The diamond scam

I've been doing some reading about the De Beers diamond cartel.

I learned that diamonds used to be really expensive, but then diamond mines were discovered in South Africa in the late 1800s and prices plummeted. Thus was the De Beers Group formed as a cartel to bolster prices.

De Beers has been an extremely effective cartel. Diamonds would probably sell for only a fraction of their current prices where it not for a combination of restriction of supply and a marketing campaign to increase demand.

The tradition of the diamond engagement ring is a bogus one. It's a tradition that De Beers invented in the 1930s. De Beers spent big money on marketing, and worked with Hollywood to place diamonds in romance movies.

The retail price of diamonds is two to three times the wholesale price, which in turn is quite a bit higher than what you would get paid if you wanted to sell back your diamond. And probably the wholesale price is several times higher than what it would be without a cartel to prop up the prices. (De Beers has successfully convinced people not to sell back their diamonds with its "diamonds are forever" campaign--if people sold back their diamonds instead of keeping them as family heirlooms, this would put downard pressure on prices.)

Who decided that a man should spend two to three months of his salary on an engagement ring? De Beers. If only all the men of the world would unite and agree not to pay so much, we would all be better off.

A combination of new supply from Canada and Russia, as well as the development of laborataory created diamonds indistinguishable from the real things, threatens to cause a huge crash in the price of diamonds. This is yet another warning against spending two months of salary on a diamond; ten years from now that same diamond may sell for only one week of salary.

Kelly Jane Torrance, who wrote the article about the artificial diamonds, really seems to understand the the psychology of women:

Imagine if the century-old De Beers’ artificial scarcity was destroyed by a little American startup. Imagine a world of hundred-dollar diamonds. We would soon see that it is not the beauty of the diamond that is important to women, but the price of that diamond. If a ring that now costs $30,000 were suddenly $1,000, does anyone think women are going to be happy with that ring? It’s just as luminous as before, but it loses rather a lot of sparkle when it’s accessible to all.

Sandy Chin is the exception who proves the rule:

Sandy Chin, 31, said her feminist side would never allow her to have a ring that, as she puts it, "shows you are the possession of someone else, which is disgusting to me.” So, instead of a ring, her fiance bought her a first edition copy of “Atlas Shrugged” by Ayn Rand.

Comments

[Turkey]

I'll be sad when the diamond market burns down. The end of the diamond scams will be one less reason to secretly hate women.

My soon to be wife has a fairly strong revulsion for DeBeers and asked for a lab-created diamond instead.

[Peter]

The Russian diamonds are generally of fairly low quality and don't compete much against the ones from DeBeers, though the Canadian diamonds (each of which has a microscopic, laser-etched polar bear logo) are of better quality.

Another factor that's contributed to the high prices of diamonds is the need for skilled cutters. Until recently almost all cutters were located in just three cities (New York, Antwerp and Tel Aviv) and were highly compensated. Lately, however, there are a growing number of trained cutters in Bombay, whose skills match those of their first-world counterparts but earn considerably less.

[David Alexander]

Diamonds are excellent way to prove why pornography and prostitution are better than a real girlfriend.

[Rob]

Not a word here on all the blood diamonds spill? Manufactured diamonds will reduce African conflict even if they don't change diamond prices much at all.

I also doubt that the company making gem quality diamonds is interested in driving prices to $100/carat.

Call it intuition.

[Spungen]

You are absolutely right, diamond engagement rings are a racket, more so even than other jewelry. It seems like a waste of money a young couple could put toward valuable assets such as real estate. This is especially true nowadays, with young people having so much more trouble becoming financially stable.

When was younger and more liberal, I gave my then-boyfriend now-husband a pious little anti-diamond speech. It was partly because I thought there was unfair social pressure and also because I'd heard DeBeers was inhumane to its workers. Marriage was not being discussed at the time, but my position was similar to that girl's on your liberal hoax blog: I'd rather have the money.

The problem is, the ring is so socially mandated that unless the couple has a very alternative lifestyle, they'll face public censure. Woe be to the guy if he's in a field where he's expected to make good money, because then people will think he's not doing well.

Fortunately there was already a ring in his family, so we did not have to choose. By the time we got engaged, I thought of his money as my money. I did not want thousands of dollars of my money wasted on something for other people to look at.

