Have You Ever Tried to Sell a Diamond? (1982)

http://www.theatlantic.com/magazine/archive/1982/02/have-you-ever-tried-to-sell-a-diamond/304575/

by olalonde • 14 years ago

279 225 14 years ago

ksherlock• 14 years ago

The story is from 1982. Yet still timely.

JoeAltmaier5• 14 years ago

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 ?

matt4711• 14 years ago

So which of these "predicted" events actually happened?

tptacek3• 14 years ago

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.

chris_mahan• 14 years ago

Is it me or is the article way too long?

tptacek3• 14 years ago

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

yeoldestuff3• 14 years ago

God how I miss that.

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

jcastro• 14 years ago

That's how I started figuring out it wasn't a recent article. I ran into this link from the G+ HN circle and didn't see a mention of the date.

Then about 1/3 of the way through I started thinking "what the hell, no article can be this long", then I looked at the date.

A great read though, it does a lot to remind us how articles used to be back in the day before our current attention spans.

neverm0re• 14 years ago

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

TheAmazingIdiot• 14 years ago

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.

dllthomas5• 14 years ago

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

"I would hurt poor people for you."

jquery6• 14 years ago

So it's just like buying a smartphone?

yeoldestuff3• 14 years ago

"A diamond is forever."

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

brazzy4• 14 years ago

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

finnw• 14 years ago

So where do all the old ones end up?

tammer• 14 years ago

Similar article, although a less historical perspective:

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

(warning: paywall)

jonnathanson5• 14 years ago

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.

zizee2• 14 years ago

the story behind the De Beers cartel is well known.

Is it really? Or are you assuming that because you and your friends know about it that you think that everyone knows about it? (not an attack, just a easy trap to fall into).

players in the market -- seem to be acting in concert

I think that whenever a new participant enters the market they find that the most profitable path is to collude with the existing cartels. After all, if diamonds are really worth nothing, why would you enter the market unless you planned to keep the status quo?

What could be causing a major, year-over-year price increase in the face of new competition

I seem to remember reading somewhere that the growing affluence of Asian markets was increasing demand. But that might be the marketing spin.

edit: added everything under "or are you assuming" sentence.

jonnathanson5• 14 years ago

It's really well known. There are articles written up about it every few years. It gets the occasional pop culture shout out.

We could split hairs for awhile and debate about how well known it is, or whether "Joe Sixpack" in Des Moines knows about it. But it's far from obscure.

I'll grant you that a lot of the major demand drivers (young couples, new money, etc.) probably don't know, or at least don't care. And that might make all the difference.

EDIT: Seems we both edited our posts at the same time. I think the Asian theory is interesting, and it might be the most savory / least fishy driver of price increases. Perhaps the "Joe Sixpack" of Shanghai, newly monied and with very few reasonable investment options in his home country, is buying diamonds left and right. Wouldn't surprise me. Either way, it seems odd that the cartels wouldn't go head to head in Asia for the big prize here, unless they reached a gentleman's agreement on territories.

dllthomas5• 14 years ago

> I think that whenever a new participant enters the market they find that the most profitable path is to collude with the existing cartels. After all, if diamonds are really worth nothing, why would you enter the market unless you planned to keep the status quo?

Also, DeBeers has diamonds and cash enough to sell below your cost of pulling things out of the ground for a lot longer than you can stay solvent.

brc6• 14 years ago

I agree with you in that the story of De Beers is pretty well known. But - for reasons outlined in the article - the intrinsic linking of diamonds to the act of romance and marriage is well embedded in society. So even if people know it is essentially meaningless (in the true sense of rarity) as far as society goes, they have a social status.

