
Diamonds are Bullshit (2013) - karenxcheng
http://blog.priceonomics.com/post/45768546804/diamonds-are-bullshit?utm_source=pocket&utm_medium=email&utm_campaign=pockethits
======
rayiner
The punchline is the second to last paragraph:

> Today, De Beers hold on the industry supply chain is less strong. And yet,
> price continue to rise as new deposits haven’t been found recently and
> demand for diamonds is increasing in India and China. For now, it’s less
> necessary that the company monopolize the supply chain because its lie that
> a diamond is a proxy for a man’s worth in life has infected the rest of the
> world.

So the monopoly is gone, prices are rising because of fixed supply in the face
of increasing demand, but diamonds are still bullshit because their value is
based on a consumer irrationality.

I hate to break it to the guy, but half of the consumer economy is built on
irrationality (and half of silicon valley is built on advertising that
irrationality to consumers). Pretty much every luxury good is purchased for
signaling reasons. Paying more for a diamond with a particular clarity grade
or color isn't any less irrational than paying more for a top-end BMW, even
though you'll never take it over 60 because of all the traffic.

~~~
samjordan2
There are very real and noticeable differences between a $30k and $90k BMW
other than top speed.

There are NOT noticeable differences between a $30k diamond and a $3k
moissanite stone. A better analogy would be $100 "professional HDMI cable" and
a $10 standard HDMI cable.

~~~
city41
> There are NOT noticeable differences between a $30k diamond and a $3k
> moissanite stone

My wife and I felt the same way too, until we actually compared them. The
sparkle and brilliance in the diamond was dramatically better than any other
stone we compared it to. We went into ring shopping pretty determined to not
get a diamond, and yet still bought one.

~~~
pen2l
Which stones did you compare it to? The stones available in the shop? That's
the problem -- there are cheaper alternatives that have a shine comparable to
diamonds, but not very widely available in brick and mortar stores. You were
kind of had by salesman gimmicks.

~~~
delg
This is rich. The whitest moissanite is still going to be obviously doubly
refractive, pretty limited in cut options (make terrible step cuts for
example) and is generally an inferior substitute to the vastly cheaper common
CZ. If you are upset that the value of diamond is all in branding, then run to
moissanite, which actually IS sold exclusively by a monopoly until this
August...

~~~
samjordan2
Do you know what double refractive is? How can it be "generally inferior" and
also have more sparkle?

~~~
delg
What's the end goal for a diamond simulant? To be sparkly, or to resemble
naturally-mined diamond?

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sandworm
The real trick isn't that they get people to buy expensive rocks. The real
trick is that they convinced so many of us to rebury them. Cemeteries are most
certainly the richest untapped diamond fields in existence.

~~~
kleer001
and gold and other heavy metals in trace ammounts

~~~
kleer001
[http://upload.wikimedia.org/wikipedia/commons/5/56/Two_pie_g...](http://upload.wikimedia.org/wikipedia/commons/5/56/Two_pie_graphs_about_the_composition_of_the_human_body.png)

------
kriro
He proposes that diamonds are an essential part in the mating ritual and then
goes on to say they are not an investment? As silly as it is if the dumb ring
helps you convince your future wife she should be your future wife I'm going
to go ahead and say that it is actually a wise investment.

I don't see peacocks wandering around saying "feathers are bullshit"

Subjective theory of value...etc.

~~~
Loque
And/or that you need to demonstrate your feelings for someone else through an
object that has inflated worth...

~~~
nosuchthing
Healthy relationships have a multitude of ways to communicate feelings and
connectivity. If a shiney finger stone seems to be required to prove
something, that should be some self reflection on the relationship.

~~~
DanBC
If you feel the meed to deny your partner something that brings them joy, even
though you think it's bullshit -- that should make you think twice about the
relationship.

The desire to control your partner that is displayed by many people in these
diamond threads is a really unpleasant character flaw.

~~~
Joeboy
> The desire to control your partner ... is a really unpleasant character
> flaw.

Isn't that a good reason to steer clear of anybody who insists on being bought
diamonds?

Edit: Unless you like buying diamonds, or have so much money it doesn't
matter.

------
Retric
Still waiting to see a 'gold' is BS post. Diamonds and gold both have plenty
of industrial usages, but when it comes to status items there both pointless
wastes. However, being pointless is why there status items in the first place.

In the end many people like birds like bright shiny objects. This just in,
fads like beany baby's, bitcoins, and baseball cards are also a thing.
[http://www.paulgraham.com/say.html](http://www.paulgraham.com/say.html)

PS: Land is still cheap: "The United States farm real estate value, a
measurement of the value of all land and buildings on farms, averaged $2,900
per acre for 2013"

~~~
jeremysmyth
Well gold and land both have a resale value that is pretty much exactly what
you paid for it, assuming other things are equal. The point of the article is
that diamonds (as used in jewellery) really don't, and therefore are not
suited to investment (or currency, or some other store of value) as gold and
land might be.

If you buy gold or land in a fair auction, you can flip it in a day or two for
roughly the same price minus fees. You can't do that with a diamond ring.

