
Have You Ever Tried to Sell a Diamond? (1982) - olalonde
http://www.theatlantic.com/magazine/archive/1982/02/have-you-ever-tried-to-sell-a-diamond/304575/
======
HorizonXP
Wow, absolutely brilliant. I can't believe this article popped up on HN's
front page tonight. I just got back from looking at engagement rings with my
girlfriend.

I've known about this monopoly for a while, and so has she. Heck, one of the
first movies we watched together when we first started dating 7 years ago was
Blood Diamond. Here's the conversation we had while in the jewellery store
tonight.

Me: "Sweety, I really don't want to buy you a diamond. I really would rather
buy you something that at least has some more value associated with it, like a
sapphire."

Her: "Well, I've always pictured a diamond ring. That's what everyone gets."

Me: "Well, what do you like about the diamond that the sapphire doesn't give
you?"

Her: "I like the sparkle."

Me: "Ok, that's fair. What about moissanite? (Link:
<http://en.wikipedia.org/wiki/Moissanite>) It's supposedly even more sparkly
and brilliant than diamonds."

Her: "What's it made of?"

Me: "You know how diamond is just carbon? Moissanite is silicon and carbon in
the same type of crystal structure."

Her: "And it's natural?"

Me: "Well, it can occur naturally, but it's extremely rare. So the ones you
buy are usually created in a lab, but are more brilliant than a diamond, but
actually cost less. I can apparently get a 1.5 carat stone for $800."

Her: (annoyed) "I don't want something fake!"

Me: "Oh, so it's not about the sparkle then?"

I swear, De Beers has probably pulled off the greatest marketing stunt in the
history of humanity. The fact that it's so ingrained in our minds, to the
point where a smart, educated, and informed person like my girlfriend still
wants a diamond even after knowing all the issues with them, is fascinating.

Honestly, as a community of people in the startup ecosystem, we could stand to
learn a thing or two here.

~~~
patio11
She even _told_ you her true requirement, which is to look good for her
girlfriends. (Watch what happens when ladies announce an engagement or look
for the ring shot on Facebook, then tell me I'm off base.)

You did not sell her a product which would make her the envy of her
girlfriends. "Cheaper than their rings" is the opposite of a victory
condition. Don't sell cheap. Sell authentic, sell natural, sell one-of-a-kind,
sell meaning, sell status, sell a story, etc.

~~~
patio11
P.S. If you understand the thing she is trying to buy, you don't have to sell
her _a ring_ at all.

There turns out to be an arbitrage opportunity in social status for, say,
middle or upper-middle class Japanese women. Anybody can buy rocks, but nobody
can buy a man vacation, so a man who demonstrates ability to take long
vacations must be able to buy virtually unlimited amounts of rocks. Regardless
of whether I can afford rocks, I can afford long vacations quite easily, so we
announced a small rock and a long honeymoon on the same day.

It's absolutely _unreal_ how effective that was. All relevant stakeholders
believe I'm unreasonably well-off. Ironically, this caused them to _sharply_
upgrade their estimations of what the (quite modest) ring must be worth.

~~~
joshkaufman
Brilliant example. There's another social signal that's relevant across
cultures regarding wedding rings: the design of the setting. The complexity
and attractiveness of _how_ the stones are set is what people notice, above
and beyond the stones themselves. (The only thing people tend to notice about
the stones is the size and quantity.)

My wife wears a moissanite ring, which she loves. The deciding factor was that
we could afford a unique custom-designed setting if we went with moissanite.
The same ring with diamonds would have been more expensive by at least a
factor of ten.

My wife worked in high-end bridal in NYC for a few years, and rings were
always a topic of conversation. The amount of times prospects noticed the
stones in her ring were moissanite: zero. The setting sends a stronger signal,
and it's less expensive. To echo patio, people who saw the ring assumed I was
unreasonably well off, when the true total price was less than the latest
MacBook.

Paying up for "perfect" diamonds is a complete waste of money from a signaling
standpoint. Spend on the setting and design, not the stones.

