There is no denying that natural diamonds are a traditional symbol of love and romance. There comes a question to mind and that is why a man traditionally proposes the womаn of his dreams with a diamond ring? Was it always that way? Do we realize how hard a man has to work to buy a diamond ring for a marriage proposal? Natural diamonds aren’t actually rare at all. So, are they then an absolute ludicrous investment?
Here are 10 Facts About Natural Diamonds You Must Know:
1. The Earliest Usage of Natural Diamonds: Polishing Axes
You may ask people what do they think about first when they hear the word “diamond“. I bet 99% of people will reply to the first thing they think about is a diamond ring.
However, the first use of diamonds by humans we see among the Ancient Chinese people, who used the natural diamonds to polish ceremonial burial axes. That happened during the Stone age or almost over 4,500 years ago. The truth is most industries use natural diamonds until today.
The axes, which were made from corundum (or ruby in its red form and sapphire in other colors), were polished to a mirror finish. Natural Corundum is the second hardest occurring substance on the Earth and close examination of these axes by physicists revealed that they could have been made only with earth-mined diamond abrasives. This is quite appropriate, since today, 85% of mined diamonds (about 120 million Carats) used for the industrial purposes of cutting, drilling, grinding, and polishing of various metals and parts.
2. Diamonds Are Not The Hardest Substance on Earth
We all might have been told that the natural diamond is the hardest substance on Earth, but it is practically a mantra for diamond jewelers trying to sell you with its physical properties if you’re not impressed by its beauty. Too bad it’s not true: while Natural Diamonds are the hardest mineral substance available, it is not the only hardest substance known to man. In 2005, physicists Natalia Dubrovinskaia and colleagues compressed carbon fullerene molecules and heated them at the same time to create a series of interconnected rods called Aggregated new Diamond Nanorods (ADNRs or “hyper diamond”). It’s about 11% harder than a natural diamond. (Photo: ESRF). Today, some modern scientists and researchers claim, the hardest synthesized materials on Earth are Q-Carbon and Boron Carbide (B4C), the hardest natural metal – Tungsten.
3. De Beers: The Diamond Cartel
We really can’t talk about diamonds without talking about the De Beers, the visionary company that single-handedly made the diamond industry reach what it is today. De Beers was founded by Sir Cecil Rhodes, who also founded the old state of Rhodesia which later became the country Zambia and Zimbabwe. The Rhodes Scholarship is also named after Cecil Rhodes and fully funded by his estate. Cecil Rhodes started by renting water pumps to miners during a Diamond Rush in early 1867 at Kimberley, South Africa.
He then expanded into mines and after twenty years later became the full-fledged sole owner of all diamond mining operations in the country. Cecil Rhodes built De Beers into the first diamond cartel (yes, they prefer “single-channel marketing” and since they are the only one company at that time, they’re technically a monopoly). De Beers mines diamonds worldwide especially in Africa, then handled their sales and distribution of mined diamonds through various entities (in London, they were known as the innocuously named Diamond Trading Company (DTC); in Israel, they were simply called “the syndicate”; in Belgium, they were called the Central Selling Organization (CSO).
If anyone wants to buy natural diamonds for sale from De Beers, they have to play by De Beers rules: Natural diamond is sold in events known as “sights” and there are such 10 sights held each year, and to buy, you have to become a sight holder (these are usually diamond dealers whose business is to have the stones cut and polished and then resell to the diamond clearing centers of Antwerp, New York, and Tel Aviv). You need to follow complete sets of rules, along with regular and fixed turnovers in order to become approved as the sight holder states.
The natural diamonds are sold on a take-it-or-leave-it basis. A sight holder is given a small box of uncut diamonds price between $1 and $25 million. De Beers set the price for such parcels – there is no haggling and no re-selling of natural diamonds in uncut form, they must polish it and sell it. It is rare for sight holders to refuse a diamond package offered to them, for fear of not being invited back is the one reason and the other is there is hardly a loss if your polishing unit doesn’t know how to get the maximum out of such sights. In the early days of the diamond industry, De Beers controlled about 90% of the world’s diamond supply.
Today, its monopoly on natural diamonds has been challenged significantly with the rise of Alrosa and Rio Tinto and some small mining companies. Estimated that the cartel now controls about 40 to 45% of the world’s diamond trade.
4. Why The Name ‘De Beers’?
5. Are Natural Diamonds Rare?
Natural Diamonds used to be rare in the past but not anymore. While it’s true that the process of extracting a diamond is very laborious (mines need to move many tons of dirt per carat of diamond found) and that the real gem-quality diamonds are relatively few (only about 1 in 1 million diamonds are quality one-carat stones, only 1 in 5 million are 2-carat, and 1 in 15 million are 3-carat), now the things have changed drastically as for the last few years there are many mines who deliver huge size rough diamonds at regular intervals. So diamonds are not rare anymore in an economic sense because supply exceeds demand.
