By Kanika Kalra
Demystifier : ED Original where the content is written in such a way that it is knowledgeable and easy to comprehend at the same time.
In July, the Economist published an article asking, “Why aren’t millennials buying diamonds?”
According to the article, the answer is pretty simple – everyone watches Leo’s movies, so everyone knows about Blood Diamonds. Hence, if millennials don’t know whether their diamonds are being ethically sourced, they are dubious about buying them.
As a result of this, says the Economist, the diamond industry is facing huge losses. It also briefly mentions how one reason for the dip in the industry might be that this lazy, cowardly generation takes longer to forge committed relationships.
Unsurprisingly, this was met with severe backlash on Twitter.
And my personal favourite – “Cuz we broke, bitch.”
Following the hoopla around this, I came across a Tumblr thread that made me ask what I believe is the real question – why should anyone buy diamonds?
Here are the results I came up with.
1. The demand for diamonds is a marketing invention. They had been treasured as gemstones used by the royalty for thousands of years, but they didn’t become popular amongst ordinary middle-class people until the 19th century. This became possible because of an increase in supply, and the use of innovative and successful advertising campaigns by the De Beers Group of Companies, which started the modern trade of diamonds.
2. Moreover, diamonds make for a terrible investment. The market for gold and silver is fairly liquid. Moreover, just like cash, they are fungible assets – you can trade one large piece of gold for ten smalls ones, just like you can a ten rupee note for ten one rupee coins. These characteristics make it a feasible potential investment.
But you can’t sell used diamonds for anything but a pittance. As soon as you leave the jeweller with a diamond, it loses over 50% of its value. Varying cuts and qualities make the value of all diamonds difficult to assess. Diamond exchanges do not have official rates, and unlike gold, are not quoted on a daily basis. Some diamonds are investment grade but they are almost never found in jewellery.
3. Finally, diamonds are, in fact, not that rare. De Beers monopolized the supply of diamonds for over a century to make the stone extremely expensive. The only way to increase the value of diamonds was to make them scarce, that is, to reduce production. De Beers owns most of the diamond mines. For mines that they don’t own, they have historically bought out all the diamonds, mostly by intimidating those who tried to resist their monopoly. They then transfer all the diamonds over to the Central Selling Organization (CSO), which they own.
Today, De Beers’ hold on the industry supply chain is less strong. And yet, prices continue to rise as new deposits of diamond haven’t been discovered recently and the demand is increasing in China, as well as over here in India.
Circling back to the million dollar question – why should anyone buy diamonds? – I honestly can’t think of a very good reason. Sure, they are very pretty; but so are rubies, solitaires, and other much more affordable gemstones.
The ingenious marketing strategies adopted by the diamond industry have turned it into a status symbol and fooled us into determining the amount of love in a relationship based on the size of the diamond ring. Not only did this industry support apartheid for centuries, it led us to believe that it’s perfectly okay to pillage the earth for sparkly bits of carbon.
So, I don’t know about you, but I personally wouldn’t go for diamonds. If I had the money, there are so many things I would rather do – go for an exhilarating trip to a remote island, buy a house or a car, donate my money to someone who would spend it on better things than stones, fund medical research, or just buy piles of books and build myself a personal library.
Because that’s how millennials prefer to spend their money. The baby boomers can keep their shiny rocks!
Picture credits: Google
You will also like to read:
Views presented in the article are those of the author and not of ED.