~~~
liber8
Unfortunately, if you do ever want to sell, the setting is essentially
worthless. Almost all of the cost of the setting is in the labor, and, as the
article explains, those who buy "used" jewelry are almost certainly going to
part it out and melt it down. (That is, unless you're talking about really
high end estate jewelery.) So, for the $3-10k you'll spend for a nice setting,
you'll probably get back 20-50% of the price of the stones, and maybe 60-80%
of the spot value of whatever metal you choose, which again, is far, far less
than the cost of the setting.

This isn't to say that you're not right on from a signaling standpoint, just
that if you think you might have the need to resell the ring in the future (or
perhaps borrow against it), you're better off getting a better stone than a
fancier setting.

~~~
rmc
Do engagement rings have a large resale value anyway? This is a whole article
about the marketing push for diamonds. I can't imagine what "second hand ring"
would say....

~~~
liber8
That's sort of the point. The ring itself is only really worth whatever the
metal weighs because nobody wants a "used" ring. So if you sell the ring to a
jeweler, he is almost certain to melt it down and recast it. Whatever you paid
for the craftsmanship/design of the ring is literally melted away.

The stone is another story. It's very easy to resell/reuse good stones,
although as the article indicates, the value you'll be able to recoup isn't
exactly great.

~~~
rmc
Yes that's true, but I'd presume a lot of what you pay for in a diamond ring
initially is not the cost of raw materials, but the symolism, and hence a
diamond ring would lose value.

I was thinking you'd lose money either way if you went with diamond vs. non-
diamond, so "you'll lose value" is not a compelling argument for non-diamond.

~~~
brc
Everything about a wedding is front-loaded to an exreme. From photos, to
flowers, to cars - when it's a wedding the price is loaded. It's a complete
rort, everyone knows it is going on, yet - there it is, everyone just pays up.
Because nobody wants to be seen to be cheap.

------
jonnathanson
It's a fascinating piece, for a number of reasons. The first, and perhaps most
interesting, is that the story behind the De Beers cartel is _well known_.
Perhaps not in this depth, but still, it's no secret. Pretty much everyone
knows they exercise a monopoly on diamond production and distribution,
artificially keeping prices high. And yet, nobody takes the red pill and opts
out of the illusion. Call it the power of the diamond industry's marketing.
Call it adherence to tradition (created by the diamond industry's marketing).
Call it what you will. But it's a powerful force. Consumers know it's a lie,
and they choose to live the lie.

Second: a major prediction made in this article _did_ come to pass, but it
didn't have the predicted effect on diamond pricing. A serious contender to De
Beers emerged in the early 2000s in the form of a multinational, "breakaway"
cartel. Yet, both cartels -- and all other minor, independent players in the
market -- seem to be acting in concert to keep supplies artificially low, and
prices artificially high. In fact, the rate of price increase is at its
highest in modern history. Economics tells us that this shouldn't be the case,
especially given the emergence of new market entrants. And yet, the rate of
price increase took off at _precisely the same moment_ as the entrance of the
new competitors. (Source:
<http://www.ajediam.com/investing_diamonds_investment.html>)

What could be causing a major, year-over-year price increase in the face of
new competition? Well, one guess would be that the two cartels are colluding
in some way. Perhaps they've made an arrangement to fix prices or production.
Or perhaps they've carved up the map, and reached some sort of non-competition
agreement in each other's territories. Perhaps both. Ordinarily I'd call these
ideas paranoid. But the history of the diamond business tells me that we can't
put it past these guys.

~~~
confluence
Free markets always tend towards monopoly/oligopoly/cartel structures in the
long term - because the firms that do so retain their pricing advantage
(profits) and the firms that don't - die.

I have to think that the idea of free/natural markets has to be one of the
greatest tricks ever pulled by anyone at any time (next to communism). Markets
are artificial and restrictive for a reason - they're created by governments
for the benefit of the populace - they are probably the most unnatural
constructions ever created in human history (next to the
corporation/government).

It is in the interests of market participants to maximise profits (to
survive/grow). Efficient markets are the enemy of profits. Hence, market
participants will make markets less efficient as a function of their
incentives - if they can. It may seem more efficient in the short term - i.e.
price wars - but in the long term - after the field is cleared - prices always
rise in some form or another.

Free/natural markets are probably one of the greatest lies ever sold.

