Why are diamonds so expensive? As mines near the end of their useful lives, the production of diamonds is decreasing. The high price of diamonds is because they are difficult to produce, there is a limited quantity of high-quality stones, and there is a global market for them. It’s a matter of supply and demand, plain and simple.
Why are diamonds so expensive?
The most common gem to be set in jewelry is the diamond. As the most expensive gemstone on the market, diamonds are also the most sought-after by collectors and investors. Unlike diamonds, many other stones are available that appear like diamonds, shine as brightly, and are created in the same way.
Because diamonds are so rare and valuable, you may be wondering why they’re so pricey. Before we go into how diamonds are created, let’s have a look at what they are. It’s a fact without a doubt. Diamonds are costly. Gold and platinum are less expensive than diamonds.
Several articles on several blogs suggest a conspiracy between De Beers and jewelers who add 200 percent to the price of diamonds. They mark up the top five most valuable substances on Earth, although not the most expensive (antimatter costs $500 million per carat).
De Beers is not solely responsible for the world’s diamond supply, as they mine less than half of all diamonds. Additionally, rather than 200 %, the retail mark-up on diamonds today is often between 5 and 10 percent.
Most Expensive Diamonds
There are gems valued millions of dollars, but most jewellery stones contain diamonds worth hundreds or thousands. You are looking at some of the world’s most expensive diamonds in this exhibition:
The Regent Diamond:
The Louvre Museum in Paris, France is home to the 140.64-carat Regent Diamond, which has a cushion-cut. The anticipated cost is around $61 million.
Centenary Diamond:
Originally weighing 599 carats, the Centenary Diamond was reduced in size to 273.85 carats not long after it was discovered. No one knows how much it’s value, but just in case, it’s insured for a hundred million dollars.
Cullinan I and Cullinan II:
The 3,106-carat diamond from which these two gems were cut yielded a total of 530.2 and 317.4 carats. Nine gems cut from this enormous diamond are worth billions of dollars in their own right.
Hope Diamond:
Harry Winston gave the Smithsonian Museum the 45.52-carat Hope Diamond. They put its value at $200 million.
Several rare and exceptionally expensive diamonds can be found. Lucky for us, most of them aren’t in the millions or billions!
Why are diamonds so hard?
In the outermost shell of a carbon atom, there are four electrons. Diamond’s extraordinarily hard tetrahedral crystal structure is the result of the sharing of these electrons by four other carbon atoms. Diamond’s extreme hardness comes from its basic, closely linked structure.
Diamond Price Chart
| Diamond Carat Weight | Price (Per Carat, Round Brilliant Cut) | Total Price |
|---|---|---|
| 0.50 carat | $1,220 – $5,800 | $610 – $2,900 |
| 1.0 carat | $2,500 – $18,000 | $2,500 – $18,000 |
| 1.50 carat | $3,300 – $24,000 | $4,400 – $32,000 |
| 2.0 carat | $4,200 – $29,000 | $8,400 – $58,000 |
| 3.0 carat | $7,200 – $51,000 | $21,600 – $153,000 |
| 4.0 carat | $8,400 – $71,500 | $33,600 – $286,000 |
| 5.0 carat | $9,600 – $67,500 | $48,000 – $337,500 |
Six main reasons why diamonds are so expensive
The following are the six main reasons why diamonds are so pricey:
1. Yield of the rough diamond is low
The Yield of Diamond Rough is 30 percent or less are common for rough diamonds. From a rough diamond of one carat, a polished stone of 0.3 carats is possible.
Diamonds can be cut into instruments or ground into a powder from industrial-grade diamond raw, while makeable rough is polished into one stone, sawable rough is cut in half before polishing, and near gem or cleavage rough must be split into more than one piece before polishing.
Rare octahedral crystals can yield as much as 70% of their weight in gold when cut into 2 princess cuts. It turns out that just a tiny fraction of the diamonds mined annually, really become polished into gem-quality diamond dust.
2. Diamond Mining Is Expensive
There are only so many diamonds in the world. A London double-decker bus could hold all the gem-quality diamonds ever mined. D Flawless diamonds are so rare that many jewelers have never witnessed one in person.
Diamond deposits sufficient for commercial mining may be found in only 53 places on the planet. Twenty years ago, the final one was unearthed. It’s for this reason that mining firms are willing to spend millions of dollars to build mines in outlandish locations, such as under a lake of Canadian tundra, deep beneath the ocean off Namibia’s coast.
It is extremely costly to run a mine because all of the employees must be flown in, housed, and fed. Many mines have a lifespan of a couple of decades. There is a huge list of mines that are no longer beneficial to operate all across the world.
