Diamonds and Value

I recently finished reading Diamond. Also, I visited Antwerp, which is where the majority of diamonds are cut and polished. On a side note, Gujurat (where my parents are from), is the other major diamond polishing/cutting center. Between my reading and my travels, I have become really interested in the “value” aspect of the industry.

There really is no logical or economic reason why diamonds and other precious stones should hold the value that they hold. There is a fascinating Atlantic article on this topic. I can’t summarize all the information from these sources, but basically there is enough of a supply of diamonds to meet the demand of the jewelry and commercial industries that diamonds should not be that expensive. The value that we place in diamonds and other precious gems is mostly artificial, based on the power of the diamond cartel and our own perceptions.

After visiting the Diamond Museum and walking through the diamond district in Antwerp, I was left with two thoughts. The first is that the industry is filled with sleazy people who are engaged in a rat race to empty your wallet. This isn’t much of a surprise I guess, and the world is now aware of blood diamonds.

The second thought I have is that there is an incredible amount of value placed on the materials, but not nearly enough value in the art. Since Tracey is a jeweler, I see a lot of jewelry and am learning a lot more about that industry. It seems to me that “poor” people obsess over the value of the stones and the materials, while “rich” people are more focused on the design and beauty of the objects. This is why Boucheron and other high-end jewelers can survive – they cater strictly to those people who are willing to pay for art.

The diamond industry definitely has something to worry about if people start making synthetic diamonds. In fact, using modern processes, the synthetic diamonds are impossible to tell apart with the naked eye or even a microscope. This new technology puts the industry very close to disaster. From a value perspective, it is foolish to invest in a diamond.