~~~
Symmetry
I think you've got this wrong. Any firm that defects from the cartel will tend
to gain market share at the expense of all the firms that remain in the
cartel. Thus, its really the firms in that remain in the cartel that die. So
the whole thing looks a lot like a Prisoner's Dilemma game played between the
firms looking to cartelize.

Now, they might do things like sign contracts between each other to prevent
defection, or buy each other's stock to make defection less profitable than
profitable than playing along, but then you have to worry about disruption
from outside the cartel. Or you could forcibly cartelize industries like FDR
tried to do with the National Recovery Administration if the government really
wants an industry to be profitable when it wouldn't otherwise be.

And when I think of successful cartels in history I think of DeBeers and OPEC
and... well, those are the only two I could name that lasted longer than a few
years.

~~~
andyjsong
> And when I think of successful cartels in history I think of DeBeers and
> OPEC and... well, those are the only two I could name that lasted longer
> than a few years.

Another would be drug cartels. They keep prices artificially high so that
everyone gets a share of the profits. But cartels in general always have
players that "cheat" by independently lowering/raising the price. If a player
is caught cheating, the cartel usually punishes the rogue player by excluding
them from future pricing meetings and use their market share to kill the
player both figuratively and literally when drugs are involved.

~~~
Symmetry
Nah, the problem with drug cartels is that they aren't cartels, as can be seen
by the body count they're racking up against each other south of the border.
They aren't cartels at all in the economic sense of the term, but rather firms
competing against each other.

~~~
jonnathanson
The term "cartel" arguably _did_ apply up until around the death of Pablo
Escobar, and the subsequent usurpation of power from the Colombian producers
by the Mexican distributors. For the most part, the drug trade really was a
single, multinational, price-fixing monopoly (or at least a cooperative
oligopoly) under Pablo's reign.

[I'm not trying to give the guy any credit or praise for his actions, though.]

------
startupfounder
3 Days ago Rohin (<http://news.ycombinator.com/submitted?id=rohin>) the co-
founder of Pricenomics posted the article: "We Need a Warby Parker for
Mattresses" (<http://priceonomics.com/mattresses/#industry>) to which I
responded: "We need a Warbly Parker for Diamonds"
(<http://news.ycombinator.com/item?id=4522922>).

Niggler posted a comment to this Atlantic article
(<http://news.ycombinator.com/item?id=4523063>) and then submitted it as a new
post that didn't get traction because I am guessing of his new status (green
name text) in the HN community.

Olalonde (<http://news.ycombinator.com/submitted?id=olalonde>) who is an old
hat commented on the article, but didn't get that many up votes or reply's
(<http://news.ycombinator.com/item?id=4525901>), but submitted the Atlantic
article (<http://news.ycombinator.com/item?id=4535611>) that Niggler found and
brought to the HN community.

Now this great article from 1982 is on the front page of HN.

~~~
olalonde
Actually, I posted this article just after reading the story about Russia
revealing a secret diamond field containing "trillions of carats"
<http://news.ycombinator.com/item?id=4534468> (I don't recall reading
niggler's comment or yours honestly). I think that's why it got so many up
votes. In fact, it seems this article is regularly submitted on HN:
[http://www.hnsearch.com/search#request/submissions&q=Hav...](http://www.hnsearch.com/search#request/submissions&q=Have+You+Ever+Tried+to+Sell+a+Diamond&sortby=points+desc&start=0).
Now that I think about it, I think I first discovered this article through HN
2 years ago.

------
kamaal
Sorry but is this the real reason why somebody buys a diamond? The number one
reason why anybody buys anything expensive is because they wish to make a
statement for that moment. Now if you go by what this article is trying to
convey is the value of diamonds in the investment per se. No body I know buys
diamonds as an investment.

