Are diamonds really rare? Myths and misconceptions about diamonds

Diamonds are our most popular gemstone. That hasn’t always been the case. It was only in the last century that diamonds became readily available. Prior to that, rubies and sapphires were the most popular gems, especially for engagement rings.

Kimberly Diamond Mine, South Africa
Kimberly Diamond Mine, South Africa. creative commons licensed ( BY-SA ) flickr photo shared by string_bass_dave

The popularity of diamonds is due primarily to the DeBeers organization. They set up the first large-scale diamond mines in South Africa. Then they began one of the most successful advertising campaigns in history, convincing consumers that engagement rings should always have a diamond.

With proper encouragement, the movie industry displayed its most glamorous women, draped in diamonds. As a result, diamonds soon became a top status symbol for the rich and famous. This peaked with the Marilyn Monroe movie, Diamonds are a Girl’s Best Friend.

Even after winning the consumers’ admiration, DeBeers continued their advertising. With the discovery of diamonds in the Soviet Union, a new campaign was created to sell anniversary bands. These made good use of the small, but nice quality diamonds the Soviet Union produced.

DeBeers actually mined considerably more rough diamonds than they sold and they have a large warehouse of uncut diamonds in London.

While the DeBeers company did wonderful things for the diamond industry, not everything about DeBeers is nice. As diamonds were discovered in other parts of Africa and South America, DeBeers managed to get control of the rough diamond supply. The tactics used to gain control of these rough diamond supplies are alleged to include murder and kidnapping.

DeBeers maintained monopolistic control over the diamond market for several decades. They carefully released only enough rough diamonds to satisfy then-current demand, while continually adjusting the degree to which the rough diamonds were made available.  This caused continually escalating prices, and of course, it increased the perception of rarity. DeBeers actually mined considerably more rough diamonds than they sold and they have a large warehouse of uncut diamonds in London. As a result, they were not allowed to do business in the US, Canada, and a few other countries.

DeBeers in Caesar's Palace, Las Vegas
DeBeers in Caesar’s Palace, Las Vegas. creative commons licensed ( BY-SA ) flickr photo shared by mrkathika

In the last couple decades of the 20th century, things began to change. Satellite technology, that was designed to find likely oil reserves, also showed the geology likely to hold diamonds. As a result, new discoveries began to multiply. Australia was one of the first developed nations to discover major diamond resources. DeBeers was able to make a deal with them to distribute all the rough, except for the very rare pink diamonds.

They also made a deal with the Soviet Union to distribute their rough diamonds. However, shortly after the break up, the Russians let their contract expire and began to sell the diamonds themselves.

The latest major diamond reserve was found in Canada. DeBeers could not make a deal with the Canadians, who are cutting and selling the stones themselves.

It is difficult to tell what the future will hold. Several sites are being explored and it is likely more diamond deposits will be found in the near future. DeBeers still controls approximately 75% to 80% of the diamond rough. The other suppliers have so far been content to sell at the same prices as DeBeers. However, if the law of supply and demand ever catches up to the diamond market, prices are likely to drop considerably. It is difficult to tell how this would play out, but DeBeers has a large inventory of uncut diamonds and would be in an excellent position for a price war.

Myths and Misconceptions

Here are some popular myths that you need to be aware of.

MYTH: Diamonds are rare.

Diamonds are the hardest material found on earth. Other than that, they hold no unique distinctions.  All gem grade materials are rare, composing just a tiny fraction of the earth. However, among gems, diamonds are actually the most common. If you doubt this ask yourself; “How many women do you know that do not own at least one diamond?” Now ask the same question about other gems.

In the constellation Centaurus, there lies a white dwarf, that has crystallized into a diamond 2,500 miles in diameter and weighing 10 billion, trillion, trillion carats.

While we are still learning about the interior of the earth, current information shows that diamonds are likely the most common gem in nature. (See Gem Formation.)