To discover a carat of diamond in even the most profitable diamond mines, firms must dig through 250 tonnes of rock. Furthermore, only a small percentage of the world’s diamonds are of high enough grade to be utilized in jewelry.
3. Sorting and Cutting are Difficult
Since diamond rough is so expensive and can have such limited yields, it takes significant expertise to select and evaluate each piece of rough. Each batch of rough must be thoroughly analyzed by experts to determine its potential.
Every piece of rough must be evaluated by the cutters to determine how best to maximize its value. Using lasers, the rough can be performed and then refined when a decision has been reached. To cut a diamond, you must use diamond powder: no other substance will do.
When things don’t go according to plan, pricey raw diamonds can be cracked or shattered. For huge diamonds, these experts can spend weeks working on a single stone. This raises the price.
4. Pricing Is Based On Quality
There is now a legal requirement for the GIA to evaluate the quality of that massive, highly-funded diamond hoard. A one carat diamond now costs $120 more, and taking out a loan for that amount of time will add a couple more weeks onto the payment schedule. But the most important factor in your diamond’s worth is that grading report.
Even if you spent so much on financing, raw materials, sorting, and cutting, you will still be competing with every person in the world who owns a G colour, VS2 clarity diamond. Using grades, diamond experts are able to more easily communicate with one another about diamond quality.
But they also make competition more intense within the market. Today, both wholesalers and retailers add only a small markup to the price of a diamond. Since there is less of a markup in the system, diamonds are flying around the globe at breakneck speed.
5. Diamonds Are In High Demand All Over the World
Due to the fact that it no longer produces 50 percent of the world’s diamonds, De Beers has stopped funding consumers marketing to promote diamonds. For at least one generation, there has been zero mass-market promotion of diamonds. Regardless, diamonds remain a sought-after commodity.
Emerging markets, such as China and India, are becoming a threat to the established markets in Europe and the United States. Demand for diamonds is anticipated to grow as these countries become more prosperous.
Thus, the diamond industry as a whole is downsizing and consolidating, as a single misstep or lack of finance can spell for a corporation. Despite this, there has been an uptick in sales. Those in the wholesale trade for diamonds and raw materials, as well as retailers, are among the lucky few that have made it.
The manufacturing of diamonds is dwindling as mines reach near the end of their lifespans. Diamonds are expensive because they are scarce, good-quality stones are few and far between, and demand is high all around the world. A simple analysis of supply and demand reveals the answer.
6. Financing Inventory adds to the Cost of Diamonds
To build new mines, gold miners require enormous amounts of finance. To maintain their cutting plants running, cutters require tens of millions of dollars in raw materials. To make jewelry, jewelers need to purchase diamonds and gold.
In addition, shops must maintain an inventory of items ready for sale. All of the steps in the diamond pipeline are expensive. It’s also not lending diamonds because banks don’t know that much about diamonds to appraise the collateral.
It’s getting more and more expensive to get business loans these days. True, of course, in any industry. Despite this, diamonds’ raw materials are more expensive than those of other industries. The equivalent of taking out a new loan each week. There is a lot of interest building up.
Summary
Diamonds are among the top five most expensive materials on Earth. The high price of diamonds is because they are difficult to produce and there is a limited quantity of them. Only a small percentage of the world’s diamonds are gem-quality enough to be used in jewelry.
What Is the Origin of Diamonds?
Diamonds mined from the Earth are a term you’ll often hear when looking for diamond jewelry. Then there’s the question of why this is specified. Because diamonds are found deep within the earth’s crust, mining is necessary.
To maintain their value, diamonds must be mined, as evidenced by the market for these precious stones. To acquire or recreate it, it’s not something that can be easily done. One of the reasons diamonds are so valuable is because of this.
For diamonds to be mined from the ground, whole industry, scientific procedure, and geological resources must be employed, as well as the labors of hundreds of people.
Interesting facts regarding the origins of diamonds
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Deep below the earth’s crust, diamond formation occurs. This is where diamonds can’t be found by humans.
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When volcanoes erupt, they bring diamonds from deep below the earth’s crust to the surface.
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Diamants in the Earth’s crust can only be removed by volcanoes, as there is no other way of doing this work.
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Mine them out of the lava that was formed millions of years ago by volcanic eruptions.
This makes diamonds one of the rarest gemstones in the world because they are naturally unretrievable by man. This raises their market worth. However, this isn’t the sole reason for their high price. One company, De Beers, was responsible for the high selling price of these gems.
How Much Does A Diamond Cost?
