This story from The Atlantic (Apple News+, PDF)—Have You Ever Tried to Sell a Diamond? written by Edward Jay Epstein—has resided in the deepest recesses of my cranium for over 40 years. The entirety of the piece is eye popping, but it’s this passage that I’ve mentally referenced hundreds of times over the years:

Except for those few stones that have been destroyed, every diamond that has been found and cut into a jewel still exists today and is literally in the public’s hands. Some hundred million women wear diamonds, while millions of others keep them in safe-deposit boxes or strongboxes as family heirlooms. It is conservatively estimated that the public holds more than 500 million carats of gem diamonds, which is more than fifty times the number of gem diamonds produced by the diamond cartel in any given year. Since the quantity of diamonds needed for engagement rings and other jewelry each year is satisfied by the production from the world’s mines, this half-billion-carat supply of diamonds must be prevented from ever being put on the market. The moment a significant portion of the public begins selling diamonds from this inventory, the price of diamonds cannot be sustained. For the diamond invention to survive, the public must be inhibited from ever parting with its diamonds.

This passage, and the article as a whole, resonated deeply with my already-jaded teenage self. My mind was blown by these revelations—really, by the entire concept of enforced scarcity. My general distaste for the shiny rocks can be traced directly to this story. (That, and the human toll diamond mining has had on Africa.) It required enormous effort to overcome this aversion when it eventually came time to propose to my eventual wife, but I too succumbed to the ubiquitous marketing.

The Atlantic piece leads off with this historic context:

Until the late nineteenth century, diamonds were found only in a few riverbeds in India and in the jungles of Brazil, and the entire world production of gem diamonds amounted to a few pounds a year. In 1870, however, huge diamond mines were discovered near the Orange River, in South Africa, where diamonds were soon being scooped out by the ton. Suddenly, the market was deluged with diamonds. The British financiers who had organized the South African mines quickly realized that their investment was endangered; diamonds had little intrinsic value—and their price depended almost entirely on their scarcity.

The Guardian had a story in January about diamond prices crashing:

The average price of a one carat natural diamond peaked at $6,819 in May 2022 (£5,422.67 at the time) and by last December had fallen to $4,997 (£3,923.83), a 26.7% fall.

The equivalent lab-grown diamond price is down from $3,410 (£2,599.38) in January 2020 to just $892 (£700.43) in December, a 73.8% fall.

Demand is down, and supply is up. The piece quotes Jack Ogden, “a historian of jewellery”:

“It’s a very artificial market,” Ogden said. “They’re very valuable because people want to pay money for them. People want to pay money for them because they’re very valuable.” 

Back to Epstein’s piece in The Atlantic:

De Beers needed a slogan for diamonds that expressed both the theme of romance and legitimacy. An N. W. Ayer copywriter came up with the caption "A Diamond Is Forever,” which was scrawled on the bottom of a picture of two young lovers on a honeymoon. Even though diamonds can in fact be shattered, chipped, discolored, or incinerated to ash, the concept of eternity perfectly captured the magical qualities that the advertising agency wanted to attribute to diamonds. Within a year, “A Diamond Is Forever” became the official motto of De Beers.

The amount of marketing that went into making diamonds an object of value is simply remarkable. Diamonds aren’t rare. They’re artificially supply-constrained—and then intensively marketed on that perceived rarity. They’d be virtually worthless without the decades of hyped up marketing. Or, as jewelry historian Ogden noted, “as common as pebbles.”

Diamonds may be the best—and worst—example of the enormous power of marketing.