My father once gave me a gift which his father gave it to him. Which is
basically a wrist watch that automatically winds a spring inside while a
person is walking. That watch is practically useless by today's standards. But
that is totally besides the point. He gave it to me because that has some
'emotional value' and the fact that it was expensive at that time, and his
father went through a lot of work to buy him that has some sentimental value
attached to it. That is the whole reason behind its existence, He gave it to
me because it means something to him. Many of my friends have asked me if I
want to sell it, but I've turned them down. It looks awesome and is a jewel.

My mom also wears a diamond, and she has told me once she passes away that is
supposed to given to me and never to be sold to anybody else. No, De Beers
didn't whisper in her ears not to sell it. Its just my dad gave it to her and
that diamond reminds her of her days when she was young, and the moment when
it was given. That thing reminds her of those days. She just doesn't want some
other women to wear it.

You can argue these things in the investment per se. But you don't give the
diamond to your girl and that moment is gone forever. You can earn that money
back again, but you can't earn that moment back. She won't have that diamond
with her which she can remember you gave it to her.

As nerds we can argue about rationality, but what is that worth to human
sentiments?

Besides you can expand this argument to everything around. And the only way to
live will be to live frugal.

~~~
Tichy
That my all be true, but at the root of it, I find the concept revolting. I
mean demonstrating your economic viability as a spouse. It is actually the
most unromantic thing ever, because it means at the end of the day you marry
for economic reasons, not for love. Which is OK, but then don't pretend for it
to be romantic.

As for remembering a moment, I don't see why something expensive is required.
You could as well collect a special looking pebble from the beach and have it
remind you of the romantic sunset you watched together.

~~~
theorique
Isn't it possible to love someone because they are the kind of person who is
considered economically valuable by society? Such a person is romantically
desirable because they offer more resources and their offspring are more
likely to survive to adulthood.

(sort of an evolutionary biology / Ayn Rand-ian concept, of course, but I see
this kind of reverence for 'the best' coming from some people)

~~~
Tichy
That's what usually happens, I guess. I remember from an old Steven Pinker
book that there is a theory that love is a necessary craziness, because
without it we would constantly be looking for better mates (the rational thing
to do). That would explain why falling in love makes people do silly things,
because they demonstrate "I am crazy, therefore you can trust that I will stay
with you".

~~~
theorique
Yes, a person who approaches matters of the heart with the brain of an
economist is generally considered pretty cold-blooded.

Not to say that 'normal' people don't _ever_ do such things, but they are
often confined to desperate situations (war zones, disaster zones, economic
depression, etc).

------
Gustomaximus
Great read. Amazing what wealthy interests can do to a market. I had to smile
at the ending:

"By the mid-1980s, the avalanche of Australian diamonds will be pouring onto
the market. Unless the resourceful managers of De Beers can find a way to gain
control of the various sources of diamonds that will soon crowd the market,
these sources may bring about the final collapse of world diamond prices. If
they do, the diamond invention will disintegrate and be remembered only as a
historical curiosity, as brilliant in its way as the glittering little stones
it once made so valuable."

As the diamond market hasn't collapsed 30 years on, De Beers must still be
doing something right.

~~~
Nick_C
I've held a plastic bag of raw Australian diamonds -- they look like dirty
grainy sand. Almost all of the Kimberley pipe's output is industrial quality,
not gem quality, although the pink gemstones are very nice.

Australian gem quality output was never going to seriously disrupt De Beers,
just challenge them a bit. That was known at the time, and I'm slightly
perplexed why The Atlantic's article says what is does.

------
ngm-hn
Most of the article seems critical of the diamond industry. Have they not done
people a service by providing them with a nice product that they can enjoy?

There are certainly moral problems with how they built their empire, but why
are clever marketing and aggressive pricing bad things? The former is simply
how you tell people about new products. Remember diamonds went from being
owned by almost no one to being owned by lots of people. If those rings make
them happy, then why is it our business?

How is DeBeers marketing any different from Apple marketing?

Of course, the article _does_ do a good job in warning people that their
diamonds may have little resale value. But that's a risk most buyers are
willing to take. After all, most non-divorced people _don't_ sell their
wedding and engagement rings.