[Spungen]

Did anyone ever see the movie "Babyface" (pre-Hayes Code) with Barbara Stanwyck? When the guy asks her to marry him, he just gives her a folder full of C-notes. I thought that was a great idea. It more efficiently respects a marriage's opportunity cost to a woman.

[Peter]

Not a word here on all the blood diamonds spill? Manufactured diamonds will reduce African conflict even if they don't change diamond prices much at all.

Some people prefer the Canadian diamonds because they don't come from war-torn regions.

[hoh]

People complain a bit about the inhumane treatment of african workers, but if the diamond price collapses and manmade becomes prevalent, what will these workers and countries in Africa do to replace the income?

[David Alexander]

People complain a bit about the inhumane treatment of african workers, but if the diamond price collapses and manmade becomes prevalent, what will these workers and countries in Africa do to replace the income?

Return to killing each other as always?

[christy]

Listen up men: do not marry a woman who demands a diamond... huge red flag

[David Alexander]

Listen up men: do not marry a woman who demands a diamond... huge red flag

So the alternative is to stick with either ugly women or to become gay? As I said earlier, the financial requirement needed to maintain a female isn't worth it, and porn and prostitutes are the answer to our society's problems.

[Spungen]

David A., where did you get the idea that ugly women are less demanding?

[Frank.B]

Less demanding initially perhaps.

[David Alexander]

David A., where did you get the idea that ugly women are less demanding?

Less demanding initially perhaps.

It's the faulty theory based on the idea that an ugly girl is more desperate than a beautiful girl because she's less likely to be noticed by men. She's less demanding upfront because it makes up for her lack of beauty.

If even ugly women are demanding, it just adds another victory for the whole porn & prostitute versus real women battle.

[Spungen]

Jeez, David A., is that really the theory you want to go down in Internet history for?

I think how demanding a woman is depends on her family's money and what she's used to having, not so much her perceived desirability. A rich unattractive girl will be more demanding than a poor attractive one. She's used to more.

Also, an attractive woman will tend to be less insecure than an unattractive one. Therefore, she'll be less likely to demand a guy alter his behavior to provide constant proof of affection.

Every woman I ever knew who was into the "Men are from Mars ..." thing was at least overweight, if not generally unattractive.

[SFG]

Seems to me like a pretty clear case of supply vs. demand. If a woman is in less demand, she has more need to supply affection. Same goes for men: alpha males can act like jerks but beta males have to show they care.

[Spungen]

Sorry to belabor the point, SFG, and I know I'm no economist. But clearly human psychology doesn't follow supply and demand in this area. People are only going to have a relationship if it meets their needs, and insecure people have at least as many needs if not more.

Think about it: if it was a supply and demand equation, then would we see so many people of both genders alone? No, we'd see more mismatched people, or flawed people, satisficing and doing whatever it took to get along.

[Spungen]

P.S. I think the issue is the difference between something people demand beause they truly enjoy it, and something people demand because it represents something else. If women just liked glittery objects, a rhinestone would serve the purpose.

A diamond ring, especially a big one, 1) reassures many women that a man values them; 2) reassures them that the man is financially stable; and 3) draws respect for them from other women because of Nos. 1 and 2.

Same thing, to a lesser degree, with things like flowers or dragging the guy on your shopping trips. It's the symbolism, not the actual value.

[SFG]

Fair enough. That makes sense. I also suppose insecure people exist at all attractiveness levels. I was aware of the symbolism value, which is why I have to buy a diamond ring even if I know it's a creation of the De beers monopoly.

[David Alexander]

A diamond ring, especially a big one, 1) reassures many women that a man values them; 2) reassures them that the man is financially stable; and 3) draws respect for them from other women because of Nos. 1 and 2.

I think that's what's driving me crazy. The fact that if I want a decent looking girl that will give me some sense of social respect vis à vis other males, then I have to spend money that I will either never have or prefer to spend on something more useful. Then in turn, despite the large investment, I still have to fear that she'll leave me or if she doesn't, that for me to have anything resembling sex, I would have to cheat on her. Either option ends up leading to a divorce, and I'll end up handing over the majority of my posessions and whatever access I have to my own children to her.

The $250/hr prostitute looks very tempting at this point.