Any society is full of irrational practices and purchases. Throwing rice at a wedding? What's that about? $5 cards to wish someone well? What on earth? Yet these are all accepted by society as societal norms, and even when the companies have conspired to create them (or at least magnify their importance) it is what it is. In a form of social proof, nobody wants to be the first to break with the tradition, which is how most tradition stays. Same goes for Christmas - which is nominally a Christian religious festival, but, at least in the USA, widely adopted by people of all religious and aetheist beliefs. Because nobody wants to be the grouch who doesn't hand out presents.

Interestingly the article mentions the introduction of Argyle diamonds - a friend of mine, while travelling in remote WA bought a large diamond at a fraction of the retail cost, direct from either the mine itself or a local retailer. He kept this for 15 years, which was the time period between purchase and eventually finding someone to marry (and getting it put into a ring).

But as to why the introduction of new sources hasn't drastically affected prices, I think that any new cartel or operator entering the market is just as likely to free-ride the hard work of De Beers. If De Beers spends significant money and influence maintaining a monopoly, and therefore creating monopoly pricing, any new entrant rationally would be well served to restrict supply so that they can free-ride on the monopoly prices without any of the costs of maintaining the monopoly.

jonnathanson5• 14 years ago

"But as to why the introduction of new sources hasn't drastically affected prices, I think that any new cartel or operator entering the market is just as likely to free-ride the hard work of De Beers. If De Beers spends significant money and influence maintaining a monopoly, and therefore creating monopoly pricing, any new entrant rationally would be well served to restrict supply so that they can free-ride on the monopoly prices without any of the costs of maintaining the monopoly."

Perhaps, but it's extremely hard (and not very lucrative) to follow the leader when the leader exercises such dramatic buyer and seller power in a marketplace -- unless you plan to compete on price, or to compete by tapping an entirely different market segment. Perhaps prices are much lower in certain markets, but if that were the case, we probably would have heard about the arbitrage opportunities by now, and commodities traders would have closed that gap in a heartbeat.

The different-segment theory is interesting, but it seems very hard to fathom without some sort of non-compete arrangement in place -- be it in X or Y geography, or for Z consumer segment, etc.

My best guess is that this is a two-sided story. There's a major demand factor involved (perhaps in Asia), coupled with the likelihood that the two cartels aren't directly competing. B has to go along with A if there's a price increase, because we know that the supply isn't actually low. There are enough diamonds to keep up with surging demand.

captaintacos• 14 years ago

Sadly, it is almost unheard of here in Japan and I am 99.999% sure it is the same in most of Asia (the real market for diamonds and luxury brands nowadays).

Just a couple weeks ago I was at lunch with my Japanese coworkers and the conversation topic went to one of them thinking on whether to buy a diamond ring to his wife as an anniversary gift.

I told him to better stay away from diamonds, and mentioned the diamond situation (pretty much the contents of the article) and not only not any of them had ever heard about it (despite most of them having graduated from top public and private Japanese universities), but also I ended up getting from all of them the most incredulous and distrustful looks I had ever been given in all my years in Japan.

A fundamentalist vegan urging them to immediately abandon sushi and seek redemption in the purity of soy beans would had been more warmly welcomed to discussion than my comment.

andyjsong5• 14 years ago

well... it does take awhile for foreign countries to adopt white man's guilt or more broadly music in general. I hear most Europeans/South Americans have not heard of Gangnam Style, I bet there will be a second wave in a month from our Euro/Latin friends.

confluence7• 14 years ago

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.

andyjsong5• 14 years ago

> 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.

This might be true, but short term profits are still attractive to people who want to disrupt the industry. If I discovered a significant diamond mine in my backyard, I'd undercut the inflated prices of the current cartel before attracting attention from the big boys. [1] The only way to disrupt the diamond market is to invent a replacement product that is accepted by all females/males that want diamonds.

[1]every single startup on HN that is "disruptive" and pining to be acquired

htf• 14 years ago

> 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.

Can you give any example?

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

What do you mean? Free markets are not a lie. There are tons of free markets. If I buy bread at the supermarket, I can choose among multiple brands.

Symmetry4• 14 years ago

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.