~~~
Quizz
It's bad because it's a vertical cartel, from mining to distribution. Cartels
are illegal in that it limits the free market using artificial price controls.
It's the artificial price controls that are illegal. Apple faces competition
from Android, RIM and Win8. DeBeers diamonds do not face any competition from
any other diamond producer because they spent 50 years establishing their
network for "gem" quality diamonds. DeBeers is beyond marketing. Why did the
U.S. government go after Microsoft? Standard Oil? Why did the U.S. prevent
AT&T from merging with TMobile?

~~~
ngm-hn
Well no, that argument does not work. Apple is the monopolist supplier of
iPhones. And it charges whatever price it wants for iPhones. If DeBeers is a
sole (or near sole) supplier of a product, then Apple certainly is.

Further, DeBeers must face the same competition that Apple faces. In these
comments, we see lots of people looking at other gemstones (sapphires, etc) in
place of diamonds. The other gemstone producers compete with DeBeers in the
same way that other smartphone producers compete with Apple.

I'm not sure it's helpful to reason from the fact that something is illegal to
why it is wrong. Sort of like the joke about the three storekeepers in jail:
The first charged higher prices than everyone else and was convicted of price
gouging. The second charged lower prices than everyone else and was convicted
of dumping and cutthroat competition. The third charged the same prices as
everyone else and was convicted of collusion. Laws will be made against all
kinds of things, and there are many incentives (e.g. law firms revenue) to
make laws against very profitable enterprises.

------
creamyhorror
This article is regularly submitted to HN, but it's good reading every time.
Winning the war against the marketing of the diamond industry will be hard,
but a start is to keep spreading articles like the following:

[http://www.huffingtonpost.com/ira-weissman/7-reasons-why-
you...](http://www.huffingtonpost.com/ira-weissman/7-reasons-why-you-
shouldn_b_1720870.html)

7 REASONS WHY DIAMONDS ARE A WASTE OF YOUR MONEY

 _I've been in the diamond business for over 10 years. I've traveled all over
the world buying and selling diamonds. I've passed through most of the major
airports across the United States with about a million dollars worth of
diamonds in a leather wallet stuffed inside my pants. I've bought and sold
diamonds in Dubai, Mumbai, Moscow, Hong Kong, Paris, Stockholm, Tel Aviv,
Madrid and Barcelona. Even today I am involved on the fringe of the diamond
business, running a diamond education site helping would-be buyers.

Considering my deep personal involvement in the diamond business, my opinion
might surprise you -- diamonds are a terrible waste of your money._

Even if this article doesn't convince your female friends, it'll spread some
awareness and cause more people to view diamond engagement rings with a bit of
doubt.

When I shared it on Facebook, I got likes from only male friends and arguments
from a female friend. This was slightly unusual because such topics normally
get a few likes from female friends. I guess there's a serious uncertainty
among my friends about throwing away the valuing of diamonds that's been
strongly ensconced in the minds of wider society.

Fundamentally, a large part of the worth of diamonds comes from their cost and
the sacrifice they represent. This in turn is a conspicuous signaller of
value, when women show their diamonds to friends ("look how much he loves
me"). So any alternative to diamond rings has to show a similar level of
value/worth. We have to try to beat diamond marketers at their own game - with
equally powerful anti-marketing.

I'd advocate an approach of laying the groundwork early by sharing such
articles regularly, and when actually in a relationship, offering a display of
value that she appreciates (e.g. memorable trip to Europe, endowment to a
cause of her choice, a custom-designed gemstone) in tandem with asking her to
consider other gemstones, perhaps one in her favorite color. If the ground's
been softened by our combined anti-marketing campaign, she might be willing to
select and customize a stone that she genuinely finds beautiful and accept
your specially planned trip (maybe extend it to Asia too, to up the
friends'-envy quotient).

Or at least I hope as much.

------
yeoldestuff
"A diamond is forever."

Translation: Please, please, please don't resell it. You'll screw up our
cartel.