[Austrian]

David,

They all get ugly by 40, so either wait until then to get married (in which case, saving your money, you may be able to grab a 20-something), or settle for a reasonable, rational woman who you can share you life with and not consider primarily as an object of social value. She may not look like Jennifer Aniston, but then again I'm pretty sure you don't look like Brad Pitt.

[Peter]

I suspect that some women want big expensive diamond rings so they can make other women jealous.

[Spungen]

SFG, my point was that there are more efficient ways to accomplish all three objectives. The argument about diamonds being a terrible investment is a good one.

The women I've seen who care the most about rings are either lower-class women (they will probably never be well-off anyway, so they focus on immediate gratification and flashy consumption), or rich women. People in the middle tend to be more practical.

David A., you are way too young to be so bitter. I suspect you're spending too much time with some of Half Sigma's blogroll buddies.

[R. Alex]

Hmmm. By and large the people I know that demand bigger rings mostly tend to be the middlings. Maybe the really attractive, too, but I am not really close to any of those. The less attractive, in my experience, don't place as much value on the ring and the big wedding and so forth. My guess has been the the middlings are often so anxious about it because it's their way to move just a little bit up the bell curve and pass a whole lot of people.

But I also think that Spungen hit the nail right on the head in that it's about wealth. A rich girl anywhere on the desirability curve is more likely to want a nice ring than a poor girl anywhere on the desirability curve, unless the latter is making a point of moving up economically which. However, I know more working-class girls that have the opposite problem and tend to be attracted to guys that aren't going anywhere with their lives.

Not sure I buy the notion that the diamond ring was invented by deBeers from whole cloth. My family has two ancient wedding rings and there's another floating around in my wife's family that predate the 1930's and have diamonds. These may be atypical (there were other rings, but they haven't been brought to my attention because they are unsuitable for wedding rings today), but they are out there.

[R. Alex]

Note that by "middlings" in the first paragraph I mean middlings on the attractiveness curve, not the economic curve.

[David Alexander]

David A., you are way too young to be so bitter. I suspect you're spending too much time with some of Half Sigma's blogroll buddies.

I just turned 23 two days ago, and I'm fending off comments from various family members wondering if I'm gay. In turn, I haven't had a girl even show any remote interest in me in about two years, and she was a decent looking overweight Latina girl. The previous girl before that was a year before, and was a immature, slightly ghetto 16 year old black girl (IIRC, I was 19). Before that was a old friend who was a small titted wonder(she wouldn't need a bra). I'm also watching my online friend get girl after girl to date. I'm also now working retail in job that pays less than my previous job did, and it's a job that I was forced to leave because of my own stupidity. Plus, I'm skipping out on my own high school reunion because I'm still an academic refugee. Also, my best friend has disappeared to write her thesis and only has time for her Wellesley friends.

I'm very bitter these days. :-X

[christy]

yeah they weren't all diamonds... I just inherited an engagement ring from the 1800's that is a giant amethyst, it would look ridiculous to wear every day today.

[Spungen]

Re insecurity: The biggest engagement ring I ever saw in person was about 6 carats. The woman who got it was a long-divorced 40ish partner at a law firm I worked for. The bald, geeky 50ish man who gave it to her had just had his second divorce go through. He'd been known as the office lech, and had hit on me as well as just about every other doable-looking female associate and secretary, some even after hooking up with her (all while still married). He was not subtle about it, and she was not dense.

So, there's a woman who really needed to shove a big ring in everyone's face. And there's a man who needed to make grandiose gestures.

A former friend of mine sent an unsolicited, detailed email about her divorced boyfriend's proposal, including lots of ring details, to everyone in her email bank including the guys. She was a merely OK-looking woman who had desperately wanted to be a television anchor, and was in her early 30s and still being supported by her parents. She had also wanted a guy who made enough money that she could quit work and paint, and this was not such a guy. Again, someone who really needed those symbols to wave around. In both cases, it almost seemed like a consolation prize.

[Spungen]

David A., 23 is very young, although I'm sure it doesn't seem so now. It sounds like you're not in a work/housing/social position to meet many suitable women. When you're young, if you don't have a helpful social group it's hard even if you are good-looking.

Not to be flippant, but ever thought of trying waitering (pick a trendy restaurant), bartending, or working at a hotel? Those are the jobs where people get laid.

