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Diamonds are Bullshit (2013) (priceonomics.com)
53 points by karenxcheng on Mar 23, 2015 | hide | past | web | favorite | 75 comments

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.

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.

> 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.

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.

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...

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

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

My compliments to the salesperson.

That is great that you like the product that you bought.

However, to many women who grew up in the US, there are huge differences between the two stones. One is a diamond, the other isn't. There's a cultural expectation here about diamonds that's pervasive, and women who say that diamonds don't matter and actually believe it are rare. My now wife was actually willing to go along with a no-diamond ring, but she was clearly bummed, so I ended up finding a diamond that never went through DeBeers hands (but still cost a lot due to their influence)

No there aren't. The majority of the people can't tell the difference between a man made diamond and a natural one. Most people can tell when they are in a super car instead of a Honda civic.

Moissanite has a slightly yellow color. Many diamonds do, but they are cheaper for it. It's essentially a K on the color scale of diamonds. It "shines" better but suspiciously so. I probably couldn't tell between a moissanite and a cheap diamond, but I could tell it's not a good diamond.

Lab diamonds aren't really cheaper than natural unless you are talking about pure shit quality or really tiny ones.

Moissanite doesn't even get that expensive. My 1ct stone was $400, and I compared it to $300 low quality white sapphire all the way to $15k loose diamonds of a similar size when shopping.

I think the biggest problem is that most people have not seen moissanite in person, and don't realize that it can compare very favorably (if not more so) to a diamond. Glad to say I've managed to sway a couple of my friends so far on that front ;) Here's some pics: https://www.flickr.com/photos/chix0r/sets/72157637715040063

It certainly is sparklier, but it looks "off." Which is fine. It's not a good diamond substitute. It has its own charm.

Even worse is what De Beers has done to try making synthetic diamonds inferior to "natural diamonds" - https://news.internetstones.com/de-beers-iidgr-holds-synthet... (They designed a special machine to make the synthetic diamonds fluoresce under certain wavelengths of UV light.)

Personally I think a synthetic diamond is better than a natural one, but IFLS.

I don't think it's better yet, but it's getting there. The cost is still super high, what's available on the market hasn't been great cuts so far, etc. Soon though.

Not really. There isn't a cultural significance to owning a $100 Monster cable (other than signalling you are probably not tech savvy).

Honestly I am not sure how you can't tell the difference between moissanite and diamond. It's pretty obvious. It's much harder to distinguish diamond and CZ.

Top-end BMW is more fun. Better-sounding speakers, more comfortable seats, snappier response (not unlike SSD vs HDD seek time), etc. You might not get above 60 in the city but if you want to have fun you can take it out to the country and hope you don't get a ticket

Thank you for illuminating this for everyone.

Expensive cars have benefits to the driver which are not related to other people's perception. The same cannot be said of diamonds.

That's a pretty narrow definition of "benefit."

Irrational luxury goods, particularly expensive shiny objects are a great way to signal a person who's money exceeds their pursuits past simple consumption and hording.

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.

Why stop there?

Living people wearing jewelry are also an untapped resource of diamonds. /logic

and gold and other heavy metals in trace ammounts

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.

True - perhaps it's wrens think those feathers are bullshit. I wouldn't have picked my wife if she had been the type to want a 2-months-salary ring. (My time and attention were more valuable.) But we're not peacocks.

I think he's trying to say that, "Don't feel bad about not buying a diamond, the only possible value is to convince the other person to marry you in the presumption that you can afford such bullshit and your partner is a bit shallow and might not care about how the household finance works nor willing to participate, otherwise your partner would advise you to better spend it on what matters. Beer"

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

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.

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.

> 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.

That seems an unfair way to frame it: there is an important distinction between actively seeking to deny someone something, and being hesitant to spend a considerable chunk of your resources on it.

The justification of heroin/meth/alcohol addicts would be in the same boat.

It's not about "control", it's about human relationships and value.

peacocks can't talk. :D

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

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"

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.

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.

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.

> 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.

The real estate sale cost does not eat half of the value.

The loan interest has nothing to do with real estate. That's just what happens when you take a loan for anything.

Jewelry is nothing like real estate. If it was, you would see billion dollar hedge funds buying up all of the jewelry.

Few people pay cash for the full price of a home. Most people get a loan a do a 3-20% down payment and can easily lose 1/2 or even all of that on a quick sale.

Land has a lot more maintenance associated with it than the other items and if you aren't going to use it, it's still just a store of value similar to gold and diamonds. You're betting that the land won't decrease in value, which isn't always a safe bet, and that the recurring costs don't eat into your return.

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


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.

> 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.

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 [1] http://www.planetaryresources.com/

I've always thought the same thing. Something that continues to fascinate me is that there are people selling/reselling jewelry on Craigslist [1]

Which makes sense for the network effects, but seems far from perfect as there's no appraisal, setting choices, etc.


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.

The ring is standard culture, a social aspect of getting married, if that's important to your partner, and you believe that it is important to support what they consider it to be, I would invest in whatever made them happy.

I found someone that a ring has no value for the proposition, my word sufficed. We did get wedding bands, but we ended up not wearing them. :D

My point is, why not give her something really meaningful instead, then?

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.

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.

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.

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!

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.

It's not him who was refusing her.

Furthermore: is't not just couple thousand dollars at stake. It's a hole in decision making that would result in permanent money leaks going forward.

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

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.

Yeah, I'm curious about that attitude. Not personally examining the grandparent (to whom I wish a long and happy marriage), but is that a real thing, that a woman would break off a promising life because of the lack of a diamond ring? If she would, does that indicate that she doesn't know how to otherwise value a mate, or sees it as an overriding signal of this mate's suitability (even over rational things like job prospects, attractiveness, health, kindness)?

This has come up before and people on HN seem adamant that women will dump you if you don't buy them diamonds. My suspicion is that either this theory hasn't actually been thoroughly tested, or it's to do with the kind of women the men of Silicon Valley tend to seek out.

Oh, yeah. She would never leave me over something like that, but I definitely got the look. If it was a matter of money, I know she would totally understand. But in her mind and essentially every girl I've ever met, it's a diamond they want. Even if it's a small one, it's symbolic.

Sounds like you got a raw deal. You just proposed to someone who literally would dump you over not getting a shiny rock. Coercion like that is a major red flag.

Most of nature has mating rituals to signify fitness of a mate, in almost infinite variety.

A fraction of homo sapiens was convinced into an irrational addition to that ritual by being unaware of the psychological manipulation targeted directly at that mating ritual, and the omnipresent self-esteem trigger.

It's not coercion, it's an instinct corrupted by greed.

About what hueving said, I bet that's a good question to ask her. Or if you're the kind that likes games, tell her is not really a diamond, and check her reaction. No, we're not 12, ask her!

Cool, congrats man!

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.

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


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.

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?"

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

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.

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.

da bears?

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