HorizonXP6• 14 years ago

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.

w1ntermute• 14 years ago

There are a lot of irrational things that smart, educated, and informed people believe in. Not to start a flamewar, but God is a great example of this.

icelancer2• 14 years ago

A belief in a higher power can easily be a rational decision.

brc6• 14 years ago

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

Yup. Bang on.

Apple does a line in 'oh, but you didn't get an Apple' better than anyone else (they aren't a startup but once were)

>I swear, De Beers has probably pulled off the greatest marketing stunt in the history of humanity

The Australian Meat & Livestock board came up with a marketing idea. On Australia Day, which falls in the middle of Summer, it's very popular to have a family barbecue.

About 8 or 9 years ago, they came up with the idea that it was an Australian tradition to put lamb chops on the barbecue for Australia day. Now, I've been around for a few Australia days myself, and I can tell you it's never been a tradition at all.

But they got a popular former football player to start running ads (in a humorous manner) to say it was 'unAustralian' not to have Lamb Chops on the Barbecue for Australia day. The actual tagline is 'Don't be unAustralian, serve Lamb on Australia day'.

It has been a big success, and now they release pop singles on YouTube and generally create a 'big suspense' to see what they will do this year.

Overall, it's been a massive success, and in just a short time, if you arrive at an Australia day barbecue, it would be surprising to not find Lamp Chops sizzling away. In another decade, it will just be one of those societal norms that will require very little advertising to keep it going.

http://www.mla.com.au/Marketing-red-meat/Domestic-marketing/...

So, these types of stunts find success when the right pieces fall together. Definitely a lot to learn for the budding startup.

MikeCapone• 14 years ago

Unless I'm misremembering, I think there are lots of recently made up holidays that are basically just marketing ploys (Mother's Day and Father's Day).

minikomi• 14 years ago

Japan has this all over the place.

* What do you eat on Christmas Day? A (very specific style of) cake, and KFC.

* Valentines day is for girls to give guys chocolates. Guys give girls chocolates on White Day (March 12th)..

I think the best one is the temples - they sell what's known as a Shimekazari on new years (a kind of wreath). You have to destroy it and buy a new one each year, and it has to be a more expensive one than last years. Nice business if you can get it.

rmc7• 14 years ago

Guinness has successfully started "Arthur's Day" in Ireland, the 29th of September when you're supposed to have a drink of Guinness to celebrate Arthur Guinness' birthday. (It's not like they need it, Diageo (the company that make guinness) have 50% of the Irish alcholic beverage market, but shrug)

MindTwister• 14 years ago

In Denmark we have J-dag, where the christmas Tuborg beer is released. Its always on a Friday and you can be 100% sure that every bar, in every city is filled to the brim with people drinking the first christmas Tuborg of the season.

elwin• 14 years ago

> I swear, De Beers has probably pulled off the greatest marketing stunt in the history of humanity.

De Beers has the advantage of selling a luxury good. The point of buying a diamond is to demonstrate one's financial ability. People don't really want cheap diamonds.

I doubt their marketing campaign is a good pattern for normal products.

JoeAltmaier5• 14 years ago

How about the iPhone? Many 'imitations' yet people who don't really know any better by the Apple product. "I don't want a fake" is very likely the reason.

majormajor• 14 years ago

The trick is to turn a less luxurious good into a luxury good.

Which is rather like what they did.

Cars are an area where this is really common. BMW doesn't bring their lower end stuff into the US. Toyota created Lexus to be a luxury brand.

Or there's the pricier sorts of bottled water...

instakill• 14 years ago

Their products are Veblen goods, economically speaking.

humbledrone• 14 years ago

If you end up going with a diamond, you might consider a company like Brilliant Earth [1], which offers "conflict free" diamonds (and other gems), and recycled precious metals. Their gems come from mines that employ adults at reasonable wages. I'm not associated with the company, but they made my fiance's engagement ring and we're very happy with it.

