up with a rise in gold prices.
  - hrktb 12y ago
    I thought diamonds have little to no resale value, or is there other ways to speculate or use them as a something valuable ?
    - zaroth 12y ago
      How can a diamond be "used"? I think it's only the person offering to buy it trying to convince you of this. Diamonds are cheap and easy to appraise, and with laser etching easy to identify. I buy all my ice with AGL certs off eBay. There are more degrees of freedom than with something like gold coins, so diamonds aren't fungible. It adds complexity but I don't think it hurts resale that badly. If the resale market were so much cheaper, that's where everyone would buy their stones, right?
digitalengineer 12y ago
Relevant for those who did not read "Have you ever tried to sell a diamond? (1982)": "The diamond invention—the creation of the idea that diamonds are rare and valuable, and are essential signs of esteem—is a relatively recent development in the history of the diamond trade" http://www.theatlantic.com/magazine/archive/1982/02/have-you-ever-tried-to-sell-a-diamond/304575/ http://www.theatlantic.com/magazine/archive/1982/02/have-you...
- sogen 12y ago
  Uupvoted because of the deep insight about the greatest marketing campaign ever.
  - larrys 12y ago
    Some people seem to feel that there is something wrong with marketing that makes you want a product or service. As many people with an expensive luxury brand can tell you (whether it's a handbag or a car) nice things are often nice way beyond what they really are or what they tangibly provide. (And there is nothing wrong about that..) Let's call it "the mother test". In other words if you gave a luxury car to your mother and she didn't know it was a Porsche Panamera Turbo how much pleasure would she derive out of it over a Toyota Avalon or a Cadillac CTS (relative to the price differential)? Put another way if a woman gets a kick out of a Coach handbag how would she feel if the handbag was a very good (licensed) replica of the Coach instead of the real thing? How many people with expensive Chef's kitchens derive pleasure out of them and actually don't even cook that much? And would rather have a kick ass Chef's oven rather than a GE oven? Just because the marketing has convinced them of value? My point is simply they are happy spending the money and getting what they are getting and there is nothing wrong or deceptive about that practice.
    - bagels 12y ago
      The Porsche Panamera Turbo is ludicrously faster than the other two cars (unless you're talking CTS-V). You're not just paying for the badge (though you are paying for that too)
Theodores 12y ago
What is not mentioned in this story is the Kimberley Process Certification Scheme that started in 2003. This was as a result of concern about 'conflict diamonds'. Essentially, if you bought through De Beers then you had a 'conflict free' diamond, with a diamond from anyone else then you were taking your chances. Although the KPCS had noble intentions it also was a means of controlling the market. Maybe that is why we had concern about 'conflict diamonds' in the first place - De Beers needed a new way of controlling the market and it ties in with a lot of the narrative presented here.
- iwwr 12y ago
  > Although the KPCS had noble intentions it also was a means of controlling the market. De Beers used the film Blood Diamond with DiCaprio as a positive marketing tool (they bought advertising with it -- 'De Beers presents...'). It popularized the notion of 'conflict diamonds' and then they calm the fears of their customers with the certification mechanism. More importantly, it creates legal opening for countries to ban the trade in non-certified diamonds.
  - judk 12y ago
    Are there reliable independent audits of DeBeers conflict-free claims, or are they just lying about it-- another facet of their monopolistic jewel of a business? Ah, found it: KPCS only covers diamonds traded for weapons, it doesn't cover slave/child labor, environmental abuse, or any other crimes committed during mining for DeBeers diamonds. http://en.m.wikipedia.org/wiki/Kimberley_Process_Certification_Scheme http://en.m.wikipedia.org/wiki/Kimberley_Process_Certificati...