[Peter]

The biggest engagement ring I ever saw in person was about 6 carats. The woman who got it was a long-divorced 40ish partner at a law firm I worked for. The bald, geeky 50ish man who gave it to her had just had his second divorce go through. He'd been known as the office lech, and had hit on me as well as just about every other doable-looking female associate and secretary, some even after hooking up with her (all while still married).

What is more likely:
A) that they are still happily married today, or
B) the Sun will rise in the west tomorrow morning?

My money's on B.

[Noumenon]

EDWARD EPSTEIN, Author, "The Rise and Fall of Diamonds":

Well, what I learned was that the diamond business wasn’t a business of extracting, as I originally expected, something of enormous value and then simply seeing how much of this object you could get out of the ground and selling it. That was what the business appeared to be when I started my venture. But their real business was restricting what came out of the ground, restricting what was discovered, restricting what got cut, restricting what actually found its way into the retail market and, at the same time, through movies, through advertising, through Hollywood, through the manipulation of perceptions, creating the idea that there was this enormous demand for these shiny little objects that they seemed to have in abundant supply. So I wound up on this voyage of discovery starting off with the idea that there was this object of great value, and it was just a question of how many could you get out, and I wound up discovering it was just the opposite.

[Lisa]

Do any of you guys ever plan to rebel and not get such a blatently vain and supeficial object of supposed devotion? Not all women desire huge diamonds to represent our union to someone else. Isn't it true that conflict diamonds have only come out of a rebellion of the totalitarian governments that dominate the diamond trade? Is it not also true that companies like De Beers started the commercial frenzy of diamonds for profit and now blame conflict diamonds for the brutality that is a response to the corporate control of African nations?

[David Alexander]

Do any of you guys ever plan to rebel and not get such a blatently vain and supeficial object of supposed devotion? Not all women desire huge diamonds to represent our union to someone else.

No, the problem is that the women who don't want diamonds tend to be ugly and non-superficial, which means there's no societal approval bonus for having a relationship with her. In contrast, the vain diamond-demanding girl may be annoying and might drive you crazy, but it will make you the envy of other men because of her high social rank.

[Spungen]

Hey Christy, you out there? Sounds like David A's calling us and "Lisa" all ugly.

David, this is almost as lame as your good handwriting = attractive woman theory.

Notice you don't cite any benefits to an attractive woman besides the envy of other men ...I'm almost sure other men are usually lower down on the list of reasons.

[cfa]

Goodness, I must be very ugly then!! Diamonds are not on my top 10 list...

[David Alexander]

Hey Christy, you out there? Sounds like David A's calling us and "Lisa" all ugly...

...Notice you don't cite any benefits to an attractive woman besides the envy of other men ...I'm almost sure other men are usually lower down on the list of reasons.

Most of the women who aren't interested in diamond rings and big weddings and the related materialistic trappings from my anecodtal experiences aren't the best looking girls. In fact, most tend to be ugly, and some are probably claiming such peferences because they're desperate.

The idea behind getting a hot girl is to make other men jealous and flout your superiority. In addition, it serves to spite the other girls who rejected you, and you use her a springboard to the mythical hot girl with nice personality.

Also, allegedly, hot girls are better in bed even if they lay still and do nothing. I'd tempted to deal with a snotty girl who gets her nails done and wears high heels than a so-so girl that I'd get along with primarily because of those fetishes. It's the choice between a girl who's sexually attractive, but devoid of friendly and warm personality, or a girl who I can get along with, but could never feel anything sexually for her.

Aesthetic über alles.

Goodness, I must be very ugly then!! Diamonds are not on my top 10 list...

It's quite possible that you could be beautiful, but I'm assured you're not hot.

[Spungen]

The idea behind getting a hot girl is to make other men jealous and flout your superiority. In addition, it serves to spite the other girls who rejected you, and you use her a springboard to the mythical hot girl with nice personality.

Wow, your pillow talk must really be steamy. But that's OK, because:

allegedly, hot girls are better in bed even if they lay still and do nothing.

Maybe for you, but that's still a really bad sign of how things are going.

In fact, most tend to be ugly, and some are probably claiming such peferences because they're desperate.

But have you ever actually known even one, for sure? Or are you just guessing? Just curious.

[cfa]

"allegedly, hot girls are better in bed even if they lay still and do nothing."

It seems to me that you are watching too many Bond movies... That is fantasy, not reality.