[1] http://www.brilliantearth.com/conflict-free-diamonds/

HorizonXP6• 14 years ago

Thank you for the link! I've been trying to find a decent source for conflict-free diamonds, and this seems to fit the bill. I hope I can convince my girlfriend to go with an alternative, but this is likely a battle that I will lose.

The issue centres around the social stigma of not having a diamond ring. Friends and family will ask what the stone is, and need to be educated. And no matter what you tell them, the perception will be that I was too cheap to buy her a real engagement ring. Nevermind the fact that I'm not actually saving any money, I'm just spending it somewhat more wisely.

It's actually a little bit of a stressful situation for me. I'm in the Royal Canadian Mint's MintChip Challenge, and I'm hoping to win some gold from the competition, so I can melt it down and make an engagement ring for her from that. In my eyes, that has more meaning behind it. Moreover, she's going on a trip with her sister to Prague & Rome in a month, a few days before our 7 year anniversary. Since she knows a proposal is coming, I was hoping to surprise her by showing up in Rome and proposing to her there. May not be the wisest way to spend my money, especially when I'm not exactly swimming in cash right now, but I felt it would be worth it for the memory and moment. To me, that's a better use for my money than some artificially-valued diamond. Seems like I'll have to scrap that plan and save more money for the ring she wants.

rmc7• 14 years ago

Sounds like a good way to show off. "Oh look you have a diamond ring too? Did it come from one of those sweatshop mines where children have to work? No? Oh that's a shame. Mine came from an ethical mine".

rubberbandage• 14 years ago

My wife and I got our wedding rings here (we also have the luxury of living in the Bay Area, so we got to meet with them in person). They also have a truly astonishing array of vintage rings with stunning stones and settings. If your fiancé(e) is into that style, they have the added benefit of being both glamourous and unusually inexpensive for the quality (and it’s definitely not a “fake”)!

clobber• 14 years ago

Congrats on presenting a diamond-alternative to her. The diamond trade is absolutely disgusting and unfortunately many people seem to equate "love" with a shiny rock. If it came down to it, I would have to reevaluate marrying someone that refused to believe otherwise.

hkmurakami3• 14 years ago

I started thinking about this issue a few days ago and have yet to come up with a strategy for convincing a (future) partner on the follies of purchasing a diamond. Is there any recourse at all to the epic marketing job De Beers has masterminded?

buyx• 14 years ago

The diamond trade is absolutely disgusting

I am not sure that the people of Botswana would agree.

dllthomas5• 14 years ago

> "I don't want something fake!"

Symbolizing the triumph of technology and human progress is not really the ideal for an engagement ring, but it's a lot better than symbolizing blood and oppression (depending, I suppose, on your views on marriage, but given that you were looking at engagement rings I expect yours are favorable...)

My wife has a lab-grown emerald from GreenKarat (http://greenkarat.com) on her finger, and she's very happy with it. She was even more opposed to diamonds than I was, going in (I think they look nice, just not worth the money or ethics, she doesn't like the look either). But yeah, for the record, "That's what everyone gets" is off by at least one!

If her heart is really set on the diamond, the best option is a ring in your family or hers, if one exists. Failing that, vintage rings you can find at estate sales and the like may be a more ethical approach than buying new diamonds. They'll have a bloody history but at least you're not adding to demand that will spur new bloodshed. "Ethical" diamonds sold presently in jewelry stores, per my understanding, are better than they were 10 years ago, but the Kimberley Process still has issues.

boyter2• 14 years ago

I actually had this argument as well recently. She however did agree with me and is now sporting a Sapphire engagement ring. It does have some diamonds on it but the main stone in Sapphire. She wanted it because she didn't want what everyone else had.

Not sure how old you are, but I have also noticed this trend in Gen Y (friends like myself) starting to get colored gemstones. Of course this is totally anecdotal but maybe De Beers stranglehold is finally going away?