To maintain the high natural diamond price, De Beers creates an artificial scarcity: they stockpile mined diamonds and sell them in small amounts. Perhaps De Beers chairman Nicky Oppenheimer said it best: “Diamonds are intrinsically worthless, except for the deep psychological need they fill.” (mental_floss, vol 7 issue 6, p. 21 “Diamond Engagement Rings” by Rebecca Zerzan)
6. Are natural diamonds real? The Moon-sized Diamond
So – diamonds aren’t rare on Earth, and they may not be rare in space either. In 2004, astronomer Travis Metcalfe of the Harvard-Smithsonian Center for Astrophysics and colleagues discovered a diamond star that is 10 billion trillion Carats! The cosmic diamond is a chunk of crystallized carbon, 4,000 km across, some 50 light-years from the Earth in the constellation Centaurus. It’s the compressed heart of an old star that was once bright like our Sun but has since faded and shrunk. Astronomers have decided to call the star “Lucy” after the Beatles song, Lucy in the Sky with Diamonds.
According to scientists, if you wait long enough, our own sun will eventually turn into one such large diamond star!
7. Famous Natural Diamonds
Just because diamonds are not rare, it doesn’t mean that there aren’t exceptional diamonds produced to date. There’s the 45-carat Hope Diamond (and its famous Curse), the mystical Koh-I-Noor Diamond of India which is now studded in the British crown, and the largest diamond ever found, the 546 Carat Golden Jubilee.
But this is Neatorama, so here’s a truly fascinating story about the Bokassa Diamond. In 1977, a crazy Central African dictator named Jean-Bédel Bokassa declared himself an emperor and asked Albert Jolis, the president of a diamond mining operation, for a diamond ring (he made sure Jolis knew that nothing smaller than a golf ball-sized rock would do!) Jolis didn’t have the money to buy such a large stone but if he didn’t deliver one, his company would lose the mining concession in Central Africa.
So he devised a clever ruse: Jolis found a large piece of black diamond bort (a poorly crystallized diamond usually fit only to be crushed into abrasive powder) that curiously resembled Africa in shape. He ordered the diamond polished and mounted on a large ring. A one-quarter Carat white diamond was then set roughly where the country is located on the continent. Jolis presented the “unique” diamond to Bokassa, and the clueless emperor loved it! He thought that the $500 ring was worth over $500,000! Just two years later, when Bokassa was overthrown in a coup, Jolis heard that he went into exile with his prize diamond ring, and noted wryly: “It’s a priceless diamond as long as he doesn’t try to sell it.”
8. The Most Brilliant Advertising Campaign of the Diamond Industry: A Diamond Is Forever
The 1930s was a bad decade for the diamond industry: the price of natural diamonds had declined worldwide. Europe was on the verge of another war and the idea of a diamond engagement ring didn’t take hold. Indeed, engagement rings were considered a luxury and when given, they hardly contained diamonds. In 1938, De Beers engaged N.W. Ayer & Son, the first advertising agency in the United States, to change the image of diamonds in America. The ad agency suggested a wonderful ad campaign to link the diamonds to romance/love in the public’s mind. To do this, they placed natural diamonds in the fingers of Hollywood stars and suggested stories to newspapers on how diamond rings symbolized romance. Even high school students were targeted:
N. W. Ayer outlined a subtle program that included arranging for lecturers to visit high schools across the United States. “All of these lectures revolve around the diamond engagement ring, and are reaching thousands of girls in their assemblies, classes and informal meetings in our leading educational institutions,” the agency explained in a memorandum to De Beers. The agency had organized, in 1946, a weekly service called “Hollywood Personalities,” which provided 125 leading newspapers with descriptions of the natural diamonds worn by movie stars. The idea was to create prestigious “role models” for the poorer middle-class wage-earners. The advertising agency explained, in its 1948 strategy paper, “We spread the word of diamonds worn by stars of screen and stage, by wives and daughters of political leaders, by any woman who can make the grocer’s wife and the mechanic’s sweetheart say ‘I wish I had what she has.'”
In 1948, an N.W. Ayer copywriter named Frances Gerety had a flash of inspiration and came up with the slogan “A Diamond is Forever.” It’s a fitting slogan because it reminds people that it is a memorial to love, and as such, must stay forever in the family, never to be sold. Ironically, Gerety never married and died a spinster. But equating natural diamonds with romance wasn’t enough. Toward the end of the 1950s, N.W. Ayer found that the Americans were ready for the next logical step, making a diamond ring a necessary element in betrothal:
“Since 1939 an entirely new generation of young people has grown to marriageable age,” it said. “To this new generation, a diamond ring is considered a necessity to engagements by virtually everyone.” The message had been so successfully impressed on the minds of this generation that those who could not afford to buy a diamond at the time of their marriage would “defer the purchase” rather than forgo it.