A diamond’s price might vary greatly from stone to stone, yet diamonds are indeed pricey.
Among the many elements that go into determining a diamond’s price are the following:
1. Clarity:
The presence of inclusions and imperfections is referred to as “clarity.” A flawless diamond is extremely rare and therefore quite costly.
2. Carat:
The weight of a diamond is measured in carats. Heavier diamonds are larger and more expensive than lighter diamonds.
3. Cut:
Cut refers to the way a diamond is fashioned, including its proportions and the way its facets are set. Diamonds with excellent cuts reflect more light and look more dazzling.
4. Color:
A white diamond’s colorlessness is quantified by its “color grade.” The most valuable diamonds are colorless, meaning they have no visible traces of the yellow-brown that lower their value.
You won’t find another diamond quite like it anywhere else. For reference, the average price of a one-carat diamond is between $2,700 and $5,500. What point on this spectrum a diamond with a carat weight of one occupies depends on its cut, color, clarity, and carat weight.
Remember this if you’re trying to save money while shopping. If the diamond’s color grade isn’t crucial to you, choosing a lower-quality diamond can help you stay within your budget.
How the De Beers Group Made Diamonds Expensive
Mining and selling diamonds are the sole sources of revenue for De Beers, a multinational corporation based in the United Kingdom. They were a group of companies that revolutionized the mining and high-priced sale of diamonds.
It was only inevitable, however, that as the market for diamonds grew, so searched for new methods of extracting these priceless gems from the earth. As a result, a slew of diamond mining locations was discovered in South Africa in the 1800s.
As a result, there was an increase in the supply of diamonds. As the price of diamonds fell, the De Beers Group realized that they would lose out on the opportunity to sell their diamonds at a premium price if they had a large number of diamonds available to the market.
The De Beers Group bought up as many diamond mines as possible to exert control over the global supply of diamonds. This allowed them complete control over the market’s supply and demand for diamonds, as well as the price at which they might be sold.
The De Beers Marketing Campaign that Changed the Game
It wasn’t enough for the De Beers Group to have complete control over the sale of pricey diamonds around the world. They had to come up with a strategy that would keep the product in great demand.
Why do diamonds command such high prices? The De Beers Group has been running a marketing effort for the better part of a century that has convinced the world that diamonds are pricey and the ideal symbol of love and marriage.
A marketing push by De Beers helped promote diamonds as a wedding band symbol. Thus, the diamond engagement ring was presented to the world. Men were shown buying diamonds for their girlfriends and proposing marriage in these highly effective ads. This was a game-changer.
Are Diamonds Expensive?
It’s no secret that diamonds have a high price tag (thanks to the De Beers Group). When it comes to diamond engagement rings, you’ll discover that the price ranges from a few thousand dollars to several thousand dollars.
Several factors influence the final market price of diamonds, but the most important is what happens to them after they are mined and before they are sold in jewelry stores.
It takes an entire industry to transform rough diamonds into the sparkling gems found in engagement rings. The mining corporations are the first to get involved in the process. Diamonds are shipped throughout the world to be cut and shaped by craftsmen and companies.
Jewelry designers and manufacturers rely on these carefully selected stones, which are sent to Gemological Laboratories for testing and certification, for the creation of their stunning diamond jewelry.
There isn’t much to the actual diamond stone itself. However, its expensive selling price is a result of the lengthy procedure it goes through to become a bright glittering diamond.
Interesting Myths about Diamonds that are Not True
A few widely held beliefs regarding diamonds and their value are untrue, which is unfortunate. As a result, they find up overspending on diamond jewelry because of their preconceptions about style.
Here are the beliefs you need to dispel to better understand why diamonds are so pricey and whether or not you should buy expensive diamond jewelry.
Myth 1: A Larger Diamond Means a Higher Price
Myth 2: Diamonds are rare and that’s why they are expensive
Myth 3: Only earth-mined diamonds are real
Myth 4: Diamonds are a great investment as they have a high market value
Myth 5: You have to spend a lot of money on diamonds because the bigger the diamond is, the better
Summary
Diamonds are naturally unretrievable by man. This makes them one of the rarest gemstones in the world. One company, De Beers, was responsible for the high selling price of these gems. A diamond’s price might vary greatly from stone to stone, yet diamonds are indeed pricey. A flawless diamond is extremely rare and therefore quite costly.
What makes a diamond shine?
Diamonds are cut and polished in a way that maximizes their natural brightness. Reflection, refraction, and dispersion are all factors that contribute to the sparkle of diamonds. Diamonds shine because of their ability to reflect light to the surface of the stone.