Congratulations as well by the way.

evincarofautumn2• 14 years ago

I haven’t noticed such a trend, but it would be welcome. Never liked the look of diamonds, myself, so I always figured if I got engaged I’d just look for the gemstone that’s right for my partner—their look, their personality.

brazzy4• 14 years ago

Sapphires are actually even more bizarre. They can be produced artifically, at perfect quality and any size, relatively cheaply. The only way to distinguish natural ones is by their impurities. The artificial ones are literally a superior product in every way, yet are considered "fake" and thus disgraceful to wear.

HorizonXP6• 14 years ago

So I presented the sapphire option to my girlfriend. She was hesitant at first because she wasn't sure what it would look like on her hand. After scouring Toronto, I found the Fair Trade Jewellery Co. (http://ftjco.com/). I'm linking to them because they are fantastic.

They stayed open past their normal hours so that my girlfriend and I could make it down. They sourced 3 purple sapphires for us so she could see, and 1 of which was absolutely gorgeous. My girlfriend loved it, and it's what I ended up going with. Putting a payment down next week.

But the best part appeals to the nerd and engineer in me. They do bespoke rings, fully in-house. They will customize the ring to any design you want, to fit your finger and the gem. That way, it's not only designed the way you want, it's made to uniquely fit you.

They design everything in CAD, and iterate with you via e-mail. Then they print it on their 3D printer, where you have a chance to go in, see it in person on your finger and with the gem. If changes are needed, they can iterate again. Otherwise, they go ahead and make a plaster mold. Then they melt the metal (i.e. gold, platinum) and cast it. They have all the equipment for this in-house in the back of their store. Honestly, I haven't been more excited about buying a ring than now. I'm super happy I found them.

philwelch3• 14 years ago

My fiancee and I did tattoos instead. We came up with a design that we both got in the same place and can be filled in and completed when we get married. The best part is, we are the only two people who had to suffer and shed blood for it.

Symmetry4• 14 years ago

Ooh, nice. To the extent that an engagement ring says "I'm willing to make a sacrifice to prove that I'm serious about you" a tattoo totally works.

caf2• 14 years ago

I was lucky, my fiancee is dead keen on Moissanite. She likes the idea that its a "meterorite stone" (even though the ones you can actually buy are industrially grown).

prawn• 14 years ago

I could not bring myself to spend my full budget on a stone, regardless of the dreams of my then fiancee. Instead I split the budget between the ring and flying her overseas for a while to propose. She got something she still stares at on her hand, and we both had a memorable trip and event that we won't ever forget.

luser0012• 14 years ago

Not sure if the "gold is made of stars, diamonds are from coal" line will convince her. https://www.npr.org/templates/story/story.php?storyId=739720...

I give major props to my now wife being OK with the gold engagement ring I bought out of principle. It had a fanciful cheesy design too. :)

Good luck!

patio113• 14 years ago

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.

patio113• 14 years ago

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.

kapowaz• 14 years ago

> Don't sell cheap. Sell authentic, sell natural, sell one-of-a-kind, sell meaning, sell status, sell a story, etc.

Basically: sell it better than De Beers has been doing for over half a century.

i.e. best of luck!

geon• 14 years ago

> Don't sell cheap. Sell authentic, sell natural, sell one-of-a-kind, sell meaning, sell status, sell a story, etc.

I have been thinking recently of an anniversary gift that would represent my personality. I'd like to get a ring of iridium. It's one of the most noble metals (platinum group), being the most corrosion resistant of all. It's very lustrous, with a dark gray color. It's very hard, thus scratch resistant. And it comes from SPACE!

supertrill• 14 years ago

Patio is damn right on looking good to the women's circle of friends. People are behaving rationally here - they understand the engagement ring as a part of the cost of doing business/participating in a social ritual, in the same vein as taking your husband's last name, buying certain kinds of houses, etc.

kaybe• 14 years ago

If you have some time, you can go to Brazil (eg state of Bahia, near Chapada Diamantina where many diamonds are found), talk to people in the villages (Spanish works, Portuguese is better) and buy a raw diamond they found.

