Blog

Diamonds have long captivated us with their scintillating beauty. Formed under extreme heat and pressure deep inside the earth billions of years ago, they are the hardest gemstones. They are prized for adorning jewellery and symbolising eternal love in the form of diamond rings. From ancient India, where diamonds were first mined, to the discovery of gems in Brazil and Africa, the quest for these precious crystals continues today.

Diamonds are coveted for their allure, mystery, and sophistication. In the section below, we'll discuss why are diamonds so expensive.

The History of Diamond Mining and Trade

Over the centuries, India has been the sole known source of diamonds globally, but it was not until the discovery of diamonds in Brazil and, subsequently, South Africa during the 1860s that diamond mining spanned into other geographical horizons. The quantum amounts of diamonds found in South Africa served as a turning point in diamonds trading across the world. Big mining corporations eventually dominated a very closely monitored market for diamonds.

However, the subsequent discovery of diamond deposits in Australia, Russia, Canada and other nations disrupted the concentration of power. While diamonds were scarce and only accessible to elites in the past, improved mining techniques and new diamond discoveries worldwide have made them more available to consumers in modern times.

Yet factors like the perception of scarcity still enable diamonds to command high prices compared to other gems. The history of diamond mining and the parallel evolution of the diamond trade has been one of both monopoly and democratisation.

Why are diamonds expensive?

Diamonds can be expensive due to multiple reasons like its scarcity, demand, mining costs, and marketing propositions.

Here are the main factors why diamond is costly:

1. Scarcity

Diamonds form under unique conditions over billions of years. They need to be extracted from depths of over 140 miles inside Earth. This makes natural diamonds rare relative to other stones and metals. There is a limited supply concentrated in a few diamond-bearing mines. This inherent scarcity allows sellers to command higher prices.

2. Demand

Societal conventions and successful marketing have spurred demand for diamond jewellery. They are intertwined with courtship and marriage proposals as the ultimate symbol of romance and commitment. The sentimental significance and aspirational quality assigned to diamonds generate desire and fuel demand that outpaces supply.

3. Marketing

Diamond miners and sellers have heavily marketed diamonds by linking them to love and luxury. The famous "A Diamond is Forever" slogan cemented the notion that diamonds signify enduring romance. Celebrities with iconic jewellery have also portrayed diamonds as a status symbol. This deliberate marketing around diamonds has manufactured demand by making natural diamonds an aspirational lifestyle product.

The Concept of Diamond Grading and its Influence on Pricing

Diamond grading plays a pivotal role in determining the valuation and pricing of diamonds. It evolved to establish clarity and consistency in evaluating and pricing these gemstones. The GIA, or Gemological Institute of America, pioneered the first standardised framework for grading the quality of diamonds based on universal benchmarks.

The GIA grading scale examines diamonds across four parameters, called the four Cs - carat, cut, colour and clarity. Carat measures weight cut grades symmetry and proportions, colour denotes the relative absence of colour, and clarity indicates internal flaws. Based on a diamond's standings across these four Cs, the GIA assigns it a rating on a scale. The highest rating is the scarce Flawless grade.

As the grade drops from VVS1 and VS1 onwards, some inclusions and imperfections become visible under magnification. The lowest grade is I3, which denotes obvious flaws and poorer cuts. This grading standardisation has enabled appraisers worldwide to gauge a diamond's properties accurately. It allows consumers to understand quality differentiation and its correlation to market prices.

Personal Reflections on the True Value of Diamonds

Beyond its monetary worth, a diamond's true value lies in what it represents to its wearer. The high asking price of diamonds relates to objective quality measures, perceived scarcity, and effective marketing. However, a diamond’s greatest value comes from the human experience it embodies—the emotions, relationships, and memories it is tied to.

A diamond has the symbolic power to express commitment, celebrate personal milestones, and immortalise special bonds. An inherited or gifted diamond jewellery piece tells the tale of past generations and precious moments shared. A diamond's value extends from the joyful sentiments people invest in it. Its economic cost struggles to capture this emotional essence.

Conclusion

For some, the symbolic meaning of diamonds outweighs rational cost considerations. Diamonds ignite emotion - of romance and status. Their complex history shows they are worth reflecting on. But worth lies in the eye of the beholder, and the stories diamonds hold close to the heart. We hope that you’ve got your answer to why are diamonds expensive.