True monetary worth of a Diamond

[Obsessed]

Personally, the value of a diamond e-ring cannot be stated in dollars. But aside from emotional and psycological value, why is such a small piece of stone so costly? I know that Debeers controls the supply and so on.... but can someone elaborate exactly how a diamonds command thousands? Also, if there was no monopoly on the supply side, would the intrinsic value of a dimond even be half of what they cost to purchase today? Its just that I sometime stare at my fiancee''s ring and think, "its beautiful and it means so much to us, but boy did it put a big dent on my wallet! Its like a honda civic on a finger, but without the engineering, parts, metals, labor(?), etc."
What kind of labor goes into finding a top 1% diamond? Are they rare at all? Is platinum rare and expensive to handle? So sorry for so many questions, but I had to ask.

 

[Rank Amateur]

If they weren't so valuable, the mining companies wouldn't be willing to move and process tons and tons of rock to get a few carats of diamonds. Then diamonds would truly be rare.

How much of the price is artificially propped up? Hard to say, really. It seems like the internet has degraded prices more than the variation in suppply. Maybe back in the day DeBeers had total control, but they have a lot of competition now. The things is, this competition wants the high prices as well. It is in their best interest not to offer goods at lower prices even if they could. The mining companies could lower their margins, but WHY?

As far as "intrinsic" value goes, your 1 ct diamond might be worth ten bucks ground up in a diamond-tipped saw blade.

 

[Obsessed]

s far as "intrinsic" value goes, your 1 ct diamond might be worth ten bucks ground up in a diamond-tipped saw blade."

Boy, ten bucks, ya thinks? That kinda sucks. May be the cutting adds a few thou, as does certifying and marketing.

 

[strmrdr]

Diamond prices are marketing driven.
The cost to buy one has no bases in intrinsic value.
Its all in how much they can fool someone into paying for one.

Diamonds at one time may have been rare but not anymore.
There is more supply than demand with more production coming online every year.
Therefore prices should be dropping that they are not just proves that the pricing is not dependant on anything but marketing and controll.
De Beers apears to have more competition but the reality of it is that they dont act like compitition.
My theory is that they are all controlled by the same people to give the illusion of compitition.

Try selling a "used" diamond.
If they really were worth what they are selling for or "forever" you should be able to get your money out of it.
HAHA good luck getting more than 30% back and more likely 15%.

 

[mtrb]

According to the book below the average engagement rock in the US is really worth about $8-$10. This is a great book, and I am not the author or trying to promote, but I would recommend it to anyone who is interested in this stuff.

http://www.amazon.com/exec/obidos/tg/detail/-/0971394296/qid=1077484128//ref=pd_ka_1/002-3536089-4401617?v=glance&s=books&n=507846

 

[Obsessed]

AHA good luck getting more than 30% back and more likely 15%"

You are probably right if you try to sell the diamonds to a non end-user. Its pretty evident that there is a secondary market for diamond jewelry. I wonder what peoples experiences are when it comes to reselling their engagement diamond rings. Its interesting to note that a Tiffany&Co ring fetches an astonishing 50-80% of retail value. In this case the value is in the end-product, not the diamond. Its sad... that a brand name has more intrinsic value than the diamond itself, given the assertion that one can only recover 15-30% of the price of the diamond.

 

[mtrb]

A GIA cert will do wonders if you are trying to resell. Many of the other bogus lab's certs aren't really worth the paper it is printed on if you are trying to resell. I have always thought a GIA cert was a good investment for that purpose. A little insurance policy.

 

[mike04456]

I recall reading once that the intrinsic worth of the human body was about $10 too. I think most people would place a higher value on themselves, however.




In a robust free-market economy, "intrinsic worth" is a nebulous concept. Demand is far more important. Diamonds are expensive because the demand will support the high prices. The demand is advertising driven to some extent, but show me a consumer product beyond basic food items for which that isn't true.




If you don't like De Beers, no one is forcing you to buy diamonds.

 

[strmrdr]

"If you don't like De Beers, no one is forcing you to buy diamonds."

guy: LawGem said no one can force me to buy diamonds so here is your topaz engagement ring.

Gal: De Beers says I deserve a diamond you cheap jerk go die!

 

[mtrb]

I agree, It is a marketing ploy that has worked extremely well over the last 70 years. The US culture especially has been taken in by Debeers. "A diamond is forever" "Two months salary". Who do you think programmed us to take these statements as fact. Who said you should pay two months salary?
I know in some other countries they do not use diamonds as engagement rings. They use rubies and other precious and semi precious stones.
We here in the US are solidly set on the Diamond however, and are programmed to pay through the teeth for it.

 

[Demelza]

A diamond, or any material item, is only worth what someone is willing to pay for it. That goes for gemstones, land, cars, clothing, etc. A diamond has as little or as much intrinsic value as a Picasso. That is simply the reality of living in a capitalistic society. As for the rarity issue, it is true that diamonds are no longer rare due to the fact that they have been found on every continent on the planet. However, a very low proportion of the mined rough is suitable for high end jewelry. Much of it is industrial quality rough. Moreover, the cost of mining is so astronomical and the yield so small that most diamond sources are left untouched (take Colorado, for instance). For this reason, gem quality diamonds truly are rare. What's most valuable to me about a diamond is the fact that there is no other material on earth that has the same physical properties as a diamond. The conditions under which a diamond is formed and brought to the earth's surface are so astounding that I can only be amazed that it has made it to my finger.

 

[tessa]

DeBeers Diamond Invention- Have you ever tried to re-sell a diamond?

read this and it will answer many of your questions about the "worth" of a diamond.

It is pretty shocking to read.

 

[Obsessed]

Interesting article... i've seen it quoted before on other posts. The article was written in 1982 and it implies an impending diamond market crash in mid 80s. Well, its now 20 years since and it hasn't happened yet.... what gives?
I think that the engagement and anniversary ring has become an iconic tradition that will keep the demand and prices up.

 

[valeria101]

----------------
On 2/23/2004 4:23:23 AM Tkimmba wrote:



Well, its now 20 years since and it hasn't happened yet.... what gives?
I think that the engagement and anniversary ring has become an iconic tradition that will keep the demand and prices up. ----------------

Interesting thread

Do you think a crash is at all possible on the diamond market?

Icons do get trempled on, just not that often, I supose. As far as I know, engagement rings existed well before diamonds became widely available, and outside the US they stil do no carry much diamond load wether buyers afford it or not. I am quite embittered at this easy concept of "intrinsic value" - cost accounting, in this case.

How about this line of thought though: AT least there is an established diamond market complete with supply regulation and marketing engine. But how much advertising have you seen for, say, ruby ? The more valuable gems are never advertised - actually, relatively few people ever hear about them unless they are or become potential buyers. Nevertheless, this must be the most enduring trade.

Following the "intrinsic value" logic, such gems which are virtually "unheard of" would be the least valuable. Not so, fortunately.

 

[mike04456]

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On 2/22/2004 5:59:35 PM strmrdr wrote:





'If you don't like De Beers, no one is forcing you to buy diamonds.'

guy: LawGem said no one can force me to buy diamonds so here is your topaz engagement ring.

Gal: De Beers says I deserve a diamond you cheap jerk go die!

----------------

Well, if you give her a topaz, you are cheap unless you spring for a top-color imperial topaz.

But you can spend the same $5k most people around here spend for the e-ring stone and get a very nice untreated ruby or sapphire that is indeed quite rare. I know a few brides who have; my cousin got married last year with a lovely blue sapphire I helped her get wholesale.

If you're going to start a revolution, someone has to throw the first stone.

 

[oldminer]

There was a very long time that really ended over 50 years ago, when diamonds and other precious materials might have been used to escape across borders and to save one's life. Paper money was no good to travel with. Coins were heavy and difficult to transport, but the family jewels could be hidden in the hem of a skirt or in one's cheek and given as bribes to escape death and war.

Today, the value of gems as this sort of monetary system of last resort is not so important as it once was. Borders are not so innaccesible. One can fly anywhere and few people need to escape for their lives. We may have some difficult times ahead, but the world has greatly changed.

This escape mechanism of diamonds is far less important than it once was. Other marketing has taken its place. While it has been effective, there is far less fear of needing diamonds, or using them to go somewhere in another land. This was once an integral part of jewels and diamonds. It no longer seems much of a factor in "value".

 

[Nicrez]

Diamonds cost so much, because good advertising has made giving diamonds for an engagement ring almost synonymous with love. IF you loved me, you would buy me a diamond. The larger the stone (or more salary you spent) means the more you love me.




The adherence to that philosophy has caused a market for proof of love, and there you have all those people who spend so much money on such a small item that is truly a bad investment most times. By the way LawGem is right, Rubies and other stones are also used, but most people don't consider that an "engagement ring". Rubies are actually much more rar than diamonds. I sure wouldn't yell at any guy getting me The DeLong Star Ruby.../idealbb/images/smilies/6.gif




DeLong Ruby
This 100.32 carat star ruby is displayed in the American Museum of Natural History. Discovered in Burma during the early part of the twentieth century, this ruby was donated by Edith Haggin DeLong to the museum.

 

[Mara]

Diamonds themselves aren't *rare* persay....look at all the rough that moves around and also those that aren't gem quality. There are tons of diamonds out there. Gem quality? Another story. It does take more than just a whack at the stone to cut it into a stunning piece. What is THAT skill at cutting worth to you? What is the work to find one gem quality stone in a parcel of rough worth to you? Hard to quantify eh?




In reality, placing any sort of monetary worth on a piece of jewelry is foolish. You buy it because you like it or because your fiance is forcing you to. Hee Hee.

 

[strmrdr]

I just about did go with a ruby for her e-ring but decided that It would be a diamond because I knew she wanted one.
I did tell her if she wanted an upgrade it had to be a Ruby! :}
I settled on 2 rubies for side stones.

I also went to the secondary market for the diamond as to not feed the De Beers machine too badly :}
When I told her about that she said. "You got a better diamond for less money awesome! I love it!"

Am I a lucky guy or what? :}

 

[Obsessed]

IMO, the diamond market will remain for a very long time and prices will keep moving up. As many of you have mentioned earlier, many goods have almost no intrinsic value. Modern economic and business theories show that an advanced economy is full of 'value added' products. Just look at how much we used to pay for a cup of coffee ten years ago and how much we pay for Starbucks coffee today. Its ridiculous! A successful economy would have most of its members satisfied with the basic necessities of life, and further growth in commerce, GDP, etc would be fueled by new methods of consumption. When it comes to a product that symbolizes engagement, a diamond engagement ring is perfect because it is relatively durable and cannot be consumed away. It can be shown off almost everyday that it is worn, and it can remind the woman of that special proposal everyday. In theory we can argue that the "diamond" is just a random object to signify love and commitment, but neverthless it has been agreed upon by modern society. The beautiful German car I recently bought will lose its value and become non-operable in a very finite amount of time. And if I am not as financialy able at that time, I may never own another car like it again. But the beautiful diamond ring on my wife's finger will always be beautiful and "operable"(as long as nothing bad ever happens to it).

 

[mike04456]

----------------
On 2/24/2004 8:09:19 PM Tkimmba wrote:











Modern economic and business theories show that an advanced economy is full of 'value added' products. Just look at how much we used to pay for a cup of coffee ten years ago and how much we pay for Starbucks coffee today. Its ridiculous!

----------------

An even better example would be bottled water. Consider the mark-up on that stuff.

I think anyone who drinks branded water shouldn't complain too loudly about branded diamonds.

 

[winyan]

Personally, though my birthstone is diamond, I also highly value Imperial topaz, (waves to LawMax, with that one!) and Pad sapphires. If anyone gave me either as an engagement ring, in a sizable stone, I'd be thrilled!

There was a thread on the forum that must not be named, about someone giving a pad as an engagement ring. It was a glorious ring!

win

 

[Obsessed]

I think anyone who drinks branded water shouldn't complain too loudly about branded diamonds

.

Well said... I am making sure my fiancee wears her Tiffany on her left hand that holds the Evian water bottle. J/k Did you hear this true story? A 30-something woman, on her way to work, pulls her Lexus into a seven eleven. She buys a coffee and gets back into her car... then, pours the 7-eleven coffee into a starbucks cup. And the cup isn't a durable mug or anything, but a plain disposable papercup. If people are willing to go to that extent, I guess buying a branded/patented diamond at a 100% mark up isn't so bad, considering that the diamond doesn't need refilling everyday.

 

[Griffin]

>But you can spend the same $5k most people around here spend for the e-ring stone and get a very nice untreated ruby or sapphire that is indeed quite rare. I know a few brides who have; my cousin got married last year with a lovely blue sapphire I helped her get wholesale.

If you're going to start a revolution, someone has to throw the first stone.<

I agree with that, Lawgem! Sapphires and Rubies used to be the engagement rings of choice, and I'd like to see them come back as options.
I notice more people now are going to them as E-Ring stones mainly for the color, or just for something different.
Most of them I've seen don't appear interested in the cost aspect, but that's probably because the people confident enough to break the mold at this point tend to be more affluent. I hope thet set the trend for others, though!

 

[fire&ice]

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On 2/24/2004 10:34:15 PM Griffin wrote:

>Most of them I've seen don't appear interested in the cost aspect, but that's probably because the people confident enough to break the mold at this point tend to be more affluent. I hope thet set the trend for others, though!
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Throwing my 2c in - I really don't care about the cost factor. I choose a diamond consciously. I like the transparancy, white color & nothing sparkles like it.

And, as I've said before - a diamond has staying power.

 

[Nicrez]

I too don't care about price...I look for a something white, and sparkly, with excellent cut and angles, that has the maximized refractory and refelctive capabilities that the stone allows and just pick a great BIG rock, that will catch the light of any teeny light source.




But if I had to buy the diamond myself, I would probably get a small blue topaz.