~~~
brazzy
Nope, not a problem at all. Because very few people buy used.

~~~
finnw
So where _do_ all the old ones end up?

~~~
checker
I bet quite a few end up in coffins.

------
TomorrowMars
After some terrible early experiences with gold diggers, I am now very happy
to be with a woman that despises any and all status symbols, and instead of
buying them invested some money in gold and silver bullion early on, as part
of a diversified portfolio. She routinely spends the money that status-
affected women waste on social symbols on travel, sports, fitness and healthy
leisure. My advise to all startup entrepreneurs is simple - plan your mating
like your startup - lean and goal-driven. Identify your goals, budget,
deadline and overall strategy. If you cannot meet the woman that meets your
demands where you are, travel and diversify.

------
spyder
Relevant: [http://www.csmonitor.com/World/Global-
News/2012/0917/Russia-...](http://www.csmonitor.com/World/Global-
News/2012/0917/Russia-reveals-shiny-state-secret-It-s-awash-in-diamonds)

~~~
sp332
Those are tiny, tiny diamonds that could be useful for industrial purposes but
will never be useful as jewelry.

------
mixmastamyk
A classic, I read it first almost a decade ago.

My advice, take her on a trip to Paris and Versailles instead... or climb
Mount Everest if you're more adventurous. We have great memories.

~~~
Tichy
Try not to get her killed, though. Hasn't climbing Mount Everest something
like a 20% mortality rate?

~~~
brazzy
According to Wikipedia there have been 4.3 fatalities for every 100 summits
(generally decreasing over time), but that can't really be meaningfully
expressed as a mortality rate because the fatalities include people who never
reach the summit (and may not even have planned to). What can be said is that
of those who successfully reach the summit, 1.1% die during the descent.

------
Quizz
It appears that the diamond market has reached its peak, and is on its way
out: <http://www.economist.com/node/21538145>

The Oppenheimers have sold their entire stake in DeBeers - they've cashed out.
They went from producing 80% of the global market (in the 90's) to 35%;
clearly, the writing is on the wall, and without strong centralized vertical
management, the diamond market will collapse.

Time to short diamonds.

------
christiansmith
The discovery of the South African diamond mines in 1870 and its impact on the
diamond industry seems to be a good analogy for what the music industry is
going through today. In both cases there is rapid shift from scarcity to
abundance, and in both cases, the supply side of the market try to save their
businesses by engineering artificial scarcity. Somehow I doubt the record
industry in its present form will fare quite as well though.

------
rondon1
I got my wife a moissonite ring. I took it to a jewelry store once to get it
cleaned. The person there went on about how beautiful it was. I said it was
moissonite and she quickly said we don't work on moissonite and handed the
ring back and left. Everyone assumes it is diamond because it is double
refractive and actually brighter than diamond. Only a gemmologist would know
the difference.

------
dimitar
The Russians just announced that they have a huge amount of quality diamonds
on their territory in some site that they haven't started exploiting yet.

To profit they basically have to ape De Beers and create a huge demand in
Europe or Asia (I think diamond engagement rings are that big only in the USA)

~~~
guard-of-terra
I think that most of diamonds sold Russia are mined in Russia (Yakutia
probably).

Still they are expensive and luxur-ish. I guess Russian jewelers are just
riding the world-wide hype wave, not interested in disrupting or "harming" the
market.

------
matt4711
So which of these "predicted" events actually happened?

~~~
tptacek
The diamond cartels continue to prop up a fake market fed by the product of
human misery largely by convincing people that diamonds have always been a
clear symbol of social status and of devotion.

------
ksherlock
The story is from 1982. Yet still timely.

~~~
JoeAltmaier
A little odd though: "the quality of the diamonds, measured in dollar value,
had declined by nearly 100 percent." I wonder how that was calculated ?