- ZachPruckowski 12y ago
  Wait, but most of the competing diamonds are from Canada, Russia, or Australia, right? Wouldn't those be conflict-free more or less automatically? If De Beers tried to set prices at which you could sell certified diamonds, couldn't those competitors make their own certification that the majority of the diamonds would use?
ginko 12y ago
Good. The sooner we can get rid of the diamond lobby the sooner we can use diamond for actually useful applications.
- return0 12y ago
  Aren't we already? Only utility i know is cutting glass.
  - Danieru 12y ago
    Diamonds are also useful for cutting stones. Granted this was never much of a problem because one only needs to sprinkle the saw blade with tiny diamond fragments. Your local hardware store should have a shelf of diamond cutting blades.
  - InclinedPlane 12y ago
    Diamond is used everywhere in tons of applications. It's especially useful in cutting and drilling of metal and stone. Although contra to the GP's point, industrial diamonds are in a completely separate market from gemstone diamonds and de beers' monopoly doesn't have much effect on that. You can find diamond tipped and coated tools at any local hardware store, for example, at quite reasonable prices.
  - Tyr42 12y ago
    There's also some quantum computing applications, but that requires synthetic diamonds doped with some other elements, and in very thin sheets. The energy levels of the electrons around the impurities are the different states it can be in, and can be controlled by lasers.
  - Panoramix 12y ago
    In addition to hardness, they have an exceptionally high thermal conductivity.
    - wyager 12y ago
      Holy shit! No kidding! From wikipedia: "Monocrystalline synthetic diamond enriched in the isotope 12C (99.9%) has the highest thermal conductivity of any known solid at room temperature: 33.2 W/(cm·K)" Copper is about 4 W/(cm*K).
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- sgk284 12y ago
  Supply and demand is more of a guideline than a strict rule (as is almost everything in economics). Monopoly pricing could result in lower than market pricing if 1) they have enough supply to satiate the market demand and 2) they want to continue to price any competition out of the market. By keeping prices lower they stop existing competition from being able to make a profit and they stop new competition from being able to justify the costs to start mining operations. In other words, in a market that anyone can enter, a monopoly can establish a continued monopoly by ensuring that they are the sole supplier of goods in that market. If it becomes too profitable, then other competition will naturally start eating at your market share. Note: I'm not saying this is what happened with DeBeers.
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return0 12y ago
If they 're not scarce they 're not going to be very valuable as status symbols. It seems like de Beers will take the market to its grave with them.
chulk90 12y ago
This is actually very old news...
jds375 12y ago
I wonder if the price will ever become so low and diamonds so common for consumers that the 'diamond ring engagement' trend starts to disappear.
- erikb 12y ago
  You can start with engaging with another present that shows something more important to your girl than a simple ring that every other girl has.
- bluedevil2k 12y ago
  No, prices will not go down. Demand has skyrocketed, see my other post for reasons why.
sandycheeks 12y ago
Didn't the RSS James Cook find a bunch of diamonds where the mantle is exposed beneath the Atlantic back in 2007? I remember following this as an amateur geologist but never heard anything more after the diary entry found here... http://www.classroomatsea.net/JC007/diary/diary_12-04.html http://www.classroomatsea.net/JC007/diary/diary_12-04.html I assumed this would have a significant effect on the supply since they indicated that they got over 150 carats simply by dragging a bucket across the sea floor.
- johnchristopher 12y ago