Polishing will make it smaller by about half, and at least I cannot judge the purity and value of a raw diamond just like that, but the story and experience of getting it and the knowledge of its ethical origin are enough of offset that in my opinion.

edit: If anyone needs directions, just ask.

bobowzki• 14 years ago

You should think twice before you marry...

kkihara• 14 years ago

Stick with your guns. Why would you buy a diamond when you're so opposed to it for perfectly valid (although potentially subjective) reasons? Does the perception of other people that you are "too poor to afford a real ring" matter to you so much?

My wife was appalled when I told her I refused to buy her a diamond engagement ring. "Why wouldn't you want to give me a diamond ring? I couldn't marry someone who wouldn't give me a diamond ring."

We're married now and she doesn't even wear the sapphire ring that I bought for her because of chores, etc. Sure, she had to explain to almost everyone why it wasn't a diamond ring but that just means that she had one more topic to go through with her friends.

HorizonXP6• 14 years ago

The only person's opinion that matters to me is my girlfriend's, and then my own. I really don't care what others think. I prefer to buck the trend and be non-conformant.

However, I have to take my girlfriend's feelings into account. I have to buy the ring, but she's the one that has to wear it. If she has ill-feelings towards the ring when she wears it, she'll hate it. I'm not saying that's what'll happen, I'm just saying I need to take her wants and needs into account. Simply making a decision for her because "I know what's best." is selfish.

Anyway, I'm slowly whittling her down. She just told me she may be interested in a sapphire ring.

cabalamat• 14 years ago

> 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.

Does she still want the diamond after being shown the article? Most people don't like being manipulated.

HorizonXP6• 14 years ago

I sent it to her, and it's a long article. I'm hoping she reads most of it.

We went out for coffee after shopping. She knows I'm right about diamonds. Her issue is a) she has difficulty listening to me about these things because she's stubborn and feels like I'm manipulating her b) she doesn't want to buck the trend, be different, and have to explain things to her friends and family.

She hates being different, and she hates being the centre of attention. She feels that by not getting a diamond engagement ring, others will speak ill of her behind her back, and she doesn't want to stand out like that.

I'm the opposite. I could care less what others think. I don't love being the centre of attention, but I don't mind it. I hate being conformant though.

Anyway, it's not criticism of her. I love her dearly, I just need her to see the light.

gadders• 14 years ago

If it's not a diamond, not matter what you call it people are going to think QVC and Diamonique.

It's not rational, and these stones might be nicer, but they're not diamonds. Branding, there.

melvinmt• 14 years ago

> I can't believe this article popped up on HN's front page tonight.

This article was actually already posted somewhere in the comments a couple of days ago: http://news.ycombinator.com/item?id=4523063

andyjsong5• 14 years ago

Here's my 2 cents on the start up industry, devs are still undervalued. I'm hearing a good dev can command $125k-$150k/year + the hope of an exit, I think that's cute. Lawyers with less value command salaries $250k to $500k.

What made De Beers and the diamond industry was with cartels and marketing. I think devs inherently lack both those features being independent thinkers and gasp introverted. Let's change that.

jlgreco2• 14 years ago

You want to change developers being independant thinkers?

Developers lack the "feature" of cartels?

This comment makes no sense and appears to me to be a poorly concealed attempt to wedge an unnecessary argument into this discussion.

dkobia• 14 years ago

I read a similar article right before I married my wife. Trust me when I say it's a losing battle trying to rationalize how we've been duped by marketing. You'd have to convince both her and her social network... Good luck with that.

nasmorn• 14 years ago

Buy her the moissanite and deBeer stock worth the price difference. It is just as pretty, shows your financial prowess and will pay for a year of your future childrens college.

guard-of-terra2• 14 years ago

"That's what everyone gets" sums it up.

