Why are Natural Diamonds so Expensive?

Diamonds, often termed as a symbol of eternal love and luxury, have captivated human fascination for centuries. From ancient civilizations to modern-day engagements, diamonds have held a prestigious place in society. But have you ever pondered why these glittering gems come with such a hefty price tag? 

We all know the feeling. You walk into a jewelry store, mesmerized by the glittering display cases, but a quick glance at the price tags sends you scrambling for the exit. Diamonds can feel unapproachable, shrouded in mystery and a seemingly inflated price. But what if we told you there’s more to the story?

This blog we’ll uncover the factors that contribute to their cost, from the grueling mining process to the ever-shifting tides of market demand. By the end, you might just see natural diamonds in a whole new light – a symbol of love, luxury, and maybe even a touch of adventure!

Brief Overview of the Diamond Industry

The diamond industry is a multi-billion dollar giant, encompassing several stages, from mining the rough stones to selling the polished gems. A few key players dominate this industry, controlling a significant chunk of the market. These companies can influence not only the supply of diamonds but also the demand, impacting their price.

The diamond industry is experiencing exciting positive trends. Data shows a strong recovery in the second half of 2021 (H2-2021) and continuing into 2022. This positive outlook is fueled by several factors:

• Strong Demand for Rough Diamonds: Demand for natural rough diamond, the unpolished stones extracted from mines, is expected to remain high throughout H2-2021 and into 2022.
• India’s Growing Midstream Activity: Net rough diamond imports into India, a major diamond processing center, grew over 190% year-on-year in the first half of 2021 (H1-2021). This significant increase indicates a strong recovery within the midstream sector, which had been operating with lower inventory levels during the COVID-19 pandemic.

The COVID-19 pandemic significantly impacted the diamond industry, but it also accelerated a transformation that was already underway. 

Diamond’s Historical Significance and Rarity

Diamonds have captivated humanity for millennia. Ancient texts from 4th century BC India mention their use as trade items, and historical accounts from Julius Caesar’s Roman Empire detail their use for jewelry and engraving tools. Their association with wealth and status blossomed throughout history, with royalty and nobility across cultures adorning themselves with these precious stones.

Natural diamonds are indeed rare, but the story goes beyond simple scarcity. 

Geologists estimate that only about 1 in 100 million tons of mined rock will actually contain diamonds. However, most of these stones are not gem-quality. The truly exceptional diamonds, coveted for their size (over 0.5 carats), flawless clarity, and colorless brilliance, are incredibly uncommon. 

To illustrate this rarity, consider that less than 1% of all mined diamonds qualify as gem-quality. This exceptional rarity, combined with their historical association with luxury and enduring love, fuels the diamond’s enduring value and high price tag.

If Diamonds Aren’t Rare, Then Why Are They So Expensive?

Contrary to popular belief, the expense of natural diamonds cannot be solely attributed to their scarcity. Rather, it is a culmination of various factors, beginning with the laborious and costly mining process.

Difficult and Costly Mining Process

Extracting diamonds is an arduous and expensive undertaking. Here’s a breakdown of why mining significantly adds to the cost:

• Deep Dives: Diamonds form under extreme pressure and heat, deep within the Earth’s mantle, sometimes kilometers underground. Reaching these depths requires specialized equipment and highly skilled labor, both of which come at a premium.
• Sifting Through Tons of Rock: On average, miners need to process a staggering 250 tons of rock to unearth a single one-carat diamond of gem quality. This translates to a massive amount of time, effort, and resources dedicated to finding just one valuable stone.
• Environmental Impact: Diamond mining can have a significant environmental impact, including land degradation, water pollution, and habitat destruction. Responsible mining practices that address these concerns add to the overall cost of production.

Data Spotlight: The Hidden Costs of Mining

• A study by the National Geographic Society estimates that it can take 250 tons of rock to produce a single one-carat diamond!

Research by the World Bank suggests that the environmental cost of mining a single carat of diamond can range from $400 to $7,000, depending on the location and mining practices.

