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Truth about Diamond

Full article:

I’ve shortened the article to its important highlights but as a fair warning it’s still quite long by imgur standards:

Americans exchange diamond rings as part of the engagement process, because in 1938 De Beers decided that they would like us to. Prior to a stunningly successful marketing campaign in 1938 Americans occasionally exchanged engagement rings, but wasn’t a pervasive occurrence. Not only is the demand for diamonds a marketing invention, but diamonds aren’t actually that rare. Only by carefully restricting the supply has De Beers kept the price of a diamond high.

It’s the equivalent of some company restricting the supply of aluminum so instead of it actually being available and dirty cheap it’s instead sold in jewelry for more expensive than platinum. It’s absolutely absurd.

A company called De Beers, who has a monopoly, artificially restricts the supply of diamond to keep the prices obscenely high. Not only are they artificially high but they are a worthless investment. Retail jewelers prefer not to buy back diamonds from customers because they sell them at a 100 to 200 percent markup. They prefer not to make the customer an offer that would be deemed insulting and could undercut the widely-held notion that diamonds go up in value, which couldn’t be further from the truth.

What, you might ask, could top institutionalizing demand for a useless product out of thin air? Monopolizing the supply of diamonds for over a century to make that useless product extremely expensive. You see, diamonds aren’t really even that rare.

Before 1870 diamonds were very rare, only worn by royalty. In 1870 enormous deposits of diamonds were discovered in South Africa. As diamonds flooded the market the owners of the mines realized they were making their investments worthless. That’s when this guy named Cecil Rhodes came in and started buying up all the mines in order to control the output and keep the price of diamonds high. By 1888 Rhodes controlled the entire South African diamond supply, and in turn, essentially the entire world supply.

In 1902, prospectors discovered a massive mine in South Africa that contained as many diamonds as all of De Beers’ mines combined. The owners initially refused to join the De Beers cartel, joining three years later.

De Beers owns most of the diamond mines. For mines that they don’t own, they have historically bought out all the diamonds, intimidating or co-opting any that think of resisting their monopoly. They then transfer all the diamonds over to the Central Selling Organization (CSO), which they own.

The CSO sorts through the diamonds, puts them in boxes and presents them to the 250 partners that they sell to. The price of the diamonds and quantity of diamonds are non-negotiable – it’s take it or leave it. Refuse your boxes and you’re out of the diamond industry.

For most of the 20th century, this system has controlled 90% of the diamond trade and been solely responsible for the inflated price of diamonds.

In 1957, the Soviet Union discovered a massive deposit of diamonds in Siberia. Though the diamonds were a bit on the smallish side, De Beers still had to swoop in and buy all of them from the Soviets, lest they risk the supply being unleashed on the world market.

Later, in Australia, a large supply of colored diamonds was discovered. When the mine refused to join the syndicate, De Beers retaliated by unloading massive amounts of colored diamonds that were similar to the Australian ones to drive down their price. Similarly, in the 1970s, some Israeli members of the CSO started stockpiling the diamonds they were allocated rather than reselling them. This made it difficult for De Beers to control the market price and would eventually cause a deflation in diamond prices when the hoarders released their stockpile. Eventually, these offending members were banned from the CSO, essentially shutting them out from the diamond business.

In 2000, De Beers announced that they were relinquishing their monopoly on the diamond business. They even settled a US Antitrust lawsuit related to price fixing industrial diamonds to the tune of $10 million (How generous! What is that, the price of one investment banker’s engagement ring?).

If none of that painted the picture clearly enough then consider this: Taafeite which is more than a million times more scarce than diamond sells for $2,500 to $20,000 per gram whereas diamond sells for $55,000 per gram. Yeah.