If a person is content to get something "what everyone gets", they are good to be defrauded while supporting labor violations in some third word country. Accepting "what everyone gets" is a real no-go, it's a surefire way to measure a person up. "Too light".

Me and my wife, we got outselves a pair of titanium rings for the wedding. They look downright alien, everybody asks about them on sight. But all those opportinities are lost to you once you accept "what everyone gets"

robflynn• 14 years ago

My girlfriend wants a Winnebago type thing instead of a diamond, presumably so she can go somewhere if I become especially annoying. ;)

deveac2• 14 years ago

I recently purchased a diamond engagement ring for my fiance. That shopping experience perfectly encapsulated everything there is that I could possibly hate about making a consumer purchase:

1)Product is monopolistic, with supply artificially constrained in order to generate prices that reflect that. Actual value of say, a one carat diamond, is probably a few hundred bucks max.

2)Cultural demand was artificially crafted by a sustained (admittedly brilliant) marketing campaign by the monopolistic entity years ago. It is now ingrained into the core of our culture. Annoying to think that it didn't exist at the beginning of the previous century and that its arrival was not organic.

3)I cannot realistically educate myself on the product in any meaningful sense like I can with a TV or a car. Yes, I visited many jewelers. They all were quite happy to educate me on how diamonds are graded. I read up on my 'Four C's". I peered into the jewelers lens and nodded as I saw the slight imperfections of one stone vs another. But you know what? At the end of the day, there is NO WAY I could accurately grade them, even after all of my research and hands on 'training'. Is that diamond a VS3 or WS1? No idea, but one is far more expensive even though they look the same under the scope. It would probably take me years to be able to identify why.

4)Blood diamonds. People are being enslaved, murdered, and abused in order get these stones to me. Not to mention other horrible labor abuses, and the guns that those diamonds go to fund that wreak havoc in the origin communities. Honestly, there is no way to tell a stone's history, especially when you are dealing with a cartel. You can't exactly ask for proof, and anything they tell/show you...can you really trust the authenticity?

So. Anyway. Yeah. I mitigated the 4th point by buying a lab grown diamond. (Not much cheaper than mined diamonds btw if you are wondering).

Don't get me wrong, -I was happy to give my fiance something that made her so happy. One of the hilarious premises we all learned when we took our first Econ class was that in order to make those simple models work, we assumed consumers were rational. We all know how true this isn't. This purchase exemplifies that for me. I'm acutely aware of how irrational I personally find it, while being simultaneously aware that I have no problem setting that aside in this (somewhat rare for me) instance. I am infinitely more rational with purchases I make for myself than for those I love. That last sentence is where a lot of margin lies for a LOT of products.

stuaxo• 14 years ago

Ha, the rationality thing is so true - just finished reading 23 things they don't tell you about the free market - it covers just this.

brc6• 14 years ago

Consumers are rational in the purchase of diamonds - their purchases are based on buying the diamond that shows the largest amount of wealth for the given stone.

Irrational would be paying more money for a smaller diamond.

Responding to social norms creating by a marketing campaign is many things - strange, definitely - but it's not irrational.

groby_b2• 14 years ago

#3: It takes you roughly six months to get decent at it. If you're willing to spend a solid week with somebody who can show you what to look for, you'll be able to take decent guesses.

And with about 15 minutes of reading you'd know there's no WS1. Or VS3. At least not according to the GIA scale, which is the most common in Northern America. VS3 is a marketing term to make an SI1 sound better. I'd assume WS1 is really VVS1 - and I guarantee you'll be able to spot the difference between a VVS1 and an SI1.

(Sorry, I happen to live with somebody who's a certified gemologist. I assume I have been affected by gem nerdery via Osmosis ;)

chc• 14 years ago

I had almost the same conversation with my fiancee. Fast forward nine months, she loves her moissanite ring. I think what changed her mind was actually seeing a moissanite — it is very obviously not "fake," and the stone's fire is amazing.