  I woulnd't hold my breath too much: > But before that, as the First of April passed into the Second, and then to the Third, our delight turned from scientific wonder, to greed, and finally to suspicion concerning the amazingly prolific haul of gems from the abyss.
bluedevil2k 12y ago
I work at a company that helps companies sell their rough diamonds, so I've seen the seismic shift in the rough diamond market over the last few years. There's a common belief amongst those in our area - "the diamond industry has changed more in the last 5 years than it did in the previous 100". That's probably an understatement. The decline in market share can't be understated on its effect on the diamond industry - DeBeers market share has gone from 90% to 40% in the past 10 years, and as a result, their pricing power has disappeared. Before, DeBeers had a take it or leave it price - sight holders essentially had a choice to accept the price DeBeers offered, or basically go out business. Now, any company who wants to buy rough diamonds has the ability. Whereas most people here have commented that the prices of diamonds should decrease, on the contrary, prices have increased. More people have access to the diamonds - demand has exploded. The decline in market power of DeBeers has been an exciting time in the industry. If be happy to answer any questions - it's a fascinating industry.
- bane 12y ago
  > Whereas most people here have commented that the prices of diamonds should decrease, on the contrary, prices have increased. Could that just be an effect of an already conditioned market? If I were to sell diamonds from my own mine, and they were moving at the prices De Beers set on their product, why wouldn't I keep my price high?
  - bluedevil2k 12y ago
    You don't "keep your prices high". Your prices reflect the market price now (whereas they didn't before). Auctions ensure that the market price is found by inviting a significant number of participants.
    - chc 12y ago
      Then why do used diamonds go for such a small fraction of the price?
      - 12y ago
joering2 12y ago
Mandatory article (that was commented on HN a while ago): http://blog.priceonomics.com/post/45768546804/diamonds-are-bullshit http://blog.priceonomics.com/post/45768546804/diamonds-are-b...
chromaton 12y ago
This articles mentions current diamond prices and even shows a graph of prices over time. My understanding was that there has not been a real market for diamonds, and thus, nobody was able to show an accurate price. Where is this price data coming from? Is there now a market where you can buy e.g. diamond futures contracts?
reillyse 12y ago
The whole diamond industry is rotten to the core. Even the process of tearing up the ground to get at diamonds is a total waste of time, effort and the planet. Do a google search for "largest hole in the ground" and you'll see what a large diamond mine looks like. That's before we even start to consider blood diamonds. Do everyone a favor and if you are considering buying a diamond as an engagement ring, have a chat with your significant other and see how they feel about lab created diamonds. They are cheaper and much higher quality and leave everyone happier all round.
- judk 12y ago
  Sadly there are too many otherwise wonderful women who suffer from the "diamond dogma" just many suffer from the other great marketing campaigns, such as Christianity.
  - CalRobert 12y ago
    If she suffers from this affliction, you could offer to donate the money to a well-researched charity as it would do more good there than as a status symbol on her finger. Her response may be illuminating.
    - reillyse 12y ago
      Yea, exactly. I'm not suggesting you do it to be cheap and to save money. In fact I'm pretty sure most girls could think of something to do with the couple of grand you save, so why spend it on making people unhappy.
sergers 12y ago
Wass just reading a _new_ article regarding debeers and how majority ownership has changed after near a century of ownership by one family. Debeers plans to raise costs 5% ever yearn for at least next 10 years to hit profit targets. So they must be doing good if now majority of market undercuts them literally.
balladeer 12y ago
The title almost feels like "a world economy no longer controlled by (or, centred around) US or $"

