Diamonds Stigma and Pricing is Based On a Facade
Did you know that diamonds are not really rare. Diamonds are not hard to unearth. Diamonds are actually fairly plentiful in places. Their whopping price tag comes not from any short supply, or in mining them. Instead, most of the high cost of diamonds is due to a left over grand scale set by a huge money making cartel that was established many years ago.
For decades the diamond industry was nothing more than well-capitalized multinational mining companies working with a major designer under a blanket wasn’t completely legitimate. Diamonds, contrary to a common belief aren’t rare or real difficult to unearth (if sought in the correct places). Once the diamonds are obtained from mining companies the product is purchased by “designers” who design the jewelry before actually selling it to retail outlets. The designers sell the jewelery to the retail outlets at considerably high prices as to how much they actually spent on obtaining the diamonds and assembling the products. The retail outlets then mark-up the gems 200-300% from there. Many people are dazzled to wear diamonds and they simply accept their outrageous price as it is. Little to no objection has ever really been made by the public because consumers usually don’t understand how much they have been getting raked. A smaller part of the public concedes that nothing they could ever do would change the situation (in a sense.. that was partially true).
Diamonds do have some very useful applications in the industry. Additionally they are truly aesthetically appealing when cut. Contrary to some perception diamonds do not initially exist as they do in rings and other jewelry. They are actually intricately cut, detailed to look and sparkle in such state. When initially unearthed they look more like a small clear but yellowish stone as opposed to the intricate, sparklingly beauty in their processed state. Another misconception is the premise of diamonds actually being rare or difficult to find. In ways one could consider this ideology a bit of a hoax over the years. The fallacy is that the stones are extraordinarily hard to come by or produce. In certain parts of the world such as Africa and Russia they simply aren’t and diamonds are not even relatively close to the price that is paid for the stones. While they are certainly still in demand they are certainly not hard to come by or find. There are plenty of diamonds to go around. The whole concept of the precious diamond was nothing short of a marketing invention by a group of companies. This concept is possibly of the very best marketing inventions of all time.
– A diamond as they are found in their natural uncut state –
One might ask .. how did all this occur? How could this of taken place? How was this not regulated or curbed? Sadly the answer is in two simple words: BIG BUSINESS. Perhaps you heard of the name Debeers. Debeers is a collection of international diamond companies. Perhaps a diamond “cartel” would be the most correct term. Debeers and it’s member organizations are based out of Germany with strong ties to London, England. These companies stem from mining companies to a few companies that actually design the jewelry (mainly Debeers). Many smaller companies joined by contract to do business only with Debeers. This cartel or group of companies essentially controlled the price of diamonds over the years, many times underhandedly. The cartel purposefully squeezed out smaller companies that planned on selling diamonds at lower prices. Debeers and the companies under contract with the major designer maintained a high cost for selling the finished product to retail outlets. The retail outlets were are/were the last part of the chain. The retail outlets have hiked up the price of the jewelry that much more.
Debeers were the international gate keepers in the diamond industry for decades. The group of companies actually had a firm grip in diamond pricing. Since the turn of the last millennium Debeers has had major difficulty in securing it’s one time diamond market monopoly. Over the past 15 years theoretically the Debeers monopoly has been broken. Russia has emerged with many diamond mines and does not have to sell directly to Debeers as it once did. Many Russian mining companies started bypassing Debeers and sold jewelry to the marketplace directly and at much lower prices. This enabled the every day bloke or bloke-ette to actually start buying diamonds a little more reasonably (though they are still of considerable mark up). Other companies followed that lead and slowly but surely The Debeers cartel has been considerably scaled down. While the group of companies is no where near the monopolizer in the industry it once was the conglomerate are indeed still of major influence.
With that noted, millions of diamonds are still mined each year in places all over the world. The mark-up on diamonds is still fairly extreme. Debeers is not the all controlling king in the industry it once was but that has not eradicated the huge margin between the cost to produce and distribute to the final tag. Things have definitely changed over the past 15 years as far as the diamond industry is concerned. However while the price of diamonds is based more on an actual real market supply and demand today than it was 25 years ago the correction isn’t anything more than slightly modest. Aside from Diamonds not all things that are held in precious regard are more hype than substance. Gold, silver and a few other precious metals are still very much priced relative to their actual value. Gold is and always has been a legitimate commodity. It has been around for thousands of years and will continue to be a form a wealth for years to come. There is no end to gold’s draw or true value in sight. In fact, it is still the most reliable form of wealth on the planet and it shows much promise in continuing to rise. The price of gold and it’s value has consistently increased decade after decade for centuries (literally).
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Diamonds Are Bullshit – Priceonomics
Mar 19, 2013 … The “keystone,” or markup, on a diamond and its setting may
range from 100 to …. As diamonds flooded the market, the financiers of the mines …