Have you ever wondered why diamonds have such a fantastic reputation? Sure, they are the “hardest” material, and you surely noticed the hefty price tag they come with – but have you ever wondered why all that is?
At the end of the day, it’s just a translucent gem that we found underground. So, can the price be justified? Or are diamonds really worthless?
It’s a fair question considering that we are expected to pay quite a bit for what is essentially a shiny rock. Well, don’t worry, we did some research – and found the explanations.
We plan to elaborate on some misunderstandings, like where these gems come from and how they’re made. So you might want to take a seat; there will be some surprises along the way.
Are Diamonds Really Worthless?
The question that we’re faced today is a bit of a loaded one, we admit.
Are diamonds worthless?
Well, no, not really. If a material has a use for anything – and diamonds certainly do – it will have a worth of some sort.
So, what is it that we’re really asking here? Diamonds come with some outstanding markups, especially when compared to other gems.
But the reasonings for these prices are much different from what people think they are.
Diamonds aren’t rare; they’re not even that strong of a material. Because of this, it seems somewhat strange that they would be worth so much.
But is there a difference between rough diamonds and ones that are sold as jewelry? Yes, there is a difference – and it’s an important one.
Diamonds, on their own, shouldn’t be priced as high as they are. Well, we’re not the ones that set the price – but you get the point. Diamonds that are spotless, translucent, and perfectly cut are a form of art.
Heck, cutting any gem is an art form if it’s done by a professional.
But the material itself is just like any other mineral, with the advantage of getting a high score on the Mohs scale – but even that might not be what it seems. All in all, we can’t say that diamonds are worthless, but they are overpriced.
They still have many uses in many industries – and we can’t overlook the fact that they’re great for jewelry like it’s nothing, either.
But there’s one more thing that shouldn’t be overlooked, and that’s lab-grown diamonds. While they can rarely be compared in size to natural diamonds, they’re the same thing in every other way.
So, if we managed to recreate the whole process in a laboratory, why should we spend all that money on mining and everything else that drives the price up?
Well, it’s a bit complicated, so we’ll have to cover some ground before we answer all of the questions. Don’t worry, though; we won’t leave any stone unturned!
Learn More: What Are Diamonds Used For Other Than Jewelry?
Are Diamonds Rare?
Alright, so we’ve already mentioned that diamonds aren’t really the rarest occurrence in the world. As a matter of fact, rubies are rarer because they have to go through a different formation process. But even though they’re rarer, they cost less in comparison.
So, what’s the deal?
Diamonds are made out of only one thing – carbon. Now, carbon is not the most abundant chemical in the universe – but it’s all over the place, that’s for sure. For a diamond to form, said carbon needs to get exposed to incredible amounts of heat and pressure.
That’s why they’re found beneath the Earth’s crust, where both of those factors are present.
So, if we have more than enough carbon, heat, and pressure to go around, does that leave any chance of a diamond being a rare occurrence in the world?
Well, no, not really.
The only thing that could be rare is a diamond of abnormal size since they take a long time to form. Other than that, there are so many mines today that it would be a shock if we ever ran out of them!
Now, logic would suggest that their price should go down if there’s such an abundance, right? Unfortunately, the introduction of logic would hurt the market. So, the big companies in charge of mining and selling tend to stay away from it.
See, diamonds don’t really obey the rules of supply and demand. They, of course, don’t have to; there’s no law that suggests you need to lower the price if you have a lot of product in stock.
At the end of the day, if people are willing to pay the high prices that are set, why shouldn’t the market make a profit?
And let us tell you, the market is there, and it’s not going anywhere. The demand for diamonds pretty much always persists. Well, at least it has for about a century and a half now.
Alright, people are willing to pay however much it takes to get the shiny gems. But what justifies the prices – or to be more exact, are they at all justified?
Let’s examine the situation.
Related Read: Which Diamond Is The Rarest Diamond? World’s Rarest Gems
Why Are They So Expensive?
What is it that keeps the demand for diamonds so constant? Do we all just really love how they look?
Sure, there are benefits to them in comparison to other gems.
Remember the hardness that they’re so famous for worldwide? Well, the word “hardness” might not represent what you think in this context, but it is an essential factor.
See, diamonds being an incredibly hard material only means that they’re scratch resistant. After all, the only thing that can scratch a diamond is another diamond.
But why is that so important?