~~~
Retric
Gold jewelry generally resells for ~1/2 of its initial purchase price +/\-
whatever the gold market did. Land also has a high transfer cost (Real Estate
Agent etc) and it's often paid for with a loan which also inflates the
purchase price, not to mention taxes, none of which is reflected in the sale
price.

Generally, if you’re moving in less than 5 years it's better to rent.

~~~
300bps
This was addressed in the first page of the article. Gold in the form of coins
or bullion is a commodity with high resale value. Gold in the form of jewelry
is a luxury item with extremely low resale value. You can't compare the two.

 _You can even hoard gold under your bed and buy gold coins and bullion
(albeit at a ~10% premium to market rates). If you want to hoard gold jewelry
however, there is typically a 100-400% retail markup so that’s probably not a
wise investment._

Your comments on land are closer to accurate but neglect to point out the
massive leverage common in such an investment. You can effectively buy a
$200,000 asset with only putting $40,000 (or even less) down. If you get a 20%
appreciation in the asset over a period of time you've doubled your money. You
also get a tax deduction on the interest from the loan and rates are
ridiculously low right now.

~~~
bradleyjg
> You can effectively buy a $200,000 asset with only putting $40,000 (or even
> less) down. If you get a 20% appreciation in the asset over a period of time
> you've doubled your money.

If the price goes down 20% over a period of time, you've wiped out your
investment. Free leverage is neutral to expected value, and leverage with
interest has a negative impact on expected value.

The real value in residential real estate is the fact that the US government
is prepared to spend unlimited amounts of money to make sure you don't lose
your shirt. Because something something yeoman farmers. However, that means
there's also a unique risk to bear. Just as the goldbug needs a greater fool
to want his shiny, so to the real estate owner needs a government in place
that will continue to massively subsidize the individual ownership of
residential real estate. The US government, today and for the last 7 years,
has issued, bought, or guaranteed the lion's share of residential mortgages.
Take that away and prices fall dramatically.

------
erbo
"Great...now I'm a party to this ugly little secret."

[http://dilbert.com/strip/1992-07-12](http://dilbert.com/strip/1992-07-12)

------
alexggordon
I've always wondered if there's a space for some serious disruption in this
industry. One of the things I've always seen, having gone to lots of auctions
as a kid, is that you can buy diamond rings for a fraction of the price on the
auction block. Even if you just rip the diamond out, and set it in a new ring,
you'd be saving money, not to mention the metals you have left over from the
ring.

If there were a company whose sole purpose was reselling jewelry like this at
a pretty big markdown from competitors, I wonder how sustainable/successful it
would be, because I know I would support it.

Part of my thinking about this is just my desire to "stick it to the bad
guys", but part of it really is a recognition that traditions aren't going to
change over night, so we might as well try to save some people a little money.

~~~
BinaryIdiot
> I've always wondered if there's a space for some serious disruption in this
> industry.

Not sure about how to do the disruption on Earth but when we can start,
effectively, mining asteroids? Well precious metals should be able to take a
nose dive. Not sure how much diamonds exist in asteroids but I wouldn't be
surprised if a company can effectively mine asteroids to disrupt all precious
metal industries.

~~~
alexggordon
Along those same lines, I think eventually we're going to be able to drill
into earths crust, or some other incredibly high pressure place and possible
just mine the diamonds from there[0]. That said though, I haven't heard
anything about planetary resources recently[1]...

[0] [http://geology.about.com/od/mantle/a/The-Diamond-
Zone.htm](http://geology.about.com/od/mantle/a/The-Diamond-Zone.htm) [1]
[http://www.planetaryresources.com/](http://www.planetaryresources.com/)

------
city41
I agree in principal that it's silly to buy a diamond engagement ring. But I
also feel like the large expense helps solidify your intent. Without the ring,
proposals would lose some of their weight. The ring helps keep more proposals
serious, which benefits everyone involved.

~~~
codyb
Doesn't it happen that lots of people use their Aunt's wedding ring, or a ring
from a previous failed proposal? I feel as if I see this on TV pretty often
(I'm 25 and unmarried and not particularly familiar with the diamond buying
process although I'm always fascinated walking through the Diamond District in
New York City). If that's the case doesn't it bring it back to a lesser
investment? Although it's true that if it is your Aunt's Wedding Ring you
probably hold it very dearly (which might make it more of an investment). But
if you get five failed proposals for three grand it's not too bad.

~~~
city41
I think most women would be offended to be proposed to with a ring from a
prior attempt. It's also common now for the woman to help pick out the ring,
as tastes vary a lot.

I'm not sure about family rings. I don't really have any evidence regardless,
just going off personal experience.

------
dangayle
I tried to explain all that to my gf, but she was having none of it. It was
either a diamond or hit the road, Jack.

Proposed to her last Saturday with a shiny diamond ring, she's now my fiance,
so I think it was worth it.

~~~
jawngee
Not to be a dick or anything, but "diamond or hit the road" sounds like she is
valuing the diamond more than you. I'm sure there was some hyperbole involved,
maybe your post is actually an ironic fable, but if neither of those are true
... well, good luck!