As for jewelry, consider this…

As for jewellery

As a gemstone for jewelry moissanite is far superior, a much more brilliant stone. Here’s some comparisons:

Refractive Indexes:
pyrope (red) garnet – 1.74
diamond – 2.418
moissanite – 2.654 – 2.967
ruby – 1.76 – 1.77
cubic zirconia – 2.15-2.18

diamond – 10
moissanite – 9.5
pyrope (red) garnet – 7 – 7.5
ruby – 9
cubic zirconia – 8-8.5

Refractive index is generally what is considered the brilliance of a gem. You can see the difference in brilliance between a moissanite gemstone and a diamond in the picture. In short, moissanite wins when it comes to appearance, hands down. It’s also incredibly hard – harder than a ruby even.

In fact, while on the subject… Consider how absurd it is that a cubic zirconia with a hardness of 8.5 and refractive index of 2.18 while completely superior to ruby (which, by the way, is vastly more expensive than diamond) is considered worthless. Despite having superior properties it is seen as insulting simply because people covet something expensive. Why, you might ask?

Because De Beers circulated marketing materials suggesting, apropos of nothing, that a man should spend one month’s salary on a diamond ring. It worked so well that De Beers arbitrarily decided to increase the suggestion to two months salary. That’s why you think that you need to spend two month’s salary on a ring — because the suppliers of the product said so.

Today, over 80 percent of women in the U.S. receive diamond rings when they get engaged. The domination is complete.

But let’s move on from jewelry…

Diamond could rival silicon as the material of choice for the electronics industry, but has been held back

Gemstones Diamonds Sapphires

“Diamond is the king of gemstones.” Less well known is that it could also be an outstanding semiconductor  material, superior in many ways to silicon, which is currently the most widely used electronic material. Diamond devices could operate at higher temperatures (more than 400 °C) and higher power than those of silicon, as well as being faster, denser and more resistant to radiation. But practical diamond electronics will need large-area, single-crystal diamond wafers to be fabricated, analogous to the 6–12-inch silicon wafers commonly used in the semiconductor industry. Two papers from Golding and colleagues, in Applied Physics Letters and Diamond and Related Materials, now show that this may be possible if sapphire wafers are used as substrates on which to grow the diamond.

Diamonds are the future of technology

Chart Diamonds Properties

Ask any electronics engineer “what is the ultimate semiconductor material?”, and the majority will say “diamond”. Take a look at any comparative table of properties and the reason is obvious (strangely exponents of gallium nitride and silicon carbide always omit the diamond column from their presentations!).

Amount of Semiconductor

Where diamond really scores is that it far outperforms any other material in terms of its ability to insulate very high voltages across very thin layers of the material. The lower the insulation strength the more base material you need to start with (which is a big issue when wide bandgap semiconductors are already at least 10 times the cost of silicon), but more importantly the slower the device operates – which is now why 6,500V appears to be the ultimate practical limit for silicon insulated gate bipolar transistors (IGBTs).

Despite its obvious intrinsic advantages, diamond has struggled in the past to make any significant progress as a semiconductor material. The reason for this because of widely held misconceptions.

The simple fact is that diamond is ideal material to meet the needs of the energy systems of today and tomorrow where the need exists to precisely control the flow of electricity from watts to megawatts. Unlike other wide bandgap materials, diamond has the potential to be able to clearly differentiate itself against existing silicon on cost (per switched watt) and performance. Beyond power electronics, diamond has a wide potential of electronics applications that exploit other facets of diamonds superior capabilities including: bio-compatible and ultrahard wearing MEMs, photovoltaics and extreme environment devices.

Diamond idea for quantum computer

Diamond Idea Quantum Computer

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The most celebrated manifestation of this technology is the quantum computer, which could exploit quantum principles to achieve far greater power than the devices on which I’m writing and you are reading. The ideal material for a quantum computer could be diamond.

Hopefully you’ll have learned something from reading this. Personally I think De Beers should be forced to stop what they’re doing. No other such market exists, nor would anything similar be tolerated in a serious industry. As for me, I certainly won’t be wearing any diamond jewelry and I’ll be recommending my friends against it as well.

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