------
squarecat
One-page, seizure-free view:

[http://www.theatlantic.com/magazine/print/1982/02/have-
you-e...](http://www.theatlantic.com/magazine/print/1982/02/have-you-ever-
tried-to-sell-a-diamond/304575/)

------
Wingman4l7
If you want a ring that shimmers brightly with color, is unique from stone to
stone, and actually has value, try opal.

The only downside is that it's not as tough as diamond, so you have to take
some care not to damage it, although this can be mitigated by the way it's
mounted in the ring.

------
neverm0re
Another fantastic bit of information about the history of the diamond trade,
courtesy of Frontline, circa 1994:
<http://video.google.com/videoplay?docid=-6186684678299366197>

------
sayYaeah
Well, it is a perceived value, but we all perceive it.

Like someone pointed out, it is not an investment. It is a demonstration for
your future marriage. She wants to see how much she's worth to you.

Buy the ring. If you indeed have moral issues, buy the conflict free one.

------
shrikant
Previous good discussions on this:

<http://news.ycombinator.com/item?id=1405698>

<http://news.ycombinator.com/item?id=1110283>

------
niggler
Can't believe its on the front page, given my comment a few days ago:
<http://news.ycombinator.com/item?id=4523063>

------
finkin1
Fantastic read. Bernays (<http://en.wikipedia.org/wiki/Edward_Bernays>) was
also an interesting character.

------
tammer
Similar article, although a less historical perspective:

<http://harpers.org/archive/2010/06/page/0059>

(warning: paywall)

------
laic
Generation after generation of brain wash, there is nothing you wouldn't
believe, such as Kim Jong Il is the savior of the world.

------
miraj
on another note (also on todays HN homepage!)

"Russia reveals secret diamond field containing 'trillions of carats'"
<http://news.ycombinator.com/item?id=4534468>

------
TheAmazingIdiot
By fallenapple ( from showdead):

Ha, they quickly stuck a date in the title. ;) I was going to comment this is
a "pre-internet" story. The film Blood Diamond came to mind as I was reading
this, and the "Diamond District" in New York City. Lots going on behind the
scenes in the "diamond industry". This is a superb lesson in 1. artificial
scarcity and 2. how consumers can be conditioned to accept new symbols (a
diamond is just a rock; but what does a diamond "mean"?). Both are principles
that, for better or worse, apply to how business is done on the web.

~~~
dllthomas
> [...] but what does a diamond "mean"?

"I would hurt poor people for you."

~~~
jquery
So it's just like buying a smartphone?

~~~
dllthomas
If you're buying someone a smart-phone so it can look pretty and symbolize
your love, then yes, exactly.

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lwat
So... why is there no second-hand diamond marketplace? Lots of people would
want to buy cheaper diamonds and there has to be people wanting to sell
theirs.

~~~
jquery
Good question. There is a second-hand diamond marketplace. But the discount
you get is proportional to the extra effort you must exert to get the diamond
you want. Do you want a 2 carat triple-A GIA certified round brilliant with
VS1 clarity, >I color, and an HCA score under 2? Good luck. You'll spend
months tracking that down. And you better know what you're doing or you could
get scammed. Or you could go to a diamond wholesaler and get what you want,
right now, no hassle, and pay the associated overhead.

~~~
caf
So there's an opportunity here, for a market facilitator. Hire a few qualified
gemstone appraisers, set up an auction site and take a small rake off the top.

~~~
lisper
Even better, write some image-processing software that can automatically grade
diamonds more quickly and accurately than human appraisers.

~~~
simonh
Diamonds are already largely graded automatically. DeBeers has invested
heavily in grading equipment that can specifically distinguish natural from
artificial diamonds.

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chris_mahan
Is it me or is the article way too long?

~~~
tptacek
It is just you. That article is a classic in long-form investigative
journalism.

~~~
yeoldestuff
God how I miss that.

Where can I find 100's more like this, _on the web_?

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tptacek
Easy: Longform.org.

Slate aggregates and curates some of these:

<http://www.slate.com/articles/life/longform.html>

~~~
yeoldestuff
Sweet. Thanks.

