Here’s Why Diamonds are Actually Worthless

Diamonds. Those glittering, dazzling stones that have been the epitome of wealth and love for centuries. But here’s a little secret – they’re not as rare as you’ve been led to believe. The hefty price tag that comes with diamonds? That’s the result of some very clever business strategies and marketing campaigns, not their inherent value. Let’s take a journey into the world of diamonds and uncover how a handful of key players have created an artificial scarcity that skyrockets the value of these shiny rocks.

The Myth of Scarcity

First things first, diamonds are not scarce. I know, it’s a shocker. This image of diamonds as a rare and precious commodity is a myth, a fairy tale spun by one of the most successful advertising strategies in history. The truth is, diamonds were found in abundance in South Africa in the 1800s. Normally, when a product floods the market, demand decreases and prices drop. But with diamonds, the exact opposite happened.

The Role of De Beers

Enter Cecil Rhodes, the English entrepreneur who founded the De Beers Mining Company. This man bought up almost all of the diamond mines across South Africa, effectively putting the world’s rough diamond supply in his pocket. By controlling the supply, De Beers created an artificial scarcity of diamonds, leading to higher prices and increased demand for these “rare” stones.

By the time Rhodes passed away in 1902, De Beers owned a whopping 90% of the world’s production and distribution of rough diamonds. This control of the diamond supply, creating artificially high prices and demand, continued well into the twenty-first century.

The Power of Marketing

But controlling the supply of diamonds wasn’t enough for De Beers. They also wanted to shape how we perceive diamonds. When diamond prices began to dip in the 1930s, De Beers launched a marketing campaign that forever changed our view of diamonds.

They aimed to turn the diamond into a symbol of love. With the help of movie stars and other celebrities, De Beers convinced the world that the size of a diamond engagement ring was a measure of a man’s love for his fiancée. This campaign was a massive success, and diamond engagement rings have since become a global norm.

The Current State of the Diamond Industry

Fast forward to today, the diamond industry is no longer a monopoly controlled by a single company. However, it still exhibits characteristics of an oligopoly, with a few key players dominating the market.

As of just two years ago, the Russian diamond mining conglomerate ALROSA had the largest market share of any diamond mining company in the world, at 30 percent. De Beers, now owned by Anglo American, accounted for 29 percent of the global diamond production market share.

Despite the shift from a monopoly to an oligopoly, the tactics used by these companies remain the same. They continue to control the supply of diamonds, maintaining their scarcity and high prices. Furthermore, they continue to market diamonds as symbols of love and wealth, ensuring their demand remains high.

So there you have it. The high value of diamonds is not a reflection of their rarity or intrinsic worth, but rather the result of a carefully orchestrated strategy by a few key players in the diamond industry.

These companies have created an artificial scarcity of diamonds, and used powerful marketing campaigns to inflate their value. So, while diamonds may sparkle and symbolize love and wealth, their high price tag is not a reflection of their true worth. Remember that next time you’re dazzled by a diamond’s sparkle.