A diamond’s brilliance is striking, yet it’s only a small fraction of its full potential. A diamond only reflects a little fraction of the light that strikes it; the rest goes through it.
Diamond Light
The glitter that diamonds are famous for is the result of light being scattered and fragmented as it passes through the stone. The refraction is what you’re seeing here. At their most basic level, diamonds are incredibly complex prisms; light enters the top, is slanted around the inside, and exits through the surface.
This enhances the radiance by generating a rainbow effect (dispersion). Depending on where the light strikes along the diamond’s surfaces, this refraction and dispersion produce natural light and dark patches.
While it may appear counter-productive, these dark patches in the shine are the magic that makes the diamond’s brilliance possible. Because of the darkness, light is amplified in its intensity. A candle’s flame generally appears brighter in a dark room than in a well-lit one.
If a diamond had no contrast it would shine just as brightly, but the brilliance would be substantially less stunning. It’s all about the contrast. It wouldn’t have the sparkle that diamonds are known for.
Are Diamonds Worthless or Worth it?
The initial remark that diamonds are worthless is a cherry-picked one. Jewelry and industrial diamonds are both worthless because they do not have an intrinsic value, but this does not indicate that they are worthless in and of themselves.
The value of gem-quality diamonds that are used in engagement rings is based on the importance we place on them as a society. You’re not going to get very far on a desert island with a diamond, a gold bar, or even a Picasso artwork.
We know, however, that these things are valuable because we all think they are valuable. If you’re not stranded on a remote island far from civilization, diamonds do have monetary value, albeit a fictitious one.
Why are diamonds unethical?
Even though diamonds have long symbolized happiness, they can also be the subject of so much pain for those who are not fortunate enough to own one. Diamond mining is a dirty business, from human rights violations and blood diamonds to habitat loss and water contamination.
Blood diamond
As defined by the United Nations (UN), a “conflict diamond” is a diamond mined in regions held by forces opposing the legitimate, internationally recognized government of a country and sold to finance military action against such a government.
FAQ’s
1. Are diamonds worth anything?
A diamond’s resale value typically ranges between 20 and 60 percent of the initial purchase price. As an example, if a fresh diamond costs $4,000, you can expect to recoup between $800 and $2,400 when selling it.
2. What is so special about diamonds?
The hardness, brightness, and sentimental significance of diamonds are well-known. The only thing that can damage a diamond’s surface is another diamond, even though they are made up of approximately 100 percent carbon atoms.
3. Are diamonds expensive because they are rare?
In terms of rarity, diamonds aren’t very uncommon. When compared to other valuable stones, diamonds are the most prevalent. Gemstone rarity affects its price per carat (or weight). Rarer stones tend to be more expensive.
4. Why do people say diamonds are worthless?
Jewelry and industrial diamonds are both worthless because they do not have an intrinsic value, however, this does not indicate that they are worthless in and of themselves. The value of gem-quality diamonds that are used in engagement rings is based on the importance we place on them as a society.
5. Are diamonds worth more now than 20 years ago?
It cost an average of $2,700 in 1960 to buy a diamond of this quality. Since then, the price of a diamond has more than tenfold risen to 29,650 U.S. dollars.
6. What is the rarest gem?
Painite is not only the rarest gemstone but also the rarest mineral on the planet. There were just two examples of Painite for many decades after its discovery in 1951. In 2004, less than a dozen gemstones had been discovered and were known to science.
7. Are diamonds rarer than gold?
Faul, a gold expert, told Live Science that gold’s basic form is more uncommon than diamonds. Carbon is one of the most common elements on Earth, especially in comparison to heavier metals like gold and diamond, which are merely comprised of carbon under extreme pressure.
8. Are diamonds becoming less popular?
A newer generation of consumers appears to be less devoted to diamond jewelry than their parents and grandparents, according to industry specialists.
9. Are diamonds bulletproof?
EPA’s air conditioning system is incorporated into Diamond Armor to keep the wearer cool and dry, making it bulletproof per NATO standards.
10. Are diamonds a good investment in 2022?
Diamonds are an excellent long-term investment. You may want to consider them if you want to broaden your financial portfolio and protect your future. It’s a great time to buy both rare and commercial diamonds in 2022.
Conclusion
As mines near the end of their useful lives, the production of diamonds is decreasing. The retail mark-up is often around 5-10 percent, rather than 200 percent, on diamonds today. One company, De Beers, was responsible for the high selling price of diamonds. The De Beers Group bought up as many diamond mines as possible to exert control over the global supply of diamonds. A diamond’s price might vary greatly from stone to stone, yet diamonds are indeed pricey.
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