Well, as far as jewelry goes, longevity is a pretty big factor. When gems get scratched up over time, they lose their sparkle and their shine, as the light can’t go through them like it once could.
That’s where diamonds come in to steal the show:
Because they can’t get scratched by anything other than their own kind, you can have a gem that shines perfectly during your whole lifetime. That gives them a chance to be worth more than other gems, yes – but the pricing still doesn’t make much sense.
Take rubies, for instance. They’re plenty more expensive than other gems in the family – yet diamonds still take home the gold.
Rubies take the second spot on the Mohs scale, meaning that they’re pretty darn resilient to scratches as well. And when you consider that they’re much rarer than their translucent brother, the logical conclusion would be that they’re worth much more.
But as we know, that isn’t the case. So, why is that?
Well, it’s because about a century and a half ago, a particular company decided to start mining for diamonds, not rubies. Let us explain:
Back in the late 1800s, the DeBeers corporation decided to go into the diamond business. They bought a couple of mines and started selling the shiny gems across the world.
In those days, diamonds weren’t considered to be as prestigious as they are today. Instead, they were pretty much just another gem.
Sure an enormous and finely cut diamond could have found its way into a museum and on the crown of some royal family member – but any gem could fit that description.
So, in the early 20th century, the DeBeers corporation started running a marketing campaign for their product. Traces of said campaign are present to this day, believe it or not.
One of the most famous ads was the idea that you had to spend at least two paychecks on an engagement ring. Not only that, engagement rings were not even a thing before the ads for diamonds started going around.
Now, they had many of these slogans and ads going around the country. They were even the bud of many jokes at the time. But they stuck to them and came out on top, more so than anyone could have imagined.
Because of this, the demand for diamonds grew so much over time that they became a staple of luxury. It didn’t hurt that the corporation had a monopoly on the whole market for a couple of decades in the beginning.
The DeBeers company is still around – but they don’t hold the market in their hands as they used to. That doesn’t mean that the situation’s any better, as there are about five companies that control both the mining and selling of diamonds.
So, how do these companies set the pricing?
Well, the demand is always there, and so is the supply, but if there are too many diamonds on the market, there is a chance that they will drop in value. When this happens, these companies just put a hold on the mining part of the process and focus on selling their diamonds.
By doing this, they limit the supply to keep the price up. That still doesn’t answer the question of why they’re so expensive, though.
Well, it’s simple, because there is so much demand, the sellers just kept driving the price up little by little for a long time. And because diamonds stayed popular for so long, the prices reached a pretty ridiculous level.
Because of this, a gem that is more common than many other rare gems managed to be more expensive than gold which is the bedrock of many currencies around the world!
Learn More: How Many Carat Diamond Should You Wear?
Are Lab-Grown Diamonds Real Diamonds?
Alright, so, while we can’t call diamonds worthless, we sure can deem them overpriced. But what about lab-grown diamonds? Can these gems stack up against the real thing?
Well, remember how we said that diamonds are just carbon that has been exposed to extreme heat and pressure? You can imagine that with such a simple formula, it would be pretty simple to make some gems in a laboratory – which it is!
Growing diamonds has been done in labs as far back as the 1950s. And experts on the market have tried very hard to discredit them for obvious reasons.
Keeping the supply low when needed is one thing – but imagine finding out that people started making diamonds themselves. The effect that it would have on mining and selling is terrible!
Well, it turns out that while you can grow a diamond in a lab, you can’t grow a carat-heavy one; that takes a long time and a lot of resources.
Still, with how the prices are set today, it may just be worth it!
Lab-grown diamonds can’t match the real thing in price – but it’s still a lucrative business. The fact of the matter is that if you have a diamond that can score high in the 4 Cs, you’ll make a good profit.
Now, growing a perfect translucent high-carat diamond in a lab is no easy task, but even the smaller, included ones bring in a reasonable amount of money.
So, are lab-grown diamonds worthless?
Far from it: Just like any gem that has the word diamond attached to it, the price just can’t seem to go down!
So, in terms of are diamonds really worthless, there you have it:
Diamonds are far from worthless; they’re actually overpriced. Now, there’s an argument that could be made for whether they should be worthless, but we’re against it, to be honest.
It’s not that we have some sort of soft spot for the gem. It’s just that in a free market if there’s use for material – or anything, for that matter – it should be worth something.
So, do the prices make sense? Absolutely not.
But hey, it’s just how it is!