130 points by lelf 12y ago

Interesting, I wonder if this will ultimately lead to a competitive environment where prices decline due to competition? I've read it elsewhere before, but I believe diamonds are only "rare" due to strict control of what comes to market. Will be interesting to see if this affects that strict control. This is especially interesting considering Tiffiany's earning reports this week which showed a substantial part of their post recessions profits is now in the low end consumer goods.

geon 12y ago
> only "rare" due to strict control of what comes to market Not only through market control. Diamonds are sort of rare in themselves too.
- rflrob 12y ago
  Kind of rare, but not enough to justify the sort of price premium they demand, at least according to [citation needed]. Heck, it's probably the same source(a) the Grandparent post is thinking of.
- tunap 12y ago
  Much less rare since man began producing perfect ones over the last 60 years... I recall reading a decade ago the only flaw with the man-made gems was that they were, indeed, flawless. http://en.wikipedia.org/wiki/Synthetic_diamond http://en.wikipedia.org/wiki/Synthetic_diamond
  - ericfranklin 12y ago
    If looking only at jewelry-quality diamonds, there are millions of carats of diamonds mined per year, while there are generally thousands of carats of diamonds grown per year. In that regard, lab-grown white diamonds are much more rare than mined diamonds. It will take billions of dollars in capital to have a diamond growing facility with enough capacity to output more jewelry-quality diamonds than a single large diamond mine (though I suppose that is less than one WhatsApp, so is within the realm of possibility). The Wired article about synthetic diamonds from 2003 was full of hype and misconceptions. Most all synthetic diamonds grown today are not flawless, and that is not by design. However, in the last couple years lab-grown white diamonds have become much more available in normal jewelry-quality ranges: http://d.neadiamonds.com/lab-created-diamonds/White-Diamonds http://d.neadiamonds.com/lab-created-diamonds/White-Diamonds ^ Disclosure: I'm an owner of D.NEA and have been selling jewelry-quality synthetic diamonds for many years.
    - tunap 12y ago
      Thanks for the additional input, EF. The disparity is much larger than I initially thought. In time, as methods & costs are refined, perhaps the ratio will shrink and reverse. I also believe that is the article I was referring to... IIRC the 'white' conundrum was the big impediment to mass production... much like the recent breakthrough in LED tech's progression to white light. Edit: Great site! Very informative... http://d.neadiamonds.com/white-diamond http://d.neadiamonds.com/white-diamond
rhizome 12y ago
This is especially interesting considering Tiffiany's earning reports this week which showed a substantial part of their post recessions profits is now in the low end consumer goods. If the correlation holds, we can expect to see a lot more teal at Target.
bradleyjg 12y ago
It's a strange many party prisoners dilemma out there, that is so far without a lot of defections. When the primary and secondary markets join together then prices will come down quite a bit. Right now, taking a diamond out of the store cuts its value at least in half.
- thruffle 12y ago
  Or even if for cultural reasons the secondary market remains relatively unimportant, you'd expect prices to fall in the primary by quite a bit. Must say I'm surprised that it hasn't happened already. So far no defections seems like a reasonable guess, though I Googled for 10 seconds and couldn't find any further discussion of that guess.
  - SoftwareMaven 12y ago
    It sounds like China is joining the diamond consumer movement, which would increase demand significantly.
pizza234 12y ago
I personally think that the price of the diamonds is almost exclusively determined by the marketing success. One very interesting bit in the article somebody's mentioned about De Beers story is that artificial diamonds are already cheaper than natural ones, and virtually undistinguishable. De Beer's response has been to produce machines than can distinguish natural diamonds from artificial ones. My conclusion is that people who wants diamonds want simply something expensive, as status symbol. They don't want a shiny rock at the most reasonable price, otherwise, it wouldn't be a status symbol anymore. If prices would fell, the perception of diamonds would change drastically, and I don't think that the industry (cartel or not) is going to allow that.
- ridgeguy 12y ago
  I agree. Synthetic diamonds are available and generally run about 25% less per carat than an equivalent quality natural stone. This pricing is high in view of the relatively low production costs. Gemesis and other companies were successful in driving down the cost of capital equipment for making diamonds by the older high pressure, high temperature process. Chemical vapor deposition of high quality diamonds is well established and doesn't cost much at all. Market pricing for aesthetic applications of diamonds continues to be only loosely related to cost of production. I think this will continue until the Maker movement decides it would be cool to have diamond doorknobs, at which point the price will drop to something more closely related to the cost of arranging sp3 bonds between carbon atoms under metastable conditions - i.e., not much. edited for a typo
  - ericfranklin 12y ago
    As a producer of synthetic diamonds (http://d.neadiamonds.com http://d.neadiamonds.com), I can say the production costs for jewelry-quality diamonds are not as low as people seem to think. It is one thing producing brown/yellow diamond powder/grit for cutting tools, but is orders of magnitude more difficult growing a large single-crystal diamond colorless and clean enough to set into jewelry. The capital equipment for HPHT and CVD are both still quite expensive. It is possible to find some used BARS presses for reasonable prices, but you will be hard-pressed to make a large colorless diamond with one of those machines, even if you know the right "recipe" to use. Gemesis has many of these BARS presses and they have only been able to produce orange yellows and to treat CVD material with them. CVD does grow more crystals per machine cycle, but also has much higher labor, power and support costs than the latest generation of HPHT machines. CVD diamonds also typically grow as a brownish or grayish color and have to be HPHT-treated (different process than HPHT-growing, but can be done in the same machines) at additional cost to whiten them, healing defects in the crystal lattice. The cost to grow a rough white diamond is generally comparable with the cost to mine one from the ground. From there, the cutting, grading, logistics and jewelry all cost essentially the same. Lab-grown diamonds are a raw good, more similar to steel, than they are an assembled good, like a TV or laptop. There will certainly be more improvements along the way, but diamond synthesis only occurs under certain conditions defined by nature. Changing the crystalline structure of carbon is a bit more involved than heating up some filament for a 3D printer.

frozenport 12y ago

>>Historically the diamond industry was structurally flawed -the De Beers monopoly controlled prices. Nonsense! With no utility, De Beers' monopoly is the only reason why these objects have value.

