Gemology Blog

Saturday, June 10, 2006

Diamond dilemma

I promised a client that I will post more information about controversies relating to Diamond marketing and selling, but was quite busy in the last month and couldn't get time out. Well here is some more info:

Diamonds were not very well known before a century ago. Actually there were only a few places where diamonds were coming out of, for example India. Nor were diamonds very much liked by people, compared to rest of the gemstones because of an obvious lack of color. But the last 100 years have seen major developments in the way these gems has been exploited, hoarded and super aggressively marketed.

Monopoly by one big company(De Beers) meant that prices of diamonds could be increased far more than Emerald and Ruby, which are much more rare and far more beautiful than diamonds. You would probably be surprised to know that in reality diamond is not rare at all. It is found in huge quantities (unlike other precious gemstones). It is the hoarding of diamond that has caused artificial scarcity in the market.

I have pasted below first few paragraphs from Wikipedia at following link: Comprehensive article on De Beers
or go to

The De Beers Group is a Johannesburg and London-based diamond mining and trading corporation. They have historically held a near-total monopoly in the diamond trade, although recently other producers have developed new mines, such as in Russia and Canada, challenging their dominance. In 1994 De Beers was charged by the United States Justice Department with antitrust violations for conspiring to fix prices for industrial diamonds. On 14 July 2004 De Beers pleaded guilty to the charges and paid a $10 million fine. The plea has enabled De Beers to trade directly in the United States diamond market after years of acting through intermediaries. Using its monopoly, De Beers has created an artificial scarcity of diamonds, thus keeping prices high. The modern tradition of diamonds as a part of engagement in many cultures has been largely created by De Beers through an amazingly effective advertising campaign started in 1938. The "A Diamond is Forever" campaign not only convinced the public that the only suitable gift for engagement is a diamond, but also served to limit the market in used diamonds. [1]

De Beers distributes diamonds to favored customers (called sightholders) by selecting batches of diamonds themselves and offering them "as is". Now and in the past De Beers has sold diamonds mined from their own mines, most of which are in South Africa and Botswana. Currently, De Beers is involved in a joint venture that is developing a diamond prospect in Canada.


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