Everyone knows that diamonds are a girl’s best friend, but she may want to rethink the friendship when she sees the price tag.
Diamonds represent love and prosperity, and that’s because you need to be prosperous to have one.
What exactly makes diamonds so expensive?
We cover exactly what makes a diamond worth the three months’ rent.
Why Are Diamonds So Expensive? (Top 10 Reasons)
Most people think of diamonds and think of the clear appearance of most diamonds, but you have options.
Diamonds come in a wide range of colors.
In fact, you may be surprised by how many hues you can find.
Some of the available colors of diamonds include:
It’s not necessarily the color that matters as much as the quality of the color.
Color is graded based on the GIA (Gemological Institute of America) D–Z color grading system.
Diamonds that receive a D grade have the truest color while each next grade indicates a reduction in quality regarding the color.
The grade will affect the cost of the diamond.
Diamonds with less color are more perfect, meaning a D grade diamond will look clearer than the yellow hue of a Z grade diamond.
Less color = more valuable since color comes from imperfections.
Most engagement rings have a rating between F and G.
It’s not only the color grade that matters but also the rareness of the color since some colored diamonds are much rarer than others.
For example, there are only about 20 to 25 red diamonds in the world, making them the rarest diamonds available.
You can expect these diamonds to be extremely expensive.
A 5.11-carat red diamond sold for $8 million.
Blue diamonds and pink diamonds are the next rarest colors.
Clarity refers to the quality of the diamond, taking special care to look out for imperfections and other problems with the diamond.
No diamond is absolutely perfect.
They all have flaws.
Most people can’t recognize these flaws with the naked eye, so an expert rates each diamond.
They will look at both internal and external flaws, with internal flaws considered more problematic when the diamond experiences serious trauma.
External flaws usually occur as a part of normal wear and tear.
They only become a serious problem when they are obvious to the naked eye.
Internal flaws include cavities and crystals.
Cavities refer to holes in the diamond, while crystals refer to minerals that get inside of the diamond.
The diamond rating scale for clarity is as follows:
- FL = Flawless
- IL = Internally Flawless
- VVSI/VVS2 = very, very slightly included
- VS1/VS2 = very slightly included
- SI1/SI2 = slightly included
- I1, I2, I3 = imperfect
Only 0.5–1% of natural diamonds are flawless, making them very rare (and very expensive).
The average engagement ring has a clarity rating of VS1/VS2.
Most diamonds are cut from a larger diamond.
A precise cut can make the diamond more valuable while a mis-proportioned cut can decrease its value.
There are three cut grades that meet the qualifications of most jewelers:
- Ideal = top 3%
- Very good = top 15%
- Good = top 25%
The diamonds can be found in multiple different shapes.
- Round: A round brilliant diamond includes 57 or 58 facets and increases light return.
- Princess: One of the newest shapes, a princess cut diamond incorporates both round and square shapes.
- Emerald: This rectangular diamond provides a step cut and a sense of elegance.
- Cushion: Vintage oval cut with distinctly large facets.
- Pear: Also known as a teardrop cut, the pear provides an especially regal cut.
- Heart: As the name suggests, this diamond comes in a heart shape especially popular for romantic gifts.
- Marquise: This long cut flatters the owner’s hand particularly well and resembles a smile.
The shape of the diamond doesn’t affect the value as much as the quality of the cut.
4. Carat Weight
“I never worry about diets. The only carrots that interest me are the number you get in a diamond.” —Mae West
A carat is a unit of measurement designed to represent the weight of diamonds.
The average engagement ring weighs one to two carats.
Naturally, larger carats cost more.
See the following average costs of diamonds of the different sized rings (round cut):
- ½ carat = $1,755.00 (starting at $610)
- 1 carat = $11,500 (starting at $2,500)
- 1.5 carat = $20,400 (starting at $4,400)
- 2 carats = $37,400 (starting at $8,400)
- 3 carats = $176,600 (starting at $33,600)
- 5 carats = $216,750 (starting at $48,000)
While carat weight plays a large role in the price, it’s important to understand that the carat is not the only or even the main determination of how much a diamond is worth.
All four factors of the four Cs come into play.
Frederick Wells, a diamond mine superintendent, found the enormous 3,106-carat Cullinan Diamond in 1905, and it still remains the largest diamond on record.
This diamond eventually was cut into nine different diamonds, and they all go for exorbitant amounts of money in the millions of dollars.
You can see some of the pieces as part of the Crown Jewels when you visit the Tower of London.
5. Storied History
“Diamond is the most valuable, not only of precious stones but of all things in this world.” —Pliny
We associate diamonds with value today in some part because of the history they carry with them.