Incidentally, rather than pitch it as "the ones you buy are created in a lab and are cheap," I'd go for something more along the lines of "they grow them through a natural process, kinda like pearls." It's not scientific, but it's true enough.

charlieok• 14 years ago

This Atlantic article is 30 years old (and still relevant -- props for that).

Here's a related one from yesterday:

http://www.theatlantic.com/health/archive/2012/09/study-soci...

“What behavioral psychology reveals about your online photos: Comments and approval from other users end up being more important than the way you look.”

It's the same phenomenon both times -- social proof. It's the same reason you're more attractive in a club if you appear to be getting approval from other attractive people. The same reason the original PageRank algorithm did a good job of surfacing web pages people wanted to see.

jcr• 14 years ago

There are two ways to avoid cartel diamonds. The first you probably know about, namely, man made diamonds, but I've got a hunch her "fake" complaint might apply here too.

The second is "Polar Diamonds" from Canada. They are the only source of natural diamonds that I know about that isn't controlled by the cartel.

lwat• 14 years ago

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.

jquery6• 14 years ago

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.

caf2• 14 years ago

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.

kamaal2• 14 years ago

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.

HorizonXP6• 14 years ago

So why do I have to buy my future fiance a diamond to experience that moment? Why not give her a piece of coal? It's the same element/material, just in a different, albeit less attractive, form.

No one's arguing about the idea of giving a gift or a token or your love. The issue is about why this token needs to be a diamond.

I know that in our family, and my girlfriend's, there is a lot of jewellery that is passed down between generations. This is usually gold though, which at least has some value associated with it. It's not like we consider melting any of it down or selling it. But it's nice to have real value associated with generational possessions on top of their sentimental value.

kamaal2• 14 years ago

>>So why do I have to buy my future fiance a diamond to experience that moment? Why not give her a piece of coal? It's the same element/material, just in a different, albeit less attractive, form.

Try gifting her a piece of coal and watch.

Really why should you wear a suit? Or why should you wear a watch? Or why should you dine a good restaurant?

There are a few emotions attached to a few things. Like for example Roses.

Tichy6• 14 years ago

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.

theorique5• 14 years ago

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)

spyder• 14 years ago

Relevant: http://www.csmonitor.com/World/Global-News/2012/0917/Russia-...

sp3322• 14 years ago

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

Wingman4l7• 14 years ago

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.

mixmastamyk• 14 years ago

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.

Tichy6• 14 years ago

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

brazzy4• 14 years ago

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.

niggler• 14 years ago

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

Gustomaximus• 14 years ago

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• 14 years ago

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.

creamyhorror• 14 years ago

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...

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.

TomorrowMars• 14 years ago

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.

miraj• 14 years ago

on another note (also on todays HN homepage!)

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

sayYaeah• 14 years ago

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.

christiansmith• 14 years ago

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.

ngm-hn2• 14 years ago

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.

Quizz2• 14 years ago

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-hn2• 14 years ago

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.

dimitar• 14 years ago

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-terra2• 14 years ago

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.

bduerst• 14 years ago

To be fair, the diamonds at that site are from/the result of a meteor crash, and most are small in diamond terms.

startupfounder• 14 years ago

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• 14 years ago

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.... Now that I think about it, I think I first discovered this article through HN 2 years ago.

shrikant• 14 years ago

Previous good discussions on this:

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

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

Quizz2• 14 years ago

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.

squarecat• 14 years ago

One-page, seizure-free view:

http://www.theatlantic.com/magazine/print/1982/02/have-you-e...

finkin1• 14 years ago

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

rondon1• 14 years ago

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.

laic• 14 years ago

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

Have You Ever Tried to Sell a Diamond? (1982)

Related Stories