Michael Shames

San Diego Consumer

Diamonds Are A Cartel's Best Friend

Not as rare as Emeralds, Rubies and Opals
By Michael Shames
Posted on Aug 16 2006
Last updated Dec 22 2006

Diamonds. They sparkle. They tantalize. They lie. Yes, that’s right. Diamonds are the most guileful gem on the market. I don’t trust them and you shouldn’t either.

Yes, this is a bold condemnation of a girl’s best friend, but I’m sharing this awful truth because diamonds are no friend at all. They are costly only because they are controlled by a cartel. De Beers has effectively dominated the world’s diamond market by restricting supply and aggressively marketing this stone as something that every woman needs to have. The romance with this particular stone stems back to the late 1930s when the De Beers diamond cartel lifted its business out of financial difficulties by selling diamonds as engagement rings. De Beers advertised heavily and worked with Hollywood to promote the status of diamonds in movies. It worked. When De Beers launched its "A Diamond is Forever" campaign in 1947, it established a tradition with baby boomers where diamonds became a proxy for love.

And it is an overpriced proxy at that. Diamonds have become the commonly accepted means of quantifying man’s love for a woman. In some cultures, it is a dowry; in America, it is a diamond. Why not another gem? Namely because De Beers understood the power of marketing and monopolization. Even though De Beers control of the market has slipped in the past decade, it still uses its formidable inventory and sales contracts to dominate the market.

“Diamonds are forever”? Well, perhaps the interest payments that you’ll be making on the financed purchase last forever. But last I checked, any gemstone has a lifespan that exceeds the average human lifespan by a factor of 100. In fact, diamonds are far more common than many other gemstones yet sell at a substantial premium. Opals, rubies and emeralds are far more rare, yet sell at a more modest premium compared to diamonds.

Now here’s the really infuriating part about diamonds….they are great impersonators. Try to tell the difference between cubic zirconia, moissanite and diamonds. It isn’t an easy task for experts armed with magnifying lenses, let alone those with untrained eyes.

Valuing diamonds nothing less than a consumer’s worst nightmare. Unless you are a diamond expert, you can never be certain about the identification or quality of a stone. The nightmare continues when you try to resell that diamond and you realize there is literally no resale market for these pricey rocks.

And don’t even get me started on the morality of a company that blithely funded the South African economy during the embargo-strained apartheid years or the fact that fifteen percent of the diamonds on the U.S. market either helped fund, prolong, or motivate violence in Africa. Even diamond advocates concede that, once they've been cut, it's virtually impossible to differentiate stones of South African exploitation from ones that were legitimately mined.

So if you are gripped by the need to buy from a cartel, I suggest you fill up your car with gasoline. Currently, it costs a little less than buying a diamond….although that may change, the way things are going.

About the author: Michael Shames is the Executive Director of the Utility Consumers' Action Network, a San Diego-based consumer group and the author of "Secrets from the World's Greatest Consumer". The author can be reached at michael@ucan.org.
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Comments

Posted by gem	August 16, 2006
I'm not really sure why you are so down on diamonds. They are pretty, especially when used with other gem stones! they glitter and they give those that have swallowed the propaganda a good feeling. Diamonds are not the only lie, and 'Free Enterprise'is founded on good marketing and not too much truth as far as I have seen (sometimes it's even legalized fraud). Depeding what you understand by lasting for ever, it might even be right, because as i understand, diamonds are harder than all other gem stones and thefore less destructable. Besides, buyers uyers must feel they are getting their money's worth, otherwise they wouldn't buy them, and diamonds are not the only overpriced products. What else is new?

Posted by Larry	September 5, 2006
How can I get a locator of store in Sandiego - Like Neiman Marcus and modern Furniture store like furniture from Italy. and I love diamonds.

Posted by Joe	September 18, 2006
Mike, i coudl'nt agree with you more, why i bought mywife a vending machine ring, simply a 'token' of my love!

Posted by Diamond insider looking for helpful press	October 6, 2006
You are on the right track of a major consumer fraud. See articles by Ann Zimmerman regarding GIA grading scandal. As you know they are headquartered in Carlsbad. A couple people resigned but the coverup continues as well as no action by Feds. They know about it but need a push by consumer advocate. IDEXONLINE.COM provided muchhelpful material but was threatened to stop most probably. ALMOST NONE OF THE DIAS. SOLD ONLINE MATCH THEIR CERTIFICATES.There is a great benefit to the cartel as well as all bribing dealers. This has been dubbed"Certifigate" and includes russians and other colorful characters.

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