airblade 12y ago
That's incorrect. On the gem side, the vast majority of people wearing diamonds would tell you they have utility. On the industrial side, diamond is a fascinating material with physical properties at the extremes, e.g. hardness, thermal conductivity, electrical conductivity, etc etc. It is vital in many applications where there is simply no other material which could fulfil the physical requirements.
- frozenport 12y ago
  >>people wearing diamonds would tell you they have utility Fashions change, yet people believe that diamonds have permanent value ('is forever'). In contrast to bullion, this is relatively recent development with little ties to traditional banking practices. >>On the industrial side, diamond is a fascinating material These can be made on demand, and cutting diamonds cost something like $1 per carat. Nobody is raging against the crystal lattice.
  - argumentum 12y ago
    > Fashions change, yet people believe that diamonds have permanent value ('is forever'). In contrast to bullion, this is relatively recent development with little ties to traditional banking practices No, actually diamonds (and other gems) have had artistic/cultural/symbolic value for as long as civilizations have existed. I.e. the "crown jewels", the "hope diamond" and more: http://en.wikipedia.org/wiki/List_of_diamonds http://en.wikipedia.org/wiki/List_of_diamonds They simply do wonders with light and are aesthetically pleasing when well cut. Not to mention they are incredibly hard to destroy.
    - deleted 12y ago
      [deleted]

lotsofmangos 12y ago

Hang on, De-Beers loses control of the diamond market and then the price goes up? This doesn't look like the market has started being rationally driven by supply and demand, this looks like someone even more nutty than De-Beers has successfully staged a coup.

privong 12y ago
It could be because DeBeers had the capability (and motivation) to carefully control and stabilize mining operations to keep supplies relative constant. In the absence of that careful control and mediation, if the supply is prone to wild swings the price would swing. I could envision a scenario in which uncertainty in the market for a desired item (without an alternative product) could result in a higher than average price due to speculation and nervousness about the supply.
sogen 12y ago
Heck, I expected, as I'm sure everyone else, that the chart would show prices going down, not UP!?! As others commented, crazy times for something of such little value...
pyre 12y ago
Some of those high prices seem like the result of speculation, or people pouring their money into 'something physical' the same way that market volatility sometimes ends up with a rise in gold prices.
- hrktb 12y ago
  I thought diamonds have little to no resale value, or is there other ways to speculate or use them as a something valuable ?
  - zaroth 12y ago
    How can a diamond be "used"? I think it's only the person offering to buy it trying to convince you of this. Diamonds are cheap and easy to appraise, and with laser etching easy to identify. I buy all my ice with AGL certs off eBay. There are more degrees of freedom than with something like gold coins, so diamonds aren't fungible. It adds complexity but I don't think it hurts resale that badly. If the resale market were so much cheaper, that's where everyone would buy their stones, right?

digitalengineer 12y ago

Relevant for those who did not read "Have you ever tried to sell a diamond? (1982)": "The diamond invention—the creation of the idea that diamonds are rare and valuable, and are essential signs of esteem—is a relatively recent development in the history of the diamond trade" http://www.theatlantic.com/magazine/archive/1982/02/have-you-ever-tried-to-sell-a-diamond/304575/ http://www.theatlantic.com/magazine/archive/1982/02/have-you...

sogen 12y ago
Uupvoted because of the deep insight about the greatest marketing campaign ever.
- larrys 12y ago
  Some people seem to feel that there is something wrong with marketing that makes you want a product or service. As many people with an expensive luxury brand can tell you (whether it's a handbag or a car) nice things are often nice way beyond what they really are or what they tangibly provide. (And there is nothing wrong about that..) Let's call it "the mother test". In other words if you gave a luxury car to your mother and she didn't know it was a Porsche Panamera Turbo how much pleasure would she derive out of it over a Toyota Avalon or a Cadillac CTS (relative to the price differential)? Put another way if a woman gets a kick out of a Coach handbag how would she feel if the handbag was a very good (licensed) replica of the Coach instead of the real thing? How many people with expensive Chef's kitchens derive pleasure out of them and actually don't even cook that much? And would rather have a kick ass Chef's oven rather than a GE oven? Just because the marketing has convinced them of value? My point is simply they are happy spending the money and getting what they are getting and there is nothing wrong or deceptive about that practice.
  - bagels 12y ago
    The Porsche Panamera Turbo is ludicrously faster than the other two cars (unless you're talking CTS-V). You're not just paying for the badge (though you are paying for that too)