~~~
rhino369
The same could be said about someone trying to cheap out on a ring, he's
valuing a couple thousand dollars over her. Its just a fiance signing bonus.

~~~
Joeboy
I'm guessing you consider a couple of thousand dollars to be quite a small
amount of money?

~~~
rhino369
It is a pretty small amount of money. If his fiance was asking him for a super
expensive ring while they were broke, yea that is pretty shitty.

------
Animats
It's worse than that. The synthetic diamond makers have been making great
progress. The first synthetic gem-quality diamonds were made at General
Electric in the 1950s. It wasn't cost-effective back then (the heat and
pressure method tied up a big press for days), but now it is. Gemesys in
Florida is stamping them out. DeBeers tried to stop Gemesys.

Then there are controlled-vapor-deposition synthetic diamonds, which are
manufactured by a process which looks a lot like a small semiconductor wafer
fab circa 1985. Those can only be distinguished from natural diamonds because
they have some hydrogen and silicon inclusions detectable with a laser and
microscope setup. The manufacturing process is kind of slow, but that's
because it's low-volume. If Applied Materials, which makes semiconductor fab
gear, reworked the diamond fab process, diamonds would probably be priced like
RAM chips.

Jewelry from both processes is available.

As for synthetic diamond for abrasives, that's easy to make and available by
the kilogram on Alibaba.

------
sirwolfgang
If you haven't seen College Humor's Adam Ruins Everything about diamonds(or
any of the others), check is out.

[https://youtu.be/N5kWu1ifBGU?list=PLuKg-
WhduhkksJoqkj9aJEnN7...](https://youtu.be/N5kWu1ifBGU?list=PLuKg-
WhduhkksJoqkj9aJEnN7v0mx8yxC)

------
chrisbennet
I'm soooo glad that my wife thought it was cool to have our rings made by a
friend on his 3D printer. :-)

That reminds me, I need to make some replacements. (We had a bunch, but they
aren't very durable.)

As for the comments, pretty much nothing anyone says will convince someone
that something is stupid once they have done it. Even if you _do_ convince
them you will only make them feel bad - so try to be nice.

------
JonnyNova
For someone who is opposed to getting diamonds, what alternatives exist?

Every time I think of this, this plays out in my head: "Sorry sweetie, I love
you but hate diamonds more. I'm not going to buy you a sweet ring to show off
to all your friends. Will you marry me anyway?"

~~~
Joeboy
One clever life hack is to seek relationships based on mutual love, respect
and communication.

------
billpg
I once told the woman I eventually married that I "would rather die a lonely
bitter old man than ever give a penny to the diamond industry."

I since went back on that thought and clarified that those genuine diamonds
grown in a factory were pretty cool.

------
gmays
When I was 23 (I'm 30 now) I bought my wife a $45,000 wedding ring that looks
like a $45,000 wedding (if you know what I mean). It has one large center
stone with two smaller stones on the side, 5ct total. It looks amazing, but...

Fucking stupid right? I thought the same thing, but I was ultra-frugal and had
a hard time thinking of better things to spend my money on than making my wife
happy, especially with how often I was gone (which was a lot).

I justified it to myself a few ways. First, by how much her eyes lit up when
she first saw it. Second, we decided not to have a wedding because of how
silly it was: pay tens of thousands for a few hours, not to mention the hassle
in planning it. Third, this thing would make her smile every day for the next
~80 years. Lastly it wouldn't cause undue financial strain. I wasn't rich, but
I was ultra frugal and had a comfortable amount in savings. For example I
still have the same car (a now 10yr old Honda Civic) I had then. I also bought
her a little ring cleaner so it always looks great because every time I see an
$80,000+ car that's dirty I think, "What's the point?"

We've been married around 7 years now. Every time she looks at it it makes her
smile. Everytime she looks at it she thinks of us and what we have. She
_still_ gets compliments on it all the time. How much is all that worth? How
much will it all have been worth when we're in our 80's? There aren't too many
ways to buy happiness, but if you could see how happy it makes her you'd see
that this is one.

The interesting thing is that my wife isn't into jewelry or expensive stuff.
She also has an old Honda Civic, still has the same clothes she wore in
college, etc. She doesn't care about that kind of stuff and hated shopping
until she was in her mid-30's and work required a change of attire. But our
marriage is important to her and a wedding ring represents that for her.

If I could afford it, I would have easily paid 2-3x what I paid for the ring
because it's worth it. I agree, it's stupid and it's just a rock, but it
wasn't for me--it was for her and it means a lot to her. Every time I see her
look at it, smile, then look at me (which she still does 7 years later) I
think of how it was worth every penny.

You can buy a lot of mediocre stuff and have a lot of mediocre experiences
with your wife, or you can go above and beyond with one thing that will last
forever. If I bought her a $2,000 ring instead I could spend $500,000 in
clothes, purses, shoes, etc. for her over 10 years and none of it would make
her as happy as this thing does. It's the _only_ thing that she _always_
wears.

What kind of ring did I get you ask? I got a ~$25 ring from Walmart.

------
bunkydoo
da bears?