Then the clever ad agency went one step further. N.W. Ayers noted that when women were involved in the selection of the engagement ring, they tended to pick cheaper rings. So De Beers encouraged the “surprise” engagement, with men picking the diamond on their own (with the clear message that the more expensive the stone, the better he’ll look in the eyes of a woman). They even gave clueless men a guideline: “American men should spend two months wages, whereas Japanese men should spend three. Why? Because they can.”
But the guidelines differed by the nation. A “two months’ salary” equivalent was touted in the United States, whereas men in Great Britain got off the hook with only one month. Japan’s expectation was set the highest, at three months. I asked a De Beers representative why the Japanese were told to spend so much compared to the Americans or the English. “We were, quite frankly, trying to bid them up,” he answered. (Source: The Heartless Stone: A Journey Through the World of Diamonds, Deceit, and Desire by Tom Zoellner)
In 1939, when De Beers engaged N.W. Ayer to change the way the American public sees diamonds, its annual sales of the gem was $23 million. By 1979, the ad agency had helped De Beers expand its sales with more than $2.1 billion.
9. Diamonds are Actually Lousy Investments
De Beers is quite famous for never lowering the price of diamonds. During the Great Depression, the cartel drastically cuts supplies and stockpiled diamonds to prop up their price. But do natural diamonds make good investments? Unless you’re a certified diamond seller, the answer is no: you won’t be able to sell a diamond ring for more than what you pay for it. And the reason is simple: with diamonds, you buy at retail and sell at wholesale, if you can sell it at all. In 1982, Edward Jay Epstein wrote an intriguing article for The Atlantic, titled “Have You Ever Tried to Sell a Diamond?” In it, he wrote about an experiment to determine a diamond’s value as an investment.
The [Money Which?] magazine conducted another experiment to determine the extent to which larger natural diamonds are appreciated in value over a one-year period. In 1970, it bought a 1.42-carat diamond for £745. In 1971, the highest offer is received for the same gem was £568. Rather than sell it at such an enormous loss, Watts decided to extend the experiment until 1974, when he again made the round of the jewelers in Hatton Garden to have it appraised. During this tour of the diamond district, Watts found that the diamond had mysteriously shrunk in weight to 1.04 Carats. One of the jewelers had apparently switched diamonds during the appraisal. In that same year, Watts, undaunted, bought another diamond, this time 1.4 Carats, from a reputable London dealer. He paid £2,595. A week later, he decided to sell it. The maximum offer he received was £1,000.
Why is there no active after-market for diamonds? Estimated that the public holds about 500 million Carat of gem diamonds. If a significant portion of the public begins selling, then the price of diamond would plummet. To prevent this from happening, the diamond industry spent a huge sum in making diamonds “heirloom” properties to be passed down for generations. This keeps the price of diamonds artificially high (so people wouldn’t be tempted to unload them for fear of losing money) and discourages jewelers from buying natural diamonds from the public.
10. Artificial Diamonds
The idea of making an artificial diamond isn’t new. H.G. Wells proposed exactly such a thing in his story “The Diamond Maker” in 1911. Since then, scientists have come up with ways to create synthetic diamonds and diamond simulants like cubic zirconia – but experts could always tell them apart. Until now, in the past decade, scientists have perfected a technique called Chemical Vapor Deposition, where carbon gas cloud is passed over diamond seeds in a vacuum chamber heated to more than 1,800 degrees. In a matter of days, they are now able to “grow” diamonds that are virtually indistinguishable from natural ones, even to the experts.
Seeking an unbiased assessment of the quality of these laboratory diamonds, I asked Bryant Linares to let me borrow an Apollo stone. The next day, I place the .38 Carat, princess-cut stone in front of Virgil Ghita in Ghita’s narrow jewelry store in downtown Boston. With a pair of tweezers, he brings the diamond up to his right eye and studies it with a jeweler’s loupe, slowly turning the gem in the mote-filled afternoon sun. “Nice stone, excellent color. I don’t see any imperfections,” he says. “Where did you get it?” “It was grown in a lab which is just 20 miles far,” I reply. He lowers the loupe and looks at me for a moment. Then he studies the stone again, pursuing his brow. He sighs. “There’s no way to tell that it’s with treatment.”
But if you think that the price of the diamond will fall precipitously, think again. Companies that make cultured diamonds like Apollo and Gemesis aren’t stupid. They’re not going to kill the goose that laid the diamond egg by flooding the market with cheap stones.
Whether you love or hate them, diamonds are endlessly fascinating. I’ll be the first to acknowledge that we haven’t touched topics like blood diamonds, J. Walter Thompson’s brilliant campaign to insert diamond engagement rings into Japan’s wedding custom, and so on.