Outside the earth, diamonds are also common. A recent discovery shows that some stars collapse on themselves, creating giant diamond crystals. In the constellation Centaurus,  there lies a white dwarf, that has crystallized into a diamond 2,500 miles in diameter and weighing 10 billion, trillion, trillion carats.

MYTH: Diamonds are the most valuable gem.

You cannot say that one species of a gem is the most valuable. To do a comparison, you need to judge gems according to size and quality.  This chart is based on top quality gems in different sizes. However, note that pure red rubies are so rare there is no trade data available. The prices listed are for Burmese rubies.

Species 1 carat 1-5 carat 5+ carats
Diamond $4,300/ct $13,600/ct $44,500/ct
Ruby $5,050/ct $9,500/ct $100,000/ct
Emerald $5,470/ct $9,030/ct $23,000/ct
Sapphire $10,000/ct $16,000/ct $34,000/ct
Alexandrite $3,600/ct $15,000/ct $70,000/ct

As you can see, diamonds are very costly, but not the most expensive gem in any size. If you were to do a comparison of other qualities, the results would be similar.  If you are looking to invest in gems you should read our article on the inner workings of the gem trade.

MYTH: Diamonds are precious.

Elongated, Cut-Cornered Barion Triangle Cut Tsavorite Garnet
Elongated, Cut-Cornered Barion Triangle Cut Tsavorite Garnet by Daniel Stair

Precious means valuable. In the 18th century, a French jeweler began describing gems as either precious or semiprecious. The categories are still used in merchandising but are frowned upon by professionals as they are nearly meaningless distinctions.

For example, garnets are considered semiprecious, but tsavorite garnets have sold for as much as $10,000 per carat. That seems pretty “precious” to me!

On the other hand, diamonds are only very valuable in their better grades and medium to large sizes. Small, low-quality diamonds are available in quantity for just $1 a piece. A quick search of eBay and you will find several diamonds under $20. These are far from precious.

MYTH: Diamonds are the most brilliant gemstone.

Not counting synthetics, there are at least 15 minerals with a higher refractive index than diamond!

Brilliance is determined by the cutting and the refractive index of the material. Diamonds have a very high refractive index of 2.41. Diamonds have the potential if properly cut to be exceptionally brilliant. However, this is nothing compared to the 2.9 RI of rutile. Not counting synthetics, there are at least 15 minerals with a higher refractive index than diamond!

MYTH: A person can make a lot of money selling diamonds.

As the Internet has continued to proliferate and GIA has established well-accepted grading standards for diamonds, margins on cut diamonds have become extremely thin.  It is not uncommon for a diamond dealer to make gross margins inside of 5%.  Compare that to virtually any other industry and you won’t think it is such a great business.

MYTH: Diamonds have more “fire” than any other gemstone.

Diamonds are known for their fire or dispersion. This is the ability to separate white light into the color of the rainbow. Diamond has a dispersion of .044, which is quite high. However, it is a far cry from gems like rutile with a dispersion of .330!

What is a Diamond?

Crystal Grove Diamond Mine
Colorless and native to New York, Herkimer diamonds are fun to find. However, they’re actually doubly terminated clear quartz gems, not real diamonds.

Diamonds are a natural mineral and they are also produced in the laboratory. Lab made diamonds are primarily used as abrasives, but they are beginning to make their way into the jewelry industry. (See Understanding Gem Synthetics and Identification of Synthetic Diamonds.)

Gemologically speaking, diamonds are a mineral with a chemical composition of C, (carbon,) that crystallize in the isometric system. (See How Gems Are Classified.)

With a hardness of 10, diamonds are the hardest substance in nature. Harder substances have been created in the laboratory, but they are extremely brittle and have no practical use. If a harder substance is ever found that does not break down so quickly, it will greatly reduce the time needed to cut diamonds.

Diamonds have a refractive index of 2.41, which is very high. Being as they form in the isometric system, they do not have any birefringence or pleochroism. They have a specific gravity of 3.51 to 3.53, which is a bit more than average.

If you need help with the gemological terminology, see the section titled An Introduction to Gemology.