I have heard it said that if you really want to distrust the mass media, read articles on a subject you know a lot about. And so it is with diamonds. Every six months or so, I come across articles along the lines of “diamonds are a scam.” (See recent pieces in The Huffington Post, PolicyMic, and Bustle.) Now, JCK’s editor-in-chief Victoria Gomelsky, Trace Shelton at Instore, and Edahn Golan at IDEX have had their say on these articles, and their takes are all worth reading. But I’d also like to talk about some common assertions, look at where they came from, and why they keep popping up.
First, let’s start with something you hear a lot: “Diamonds are not rare.” Now, this is true, to an extent. You can buy diamonds at any mall in America. Any item that is available within a 10-mile radius of most Americans is not rare. But high-quality diamonds are not so easy to find. And the biggest, best-quality diamonds are rarest of all. Wealthy investors wouldn’t spend $30 million for a 118 ct. D Flawless if there were piles of them lying around somewhere.
When people say “diamonds aren’t rare” they generally mean the supply of diamonds has been artificially constrained. And yes, for decades, De Beers did stockpile diamonds in order to keep the prices high. Now, however, its market share is 35 to 40 percent, and it no longer makes sense to do that. In addition, De Beers’ agreement with European Union antitrust authorities forbids it from stockpiling. As does the American antitrust class-action suit that became final in 2012, which requires De Beers to:
