Are diamonds really forever?
Is the diamond market a created market by De Beers? I remember hearing stories of them controlling the diamond market by making diamonds seem more rare than they really are. Also now that there are synthetic diamond productions will that further decrease the value of a diamond?
Best Answer
138 points
Bob answered one year ago …
Chidog47, let me try to answer your question more directly!
When I studied gemology years ago, it was widely known that De Beers held a monopoly in jewelry and investment grade natural diamonds, and they tried their best to maintain an orderly market by metering out the right amount of "goods" to prop the price up. Old Man has mentioned Russia joining De Beers, and let me add that Australia is also a major player (google Argyle Diamonds). So yes, they could flood the market with jewelry grade diamonds and drive down the price, but why!!! Just as OPEC can open and close the spigot to control supply, so goes De Beers, and I expect Australia follows suit looking out for their own bottom line.
Man made diamonds are not a threat to the investment grade natural diamond market, as synthetics can be spotted by the watchful eyes of the Gemological Institute of America, and other diamond graders. There are synthetic Rubies, Sapphires and Emeralds that are so nice that they command a high price, but the real (natural) gems are not affected because they are a separate market. There is a problem with many gemstones being treated with heat and radiation to enhance their properties! A GIA, or equivalent certificate is a must if you are looking to invest in diamonds!
Would I invest in high grade diamonds! They were a popular store of value, and very compact in case you wanted to leave the country, back in the 70's, but unless there is another bout of runaway inflation on the horizon, I won't be bothering. Likewise with gold, as it is still way in the hole compared to its all time peak when inflation is factored in.
To clarify one thing, there is no A,B or C colorless diamond grade in the USA. D is the top color, or should I say lack thereof! Some companies have used such color grade names in the past. Google GIA for more info.
Anyone see the news today about the 22 carat "D" flawless diamond going up for auction? Let's see GE make one of those!
Answers
2183 points
ChaosNantuko answered one year ago …
synthetic diamond producers will definitely decrease the value of a diamond. Yet it will open a new market for "real diamonds" vs. "synthetic diamonds", which increases the prestige, and so helps to minimize the decrease in value of diamonds. Synthetic diamonds have the potentially to be many levels above what is usually found naturally, so this ones going to come down to marketting. If the main retailers of real diamonds can make them sound special, different, and more "real" then synthetically created diamonds, then the price will stay almost where it is, and profits will only be reduced slightly. If retailers of real diamonds cannot pursuade the public, and make them believe they are somehow better (rarer perhaps?), then the price of diamonds has a long way to fall.
Personally, i'm all for buying the synthetic diamond producers. maybe look into who has the patent for the technology?
2775 points
Oldman answered one year ago …
Back in the 60's, when I used to edit abstracts for Chem Abstracts, there were many about processes from GE & others for synthetic diamonds. This is still an area of confusion. There's an immense market for synthetic diamonds for machine tools, coatings for the big earth and rock cutter teeth, tile and stone saws, concrete jack hammers, etc. (all the way down to pocket knife sharpeners)
On the other hand, even the Russians try to market "natural" diamonds that have bee mined from alluvial deposits or "diamond" pipes via DeBeers. These are "Gem" stones, for decorative purposes, and require faceting to bring out the refraction that makes the "sparkle".
The grading and bidding on "lots" of gem diamonds is done at diamond exchanges, notably in the Netherlands and Belgium, and the exchanges certify that the gem stones weren't obtained from illegal ("Blood") or contraband (Cartel money laundering) by a partnership with Interpol and DeBeers. Most reputable diamond merchants value the security and transparency of the exchanges, even if it increases the bulk cost.
3963 points
MNSL answered one year ago …
No Diamonds are not for ever. Stocks, commodities, currencies all have bull market, bear market, corrections short and long and crash etc.
However According to following websites some analysts expect strong demand for diamonds products from India and China. It is true currently there is a demand for gold and diamond etc due to rapid development of world economy particularly growth in newly emerging countries such India, China etc. At the moment gold and diamond remains firmly in bull market.
However once fall of dollar comes to end and started to recover most believes during 2009, it could signal the turning point for gold and diamond. In addition reduction of interest rate will come to end in some point. My other concern is in a recession and low world growth environment people will postpone buying expensive items such as gold and diamond jewelries. We also can see gradual decline in demand and prices of gold and diamond jewelries due to higher price of gold and diamond. We must not forget that there are different type of investors, traders, speculators and other derivative instrument traders etc have invested in gold and diamond. Their market movement also will affect for gold and diamond prices. Therefore, I have strong feeling we can see correction in gold and diamond prices very soon.
http://www.miningweekly.co.za/article.php?a_id=124337
http://seekingalpha.com/article/45988-chinese-demand-driving-diamond-prices-and-stocks?source=side_bar_news%20briefs
www.mineweb.com
2775 points
Oldman answered one year ago …
P.S. The value of commercial diamonds, from mining, and the value of synthetic diamonds, from pressure reactors, vastly exceeds the value of the Gem stones:
There wouldn't be a cross Channel Chunnel, or any other modern structure; there wouldn't be an oil well or mine pit or commercial steel or lumber process without them...no bathroom tiles; no ceramic fittings, no "high speed steel" cutters or drills or routers. So the synthetics (which also include rubies for lasers, as an example) are much more common than the gems, and much more vital to the world's economy, but they don't say "I love you", they just whine and growl while they do all the hard work.
1130 points
sundarkambam answered one year ago …
Link
http://www.squidoo.com/cubiczirconia
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.
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? In the late 19th century, when they were finishing the Washington Monument, they placed a small cap on top of the monument of the rarest metal at the time - aluminum. Will the same thing happen to a diamond?
Would it be smarter to consider cubic zirconia jewelry that looks so much like a diamond that most jeweler's can't tell the difference?
2183 points
ChaosNantuko answered one year ago …
As a small aside, i just read in an email pushing investment in a number of commodities that
"The growth rate in China for diamonds is 20% a year. Jewelry--especially diamonds--is now the third leading consumption item in China after housing and cars!"
Not enough for me to warrant buying diamonds, but definitely something to think about. IF (big if) the USA goes into recession, and china has less money to spend, will that result in a significant decrease in diamond demand? Probably not. Yet will it result in a significant decrease in diamond demand growth? Its a strong possibility. If the industry is growing slower, then P/E ratios will drop, and diamond producers will lose value. That is definitely speculation though.
904 points
jillybeansisme answered one year ago …
OK. Some things to know. CZs tend to look milky after awhile, so you can tell if they are old. Investment quality diamonds begin at 3 carats on up. You absolutely need to know who you are dealing with or you can easily be scammed. Colored diamonds are more rare, but they are also counterfeited more often (yellow, pink. blue, etc.). Just because a diamond is large, doesn't mean it is worth investing in. It depends on the color (or lack of color), clarity (inclusions are ok, depending on size and number), and cut (it had better be right or the diamond loses value).
As to color (or lack of it), A, B, C and D are colorless. If a loose diamond graded one of these is dropped in water, you will not see it easily. E, F, G and even H are considered white and engagement quality. And then they get yellowish in color to blackish in color and these are not the highly rare yellow or black diamonds that I'm talking about. These are just poor quality diamonds.
As to grade -- anything lower than SI1 (slight inclusion 1) should not be considered even for an engagement ring. If you can see it with the naked eye you don't want it.
