How do blood diamonds and artificial diamonds not cancel eachother out?
Artificial diamonds are cheap to make, and relatively easy. I’m not sure this is true, at least relative to the cost of tossing kids into diamond mines at slave labor wages. And it is a rather technical process that I don’t think many of these countries have the infrastructure for. The distinction is that artificial diamonds are not considered “real” diamonds. In other words, the consumer hear “artificial” or “synthetic” and they immediately think “fake”. The thing to understand is that diamonds have no inherent value. They aren’t like gold, nor are they scarce, like some other gemstones. They also have no resale value. The reason diamonds are expensive is because deBeers almost exclusively controls mining and distribution – they limit the amount of diamonds on the market to create a scarcity where none naturally exists. Thus they can charge monopoly prices. The blood diamonds come in under the monopoly price, but well above the “market” price, which would be very low.
When I said, “no resale value”, I meant very low resale value. There is not proper secondary market for diamonds. There’s ebay, etc, given that diamonds can’t be scratched and are VERY difficult to damage, you would think a ten year old diamond of certain characteristics would command the same price as a new diamond with the same characteristics. A ten yr olf gold brick is the same price as a new gold brick and that price is established on the commodity market. But that is not the case with diamonds. There is no well-established market price for a diamond of a given size, color, cut, and clarity. If there were, the volume of diamonds out there flooding onto the market along with the 100 million carats worth of newly mined diamonds would collapse the price.
Oh, but there are people selling things they call “synthetic diamonds” or “lab diamonds” but those things are not actually diamonds. They’re moissanite or cubic zirconia crystals. Since blood diamonds are real diamonds, the actual “fake diamond” market doesn’t impact them. But like I said, real artificial diamonds are more expensive then standard diamonds right now, that’s likely to change in the future, but it hasn’t yet.
This is on topic from a recent Economist article about diamonds: “Marketing is … vital in persuading people to buy the real thing. Synthetic diamonds have captured 90% of the industrial market, but have made few inroads into jewellery, at least so far.” Two off-topic points that stood out for me regarding the DeBeers monopoly (Economist says no longer) and blood diamonds (Economist and others say virtually no longer exist as such, although diamonds are still being mined in deplorable conditions): – “[I]n reality, the shape of the industry—which produces an estimated $13 billion of rough stones and over $62 [1990s, Sierra Leone & Liberia]…. Most of this transformation is due to the fact that De Beers, the company that once controlled much of the supply of rough diamonds, has loosened its grip, and a host of smaller producers are emerging. Regulators in Europe and America and governments in Africa have