Market Demand and Trends

The demand for natural diamonds, driven by cultural norms and societal expectations, significantly influences their pricing. Despite fluctuations in consumer preferences and economic conditions, diamonds remain a coveted commodity, further bolstering their market value.

The 4Cs of Diamond Quality

Not all natural diamonds are created equal. Even among gem-quality stones, a diamond’s brilliance, fire (play of colors), and overall beauty are determined by four key factors, often referred to as the “4 cs of diamonds“:

1. Cut: This refers to the way a diamond’s facets are proportioned and angled. A well-cut diamond maximizes light refraction, creating the signature sparkle and brilliance we associate with diamonds. Cutting a natural rough diamond into a beautiful gem requires a skilled artisan and can significantly impact the final value.
2. Color: While most diamonds have a slight yellowish tint, truly colorless diamonds are exceptionally rare and valuable. The Gemological Institute of America (GIA) has a color grading scale that goes from D (colorless) to Z (light yellow). The closer a diamond is to D on the scale, the more expensive it becomes.
3. Clarity: Tiny internal flaws or blemishes can affect a diamond’s brilliance. Flawless diamonds (internally flawless or internally slightly flawed) are the rarest and most expensive. Diamonds with minor inclusions, visible only under magnification, are still considered valuable but at a lower price point.
4. Carat Weight: This refers to the physical weight of the diamond. Larger diamonds are naturally rarer and more expensive, but carat weight alone doesn’t determine value. A well-cut, colorless diamond with good clarity will always be more valuable than a larger diamond with significant flaws or a poor cut.

Conclusion

Are natural diamonds really worth their weight in gold? 

As we understand the complexities of the diamond industry, one question remains: What defines the value of a diamond? 

While scarcity undoubtedly plays a role, it is not the sole determinant of price. Factors such as craftsmanship, brand reputation, and market demand also influence the cost of diamonds.

In a market saturated with high-priced brands, it’s essential to prioritize value over vanity. At Precious Carbon, we understand the significance of finding the perfect diamond without breaking the bank. Our extensive collection of exquisite diamonds and customizable settings ensures that you’ll find a stunning piece to cherish forever.

So, whether you’re planning a life-changing proposal or simply treating yourself to a timeless piece, let us be your guide in the world of natural diamonds. 

Contact us today and we can help you find a diamond that reflects your style and budget, making your special occasion truly unforgettable.

Frequently Asked Question 

How to Know if a Diamond is Real?

While definitive identification requires a jeweler’s expertise, here are some at-home tests to get a hint:

• Light Reflection: Real diamonds refract light brilliantly, creating a rainbow sparkle. Look for flashes of rainbow colors when holding the stone under a light source.
• The Fog Test: Breathe lightly on the diamond. A fake stone will fog up for a few seconds, while a real diamond’s fog will dissipate almost instantly due to high thermal conductivity.
• Scratch Test (Use with Caution!): Diamonds are incredibly hard. A real diamond will scratch glass (not recommended for your windows!), while a fake stone won’t. However, proceed with caution as this can damage softer gemstones.

Remember: These tests are not foolproof. For a guaranteed answer, visit a professional jeweler who can use specialized equipment for accurate identification.

How to Take Care of Diamond Jewelry?

By following these tips, you can ensure your diamond jewelry sparkles for generations to come – 

• Clean Regularly: Use a gentle dish soap solution and a soft brush to clean your diamond jewelry. Soak for 10-15 minutes, then rinse thoroughly with clean water and pat dry with a microfiber cloth.
• Store Properly: Keep your diamonds separate from other jewelry to prevent scratches. Use a soft pouch or a designated compartment in a jewelry box.
• Professional Cleaning: Schedule professional cleanings every 6 months to a year for a deeper clean and inspection by a jeweler.
• Avoid Harsh Chemicals: Keep your diamonds away from harsh chemicals like chlorine, bleach, and cosmetics. These can damage the metal setting and potentially dull the diamond’s brilliance.