[Lisa]

Thank you David. Actually I could have been a model but it seems like a very negative and wasteful thing to be in the world. My boyfriend may have at first been attracted to me because of what I look like but if he wants me "forever" niether my looks or any diamond of his will keep love together for that long. I am financially frugal and minimalistic as well and diamonds do not perpetuate anything of substance.In fact I used to date out of gratuity myself but it really wasn't that fulfilling.It was no wonder that the egotistic hot guys were also selfish in bed.

[David Alexander]

Wow, your pillow talk must really be steamy. But that's OK, because:

The last time I had pillow talk, it focused on the two of us holding hands and comparing our skin tones (she was white), and how that was a beautiful thing.

But have you ever actually known even one, for sure? Or are you just guessing? Just curious.

I knew a girl who's standards changed once she had her stomach stapling, and she started attracting better men.

Actually I could have been a model but it seems like a very negative and wasteful thing to be in the world.

This is going to sound weird, but models aren't hot. Porn stars are hot, but most models are not. Many are beautiful, some are hideous looking, IMHO, but most are definitely not hot.

I am financially frugal and minimalistic as well and diamonds do not perpetuate anything of substance.

You're rather unique when compared to most other women in your situation. Many others would milk their looks to gain the trappings of life that would make help them look better than their colleagues.

It was no wonder that the egotistic hot guys were also selfish in bed.

I think I'm one of the few guys who cares if women actually orgasm in bed, and I chastise my male colleagues who only care about their own orgasm and not about hers. Mind you, I hate women who fake orgasms. I think it's one of the lowest things that you can do as a human.

[Spungen]

You're rather unique when compared to most other women in your situation. Many others would milk their looks to gain the trappings of life that would make help them look better than their colleagues.

I think I've figured out why your experiences on this topic seem so off: You're talking about women your age, about 23. People that young don't usually get married. So women you know can say any damn thing, but it's probably not until they're about 30 that it will matter.

Some commenter in another thread seconded my view about how when people have been together for a while, the woman is more likely to view your money as hers too and will be less likely to want it spent frivolously.

No offense, David, but you spend a lot of time worrying that women you don't even know will "seize assets" that you don't even have.

[David Alexander]

So women you know can say any damn thing, but it's probably not until they're about 30 that it will matter.

The woman with the stomach stapling is in her mid-thirties. Besides, you'd be surprised at what you can hear when you pay attention into other people's conversations. Plus, you'd be pleasantly surprised at how demanding girls my age are. I'm not arguing if it's a good or bad thing, but that's just how the market works.

No offense, David, but you spend a lot of time worrying that women you don't even know will "seize assets" that you don't even have.

I've read way too many stories about men who's wives leave them for better men and through the divorce proceedings loot them men for their assets. I'm also frightened by statistics that show that 10% of children have a biological father that's different than the person they think is their father. Many might say 10% is low, but given my precarious state, that 10% risk is much too high. I am not willing to become one of those men who's bitter at women because "she cheated on me and stole my money". I'd rather avoid the problem in the first place now then fall foolishly in love and end up broke 20 years from now.

The best option if you find a long term relationship is not to marry her or enter into a civil union. Just stay with her until you grow tired of her (or she does so of you), and move on. Otherwise, pornography and your local area call-girl are a great cost-effective option. It's way cheaper than dating, there's less of a social awkwardness about it, and, you get a direct route to what you want.

[Lisa]

The title of this web-site is very mis-leading. I actually thought I would find good points here and all I have read on this subject is a bunch of people who

1. Got way off of the orginal subject
2.Started making comments that resemble a teenager's thoughts
3. Are not educated enough in the jewelry industry to have an opinion!

First of all, diamonds from Canada are also becoming known as blood diamonds as well. Maybe those who think they know better should do their homework first!

And second- you call this the place of common sense? judging by some of these posts, there really is not a whole lot of common sense to be found!

[noteapot]

I have a sneaking suspicion that the whole conflict diamond / blood diamond thing was created by debeers to smear all diamonds not sold by them. I'm pretty sure oil backs a lot more corrupt regeimes than diamonds do. The whole diamond things is a scam. Even the Chinese who never used to care about diamonds are getting suckerd into it.

[Paul]

I appreciate and endorse Sandy Chins take on diamonds, but substituting Atlas Shrugged? Talk about overinflated!

[Chris]

Sandy, that is the most beautiful thing I have ever heard.