Theodores 12y ago

What is not mentioned in this story is the Kimberley Process Certification Scheme that started in 2003. This was as a result of concern about 'conflict diamonds'. Essentially, if you bought through De Beers then you had a 'conflict free' diamond, with a diamond from anyone else then you were taking your chances. Although the KPCS had noble intentions it also was a means of controlling the market. Maybe that is why we had concern about 'conflict diamonds' in the first place - De Beers needed a new way of controlling the market and it ties in with a lot of the narrative presented here.

iwwr 12y ago
> Although the KPCS had noble intentions it also was a means of controlling the market. De Beers used the film Blood Diamond with DiCaprio as a positive marketing tool (they bought advertising with it -- 'De Beers presents...'). It popularized the notion of 'conflict diamonds' and then they calm the fears of their customers with the certification mechanism. More importantly, it creates legal opening for countries to ban the trade in non-certified diamonds.
- judk 12y ago
  Are there reliable independent audits of DeBeers conflict-free claims, or are they just lying about it-- another facet of their monopolistic jewel of a business? Ah, found it: KPCS only covers diamonds traded for weapons, it doesn't cover slave/child labor, environmental abuse, or any other crimes committed during mining for DeBeers diamonds. http://en.m.wikipedia.org/wiki/Kimberley_Process_Certification_Scheme http://en.m.wikipedia.org/wiki/Kimberley_Process_Certificati...
ZachPruckowski 12y ago
Wait, but most of the competing diamonds are from Canada, Russia, or Australia, right? Wouldn't those be conflict-free more or less automatically? If De Beers tried to set prices at which you could sell certified diamonds, couldn't those competitors make their own certification that the majority of the diamonds would use?

ginko 12y ago

Good. The sooner we can get rid of the diamond lobby the sooner we can use diamond for actually useful applications.

return0 12y ago
Aren't we already? Only utility i know is cutting glass.
- Danieru 12y ago
  Diamonds are also useful for cutting stones. Granted this was never much of a problem because one only needs to sprinkle the saw blade with tiny diamond fragments. Your local hardware store should have a shelf of diamond cutting blades.
- InclinedPlane 12y ago
  Diamond is used everywhere in tons of applications. It's especially useful in cutting and drilling of metal and stone. Although contra to the GP's point, industrial diamonds are in a completely separate market from gemstone diamonds and de beers' monopoly doesn't have much effect on that. You can find diamond tipped and coated tools at any local hardware store, for example, at quite reasonable prices.
- Tyr42 12y ago
  There's also some quantum computing applications, but that requires synthetic diamonds doped with some other elements, and in very thin sheets. The energy levels of the electrons around the impurities are the different states it can be in, and can be controlled by lasers.
- Panoramix 12y ago
  In addition to hardness, they have an exceptionally high thermal conductivity.
  - wyager 12y ago
    Holy shit! No kidding! From wikipedia: "Monocrystalline synthetic diamond enriched in the isotope 12C (99.9%) has the highest thermal conductivity of any known solid at room temperature: 33.2 W/(cm·K)" Copper is about 4 W/(cm*K).

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sgk284 12y ago
Supply and demand is more of a guideline than a strict rule (as is almost everything in economics). Monopoly pricing could result in lower than market pricing if 1) they have enough supply to satiate the market demand and 2) they want to continue to price any competition out of the market. By keeping prices lower they stop existing competition from being able to make a profit and they stop new competition from being able to justify the costs to start mining operations. In other words, in a market that anyone can enter, a monopoly can establish a continued monopoly by ensuring that they are the sole supplier of goods in that market. If it becomes too profitable, then other competition will naturally start eating at your market share. Note: I'm not saying this is what happened with DeBeers.
- deleted 12y ago
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return0 12y ago

If they 're not scarce they 're not going to be very valuable as status symbols. It seems like de Beers will take the market to its grave with them.

chulk90 12y ago

This is actually very old news...

jds375 12y ago

I wonder if the price will ever become so low and diamonds so common for consumers that the 'diamond ring engagement' trend starts to disappear.