Indigenous people in India found the first diamonds in 4 B.C.
The people considered them useful thanks to their reflective properties as well as their sharpness.
Many people used them as tools.
Eventually, they became considered more and more valuable, and people traded them on the Silk Road before trading them all over the world.
People thought India was the only place to find diamonds until about 1800 when India’s supply started depleting.
Miners in different countries started finding mines filled with gorgeous diamonds.
Diamonds became representative of wealth and prosperity, and people who could obtain a diamond proudly displayed it.
Soon, the aristocracy and royalty flaunted it to the point that it made some of the commonfolk unhappy, such as the case with Marie Antoinette and “Le Collier de la Reine”.
One of the main reasons that diamonds cost so much is that people want them.
They still represent prosperity and act as a status symbol.
People with diamonds show off how well they are doing to the people around them in a subtle (or not so subtle) way.
It doesn’t necessarily take commercials to help increase popularity since it already exists, but we also still see plenty of commercials for stores like Kay Jewelers and Jared.
It’s not just Americans who want diamonds, even though they rank second.
The popularity exists all over the world.
India buys the most diamonds with Hong Kong and Belgium following the United States.
7. Expense Of Mining
There are only 53 locations across the world where people mine diamonds.
Manufacturers must fly employees to the location.
It’s also not exactly easy to find rare diamonds.
Miners must mine through 250 tons of rock to find one single diamond.
Obviously, this takes a lot of time and money.
Some of these locations don’t make for the easiest work conditions, either.
For example, some mining fields exist in a lake in the tundra of Canada or in the ocean near the Namibian coast.
After about 20 years, the mines don’t generate a profit anymore, and the business must move all business operations to another location.
Furthermore, when you do find diamonds, only some of them are high enough quality to be sold.
Of the ones that get sold, they only yield about one-third the weight after they are made into diamonds suitable for sale.
In order to ensure that miners make the most of what they find, they need to hire professionals with the know-how to sort through the diamonds correctly.
8. Engagement Rings
Society convinces men that they need to spend three months’ salary on a gorgeous ring in order to prove their love to their partner.
Women expect it, and men feel pressure to provide it with the average engagement ring costing $2,500.
While men pick up the tab most of the time, independent women step in and pay for their own ring 20% of the time.
Diamonds are used in 87% of engagement rings with only 13% of brides opting for an alternative gemstone.
This practice can singlehandedly keep the diamond industry afloat, especially considering the emotional connotation attached to the object.
It all started with a marketing campaign started by the De Beers Corporation.
9. De Beers
The De Beers Corporation is the largest diamond company in the world.
At one point in time, they controlled over 80% of the diamond sales in the world, but they currently only sell about 30% of the diamonds in the world.
Nonetheless, their contributions to the diamond industry, both good and bad, cannot be ignored.
Unfortunately, the De Beers Corporation, as the leading diamond manufacturer for an extended period of time, has become associated with the practice of blood diamonds over the years.
Blood diamonds refer to diamonds mined in war-torn lands and sold to fund wars and malicious political agendas.
The fight for these diamonds led to atrocious practices, such as child soldiers and the physical maiming of mine workers.
After these diamonds are sold, they got mixed in with the regular diamonds sold by the De Beers Corporation.
For what it’s worth, since the recent focus on blood diamonds, the De Beers Corporation has taken steps to eliminate their involvement.
They also don’t have nearly the control over the industry as they once did.
Current companies owned by the De Beers Corporation include:
- Debmarine Namibia
As we mentioned, the De Beers Corporation no longer has a monopoly on the diamond industry.
In the early 21st century, De Beers faced several federal lawsuits in the United States that forced them to pay a hefty fine of $295 million and change their future business practices.
10. Precious Metals
Diamonds generally come as part of a larger piece of jewelry, such as a ring, necklace, or earrings.
When you incorporate real diamonds into a piece of jewelry, you will use high-end precious metals to pair with it.
White gold, gold, and silver are the most common materials paired with diamonds.
The cost of a white gold setting for a ring, the most common option, is $180 for a simple ring with a single stone to $2,500 for a complicated ring design.
For women who like bling, consider talking to the jeweler about adding smaller diamonds around the band.
Diamonds cost a lot of money. In many cases, the cost is justified, especially when it is used to represent love for someone close to you.
However, we need to be mindful that marketing campaigns, monopolies, and blood diamonds are part of the industry as well.
As long as you do your research in advance and don’t put too much stock into using diamonds as a status symbol, you can find ways to reduce your cost when purchasing a diamond.