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Why Are Diamonds Valuable and Expensive?

Diamonds are elegant; diamonds are brilliant, and diamonds are every woman’s best friend. But why are they so expensive? Is it because diamonds are rare? Or are there other key factors that influence and determine a diamond (loose or jewellery) market value?

Many people believe that a diamond stone’s market price depends on its rarity in nature. Others think that diamond jewellery items cost more because diamonds are highly precious materials that are depleting as they’re being mined at a large scale; they assume that the exploitation of natural diamonds leads to increase in the market value. But none of that is true. Then what makes a diamond so valuable and expensive? The answer lies in market demand.

Since the early ages, diamond has been associated with wealth, royalty, and high-class living. When they were rarely found, they had limited availability to only a few sections of the society. But things changed when a large reservoir of diamond rocks was discovered.

In the 1800s, a treasure of diamonds was found in Kimberly, South Africa. The unexplored region where the diamond mines were unearthed had a large number of diamond deposits that were waiting to enter the market. The diamonds were rare, common, colourless, and colourful. But the sudden influx of these naturally mined diamond stones in the market would drive the value of these precious stones to fall drastically. With the high supply and average demand, the product’s cost falls. But the giant diamond corporation, De Beers did not intend for the diamond prices to decline. Hence, they intertwined and bought these mines in SA.

After the purchase, De Beers stringently maintained the influx of diamond rocks and jewellery in the market, only to meet the annual demands. Even if billions of diamonds were leaving the mines of Kimberly, only a portion of that entered market, others were kept as future stocks. By controlling the world’s largest diamond mines, De Beers controlled the entire diamond market and set up the market value of these precious stones.

The story might seem interesting, but as a consumer, all such information is invaluable to you. This is what you must always focus on while thinking about diamond price:

  • Diamonds are rare in their shape and colour, not in their occurrence. The rarity of natural diamonds in the mines does little to determine the market value for the consumers.
  • Diamonds are valuable as told to you by the industry. Its highly valuable tag put on by giant precious stone retailers and businesses does almost nothing to influence price fluctuations for the buyers.
  • Earth has vast reservoirs of natural diamond rocks, some depleted and some active. Although fancy coloured diamonds are rare, colourless stones are not going to vanish anytime soon.
  • A large diamond need not cost you more if the cut, clarity, and colour of the stone are not in the higher side of the grade. The 4Cs of a diamond does impact its price, but not the standard market value.
  • Lastly, market demand is solely responsible for setting the diamond value for the buyers. While the 4Cs does a little to influence the base price, it ultimately comes down to you (and other buyers) who purchase diamonds in the form of jewellery pieces or loose stones.

However, you must know that such pricing is standard for any precious material in the jewellery market. Hence, we suggest that you go for the diamond purchase, but conduct thorough research before finalizing a product. Melorra has created an extensive diamond jewellery guide to help you sail through the precious stone purchase journey without any issues. In any case, you can always connect with our team of experts to clarify your doubts/queries without hesitation.

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