
Starting in 1937 the De Beers company kicked off what has become one of
the most successful advertising campaigns in history. Using the slogan “A
diamond is forever”, De Beers was able over time to convince a large
portion of the western world that a diamond was the only viable option for
an engagement ring. They were also able to create an extensive market for
diamond jewelry and to control the prices for diamonds. At that time, a
diamond was the hardest known material and could only be found in a
limited number of mines. In 2007, advanced in technology have changed the
gemstone marketplace. At this time, a diamond is the third hardest
material as there are now two man-made materials that are harder than a
diamond. In addition, diamonds can now be made in a laboratory. The
question that needs to be asked is what will a diamond be worth in 25
years or 50 years?
At present, it is correct to say that the price of
mined diamonds is not consistent with what the law of supply and demand
would dictate. The De Beers Company produces about 50% of the mined
diamonds available in the world and they restrict the access to gemstone
quality diamonds so that the pricing for diamonds remains higher than it
would normally. This artificial pricing for diamonds tends to inflate the
prices for man-made diamonds as well because there are very few
manufacturers currently making gem quality diamonds. For the next 5-10
years, this situation probably won’t change significantly.
Currently,
man-made diamonds remain relatively rare, but diamond simulants, gemstones
that appear like a diamond, are becoming quite common and inexpensive.
Cubic Zirconia (CZ) is a very rare naturally occurring material that can
be man made in a laboratory inexpensively. CZs look so much like a
diamond that in general, only a highly trained jeweler can tell the
difference. The easy test to identify a CZ versus a diamond is – look
into the stone with a microscope and if there are inclusions
(imperfections in the stone) then it is probably a diamond. If the inside
of the stone is free of imperfections then it is probably a CZ.
What will happen beyond 10 years when man-made
diamonds are readily available? One of the interesting properties of a
diamond is that it conducts heat better than copper. Will it come to pass
that 50 years from now you are cooking your dinner in a diamond frying
pan? Will the value of mined diamonds decrease as man-made diamonds
become more available? In the late 19th century, when they
were finishing the Washington Monument, they placed a metal mall cap on top of
the monument of the rarest metal at the time – aluminum. Since then
aluminum has become easy to refine and is now inexpensive. Will the same
thing happen to a diamond? To think that what happeded to aluminum
won't happen to a diamond just isn't sound thinking.
Armed
with this knowledge, how would an intelligent person respond? Would it be
smart to invest in a comodity that will depreciate in value over the next
25 to 50 years? Wouldn't it be smarter to consider lower priced
alternatives to a diamond (cubic zirconia jewelry) that look so much like a
diamond that most jeweler’s can’t tell the difference? How about man-made
sapphires or rubies? We believe that it is only safe to conclued
that over time the value of mined diamonds, rubies, saphhires,
aquamarines, emeralds and amethyst will decrease significantly as
excellent quality man-made gemstones becomes more available. Does it
make sense to spend more for an inferior product just because it came out
of the ground? Over the long term, it just doesn't make sense.
Please select any picture to view that item in our
Internet store.
Opinion written by Gary Helwig |