erikb 12y ago
You can start with engaging with another present that shows something more important to your girl than a simple ring that every other girl has.
bluedevil2k 12y ago
No, prices will not go down. Demand has skyrocketed, see my other post for reasons why.

sandycheeks 12y ago

Didn't the RSS James Cook find a bunch of diamonds where the mantle is exposed beneath the Atlantic back in 2007? I remember following this as an amateur geologist but never heard anything more after the diary entry found here... http://www.classroomatsea.net/JC007/diary/diary_12-04.html http://www.classroomatsea.net/JC007/diary/diary_12-04.html I assumed this would have a significant effect on the supply since they indicated that they got over 150 carats simply by dragging a bucket across the sea floor.

johnchristopher 12y ago
I woulnd't hold my breath too much: > But before that, as the First of April passed into the Second, and then to the Third, our delight turned from scientific wonder, to greed, and finally to suspicion concerning the amazingly prolific haul of gems from the abyss.

bluedevil2k 12y ago

I work at a company that helps companies sell their rough diamonds, so I've seen the seismic shift in the rough diamond market over the last few years. There's a common belief amongst those in our area - "the diamond industry has changed more in the last 5 years than it did in the previous 100". That's probably an understatement. The decline in market share can't be understated on its effect on the diamond industry - DeBeers market share has gone from 90% to 40% in the past 10 years, and as a result, their pricing power has disappeared. Before, DeBeers had a take it or leave it price - sight holders essentially had a choice to accept the price DeBeers offered, or basically go out business. Now, any company who wants to buy rough diamonds has the ability. Whereas most people here have commented that the prices of diamonds should decrease, on the contrary, prices have increased. More people have access to the diamonds - demand has exploded. The decline in market power of DeBeers has been an exciting time in the industry. If be happy to answer any questions - it's a fascinating industry.

bane 12y ago
> Whereas most people here have commented that the prices of diamonds should decrease, on the contrary, prices have increased. Could that just be an effect of an already conditioned market? If I were to sell diamonds from my own mine, and they were moving at the prices De Beers set on their product, why wouldn't I keep my price high?
- bluedevil2k 12y ago
  You don't "keep your prices high". Your prices reflect the market price now (whereas they didn't before). Auctions ensure that the market price is found by inviting a significant number of participants.
  - chc 12y ago
    Then why do used diamonds go for such a small fraction of the price?
    - 12y ago

joering2 12y ago

Mandatory article (that was commented on HN a while ago): http://blog.priceonomics.com/post/45768546804/diamonds-are-bullshit http://blog.priceonomics.com/post/45768546804/diamonds-are-b...

chromaton 12y ago

This articles mentions current diamond prices and even shows a graph of prices over time. My understanding was that there has not been a real market for diamonds, and thus, nobody was able to show an accurate price. Where is this price data coming from? Is there now a market where you can buy e.g. diamond futures contracts?

reillyse 12y ago

The whole diamond industry is rotten to the core. Even the process of tearing up the ground to get at diamonds is a total waste of time, effort and the planet. Do a google search for "largest hole in the ground" and you'll see what a large diamond mine looks like. That's before we even start to consider blood diamonds. Do everyone a favor and if you are considering buying a diamond as an engagement ring, have a chat with your significant other and see how they feel about lab created diamonds. They are cheaper and much higher quality and leave everyone happier all round.

judk 12y ago
Sadly there are too many otherwise wonderful women who suffer from the "diamond dogma" just many suffer from the other great marketing campaigns, such as Christianity.
- CalRobert 12y ago
  If she suffers from this affliction, you could offer to donate the money to a well-researched charity as it would do more good there than as a status symbol on her finger. Her response may be illuminating.
  - reillyse 12y ago
    Yea, exactly. I'm not suggesting you do it to be cheap and to save money. In fact I'm pretty sure most girls could think of something to do with the couple of grand you save, so why spend it on making people unhappy.

sergers 12y ago

Wass just reading a _new_ article regarding debeers and how majority ownership has changed after near a century of ownership by one family. Debeers plans to raise costs 5% ever yearn for at least next 10 years to hit profit targets. So they must be doing good if now majority of market undercuts them literally.

balladeer 12y ago

The title almost feels like "a world economy no longer controlled by (or, centred around) US or $"