Why Are Diamonds So Expensive?

by Ultimate Jewelry Guide
Why Are Diamonds So Expensive?

So, you’ve been looking for a ring and found that the going rate is about $4,000 on average. What gives? Why are diamonds so expensive? It turns out there’s a lot of complicated things going on behind the scenes to make this happen. Here we will explore some of these in detail.

Diamonds are some of the most expensive gemstones in the world. They have been used as decoration for centuries, but it’s not just because they look so good.

Diamonds are extremely rare and difficult to find, making them one of the most expensive options on the market today. Gemstone experts estimate that there are only 30 million carats of diamonds available on earth at any given time, which would make up less than 1% of all minerals found on Earth!

To help you set the record straight, here are some of the reasons why diamonds are so expensive.

Mining Costs

Diamonds are expensive because of the high cost to mine and dig them out of the earth. Many diamonds today come from deep within mines, making it difficult and costly for miners to find these large gems.

When speaking of mining costs, it means everything involved in finding the diamonds, from machinery to labor. Remember, the workers need to be fed and paid even if no diamonds are found. That’s not all, the creation and maintenance of the diamond mining sites are costly.

Polishing and Cutting Diamonds Is Expensive

The process of polishing and cutting a diamond is very time-consuming. This makes diamonds more expensive to produce. Diamonds are also desired for their sparkle, which can’t be produced with any other gemstones on earth besides diamonds themselves.

In addition to the difficulty in polishing and cutting them, diamonds have been around since before humans existed. They are the hardest gemstones on earth, which makes them even more valuable. As a result, diamonds are extremely expensive.

Adding to the costs, it’s experts and expensive tools that are also needed to properly cut and polish diamonds. The investment needed to get the proper tools is extremely expensive, which makes working with diamonds very costly in itself.

A Low Yield In Rough Diamonds

Diamonds are expensive because they have a low yield. Rough diamonds only make up a few percentage of all mined stones and diamonds can be as rare as one in a billion (Kendall, 2009).

Diamond mining is an intensive process that makes it difficult to find enough rough diamonds for commercial use. This means that there aren’t that many diamonds available. If there is a low supply and high demand for the diamond, then it will have to be sold at a higher price in order to make money from its sale.

But why does this happen? If there aren’t enough rough diamonds, most of the yield usually ends up as dust or fragments during the polishing and cutting process.

Market Manipulation By De Beers And Other Industry Leaders

Although it’s considered a myth that diamond prices are affected by De Beers’ monopoly on them, they do own around 35% of all mined diamonds in the world at any given time. They also set the prices for all of them, and they can also increase or decrease diamond production at any time. This monopoly on diamonds allows them to control the price of every diamond sold.

They also have a huge influence over how other people set diamond prices as well since they need investors and banks to buy their stockpiles in order for them to make profits when selling them off. This means that if De Beers cuts down supply or increases demand, then it means that the price of diamonds will go up.

There are also many other players in this industry, including banks and diamond mining companies like Rio Tinto or BHP Billiton who can set their own prices for mined diamonds just as well.

This is because they have so much control over the market even though most people don’t realize it. They can also buy diamonds from De Beers whenever they want, and it’s estimated that nearly half of all diamonds in the world are used for industrial purposes or sold on a gray market where prices aren’t regulated.

The demand for mined diamonds has gone down significantly since 2012 due to economic factors as well as ethical concerns about how they’ve been acquired in a not so conflict-free manner.

The Rarity Of Diamonds

The rarity of diamonds is one of the biggest reasons they are so expensive. The word “rare” only goes as far as to describe diamonds, considering out of all the substances on Earth, diamond comprises less than 0.01%!

Unlike any other precious gemstone which can be mined in different areas around the world, finding a high-quality diamond is a difficult task. The only place you will find these gemstones is deep inside the Earth’s crust, and they can be found in varying locations around the globe.

The “Four Cs” of Diamond Quality

In order to understand why diamonds are so expensive it is important to know what makes them special – there are four factors that determine the quality of a diamond.

The “Four Cs” are:

  • Color, 
  • Clarity, 
  • Cut
  • Carat weight.

These factors all contribute to how valuable or expensive your diamond is. A high color refers to diamonds with light tints such as yellow/pink which can be worth more than white diamonds.

High clarity means that the diamond does not have any visible defects or blemishes, which can mean that it is of higher quality and thus more expensive. The cut of a diamond refers to how well-proportioned it is – if there are fewer flaws within the stone then this will also increase its price as it will generate more brilliance.

Finally, the carat weight of a diamond is how big it actually is – diamonds that are larger in size can be rarer and thus worth more money.

The Four Cs play an important part in determining what sort of diamond you should purchase but they are not directly responsible for their high prices as there are many diamonds that are of very high quality but can be bought for relatively low prices.

Supply And Demand

That’s really all there is to it. Diamonds are rare, which means that they can’t produce them fast enough for everyone who wants one – and the demand is always high so the price goes up! As a result, diamonds are worth so much more than their actual value.

In fact, there might be enough diamond in the world to give every person on earth an average of three carats each! There’s just not enough mined at once for everyone to have one. In addition, keep in mind that these statistics only take into account what has been mined so far – and diamonds can be thousands of years old. So there may actually be more available than we think!

Diamonds are also popular because they last a long time. While other pieces of jewelry (like gold, silver, and platinum) will quickly lose their value if the market for them drops. However, diamonds continue to hold their worth regardless of the economic situation.

So, when you’re choosing a gift for that special someone (or if it’s just something to splurge on yourself), remember that there’s no reason not to go with diamonds – they’ll hold their value in any market.

Final Thoughts

Diamonds are expensive because they have long been given an elevated status by society. This means that the wealthy elites of today’s societies typically purchase diamonds to symbolize their social class, power, and wealth. They also represent love, beauty, and fidelity which can be passed down from generation to generation as a family heirloom for those who can afford to spend the money on such an expensive gift. 

Diamonds are also in demand because they can be manufactured and sold artificially which has led many people to believe that real diamonds are scarce. 

Although diamonds are not actually rare, they can be difficult and expensive to find in certain parts of the world because large scale mining operations require extensive labor, machinery, equipment, transportation means, chemicals for processing, etc., making it cost prohibitive to mine small rocks that don’t contain diamonds.

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