The TRUTH About How De Beers Manipulated Price of Diamonds

Summary

This podcast challenges the common perception of diamonds as rare and valuable. It reveals that diamonds are actually abundant and controlled by De Beers, which used a monopoly and clever marketing strategies to create artificial rarity and drive demand. The episode highlights the pressures placed on consumers to spend large amounts on engagement rings, often beyond their means, and contrasts diamond prices with other rare substances. It also introduces lab-grown diamonds as a more affordable and ethical alternative, encouraging listeners to rethink their spending and consider investing in other areas like business or real estate.

Takeaways

• 😀 Diamonds are not as rare as we’ve been led to believe. There are roughly a quadrillion tons of diamonds in the Earth, making them quite common.
• 😀 De Beers, a company that controlled 90% of the diamond market in the early 20th century, used clever marketing strategies to convince us that diamonds are forever and symbolize wealth and love.
• 😀 The De Beers company manipulated the diamond supply to create an illusion of rarity, thus inflating their value over time.
• 😀 In the 1930s, De Beers began marketing diamonds using Hollywood actresses, which led to a 50% increase in diamond sales within 3 years.
• 😀 De Beers pressured men to spend three months’ salary on an engagement ring, significantly increasing consumer spending on diamonds.
• 😀 The famous 1947 slogan 'Diamonds Are Forever' helped cement the idea that diamonds are a symbol of eternal love and luxury.
• 😀 The cost of diamonds is significantly inflated compared to other rare substances like gold, platinum, and even rarer materials like plutonium and antimatter.
• 😀 Lab-grown diamonds, which are chemically identical to natural diamonds, are much cheaper (30-40% less) and increasingly popular as a more ethical alternative.
• 😀 Diamond sales are currently declining, with rough diamond sales expected to fall by 25% and polished diamond sales by 10% by the end of the year.
• 😀 In recent years, the popularity of lab-grown diamonds has surged, with their market share growing 900% in the past five years in India, a key diamond exporter.
• 😀 Instead of spending excessive amounts on a diamond ring, the speaker suggests couples should consider investing in experiences or financial assets like real estate or businesses.

Q & A

Why are diamonds considered rare, according to the podcast?

Diamonds are often considered rare due to their association with luxury and value, but the podcast reveals that diamonds are actually very common. There are an estimated quadrillion tons of diamonds in the Earth's mantle, challenging the common notion of rarity.

What role did De Beers play in shaping the diamond industry?

De Beers played a central role in controlling the global diamond market by monopolizing the production and distribution of diamonds. They influenced consumer perception and created the idea that diamonds were rare and essential for engagement rings, using powerful marketing strategies.

How did De Beers market diamonds in Hollywood?

De Beers marketed diamonds through Hollywood by encouraging movie stars to wear diamonds, associating them with glamour and luxury. This helped establish diamonds as symbols of wealth and status, contributing to the cultural belief that diamonds were essential for engagement rings.

What was the significance of the 1947 campaign 'Diamonds are Forever'?

The 'Diamonds are Forever' slogan, introduced in 1947, became a key part of De Beers' marketing campaign. It was reinforced by Marilyn Monroe’s performance in the song 'Diamonds Are a Girl's Best Friend' in the movie *Gentlemen Prefer Blondes*, solidifying the idea of diamonds being timeless and irreplaceable.

What pressure did De Beers put on consumers regarding engagement rings?

De Beers pressured consumers by suggesting that the cost of an engagement ring should be three times the buyer's monthly salary. This created immense social pressure on men to spend large amounts of money on rings, often beyond their means.

How did De Beers manipulate the diamond supply to create an illusion of scarcity?

De Beers created an illusion of scarcity by limiting the release of diamonds into the market. Despite there being vast quantities of diamonds, they controlled the supply to make diamonds appear rare and valuable, thereby driving up demand and prices.

How did De Beers' monopoly affect the global diamond market?

De Beers controlled 90% of the global rough diamond market for much of the 20th century, establishing exclusive contracts with suppliers and buyers. This monopoly meant that it was virtually impossible to engage in diamond trade outside of their control.

What is the current price trend of diamonds?

The price of diamonds has been on a downward trend in recent years. According to data from 2023, De Beers cut diamond prices by more than 40%, and the global diamond index recently hit its lowest point in 20 years. This decline reflects reduced demand and market saturation.

What are lab-grown diamonds, and why are they becoming popular?

Lab-grown diamonds are chemically, physically, and optically identical to natural diamonds but are created in controlled environments rather than formed naturally in the Earth's mantle. They are becoming more popular due to their lower cost (30-40% less) and growing consumer interest in ethical sourcing.

How have lab-grown diamonds impacted the traditional diamond industry?

Lab-grown diamonds are challenging the traditional diamond industry by offering an affordable and ethically sourced alternative. The market share for lab-grown diamonds is growing rapidly, with global sales reaching $12 billion in 2022, up 38% from the previous year.