The previous article highlighted the importance of irregularities and how they impact the value of a diamond. Irregularities, together with carat, clarity and color, are the basic components that determine a diamond’s value.
Many people believe natural diamonds are rare, while others doubt it. So how rare are diamonds in reality? Sceptics claim the rarity of diamonds is a De Beers fiction. They couldn’t be more wrong. Few countries have diamond resources. Of these few resources only a few are commercially viable and the commercially viable one are home to very few high quality diamonds. Added to that, the natural process through which diamonds are created takes so long that the rarity of diamonds is only increasing.
All in all, it’s been a turbulent and rather unusual year when it comes to the price of diamonds. Those in the trade know this, but when it comes to the question of how diamond pricing actually works, consumers often remain in the dark. And in a market where consumers don’t have reliable tools to assess a diamond’s price, can we really expect them to confidently buy the highest priced diamond jewellery? This past Christmas, the figures show we couldn’t and they didn’t, but more of that later.
The rarity of natural diamonds is a factor of the economics of diamonds. What continues to propel diamond prices is a combination of the cost of production, the cost of polishing, demand in the market and limited supply. But is that all there is to it?
When we talk of the rarity of diamonds, we are not just talking about the finite and declining supply of diamonds found in the earth. We are also talking of the increasing rarity of diamonds in the light of increasing demand for diamonds and what happens to diamonds once they are polished. All these factors combine to make diamonds even rarer.