Diamonds are not forever
I know you all girls die for receiving a 1-carat-diamond engagement ring from Prince Charming. And I know some of you may have actually received one. Probably even one or two received a nice 2-carat family-treasure ring that was once worn by the groom’s grandma but, I’m pretty sure, none of you have received a 100 year old diamond engagement ring. Have you? I know you haven’t. And you know why? Because the concept that offering a diamond ring was THE symbol of engagement was INVENTED some when during the 1940s…
By that year one South African company, De Beers, controlled 90% of the diamond production and almost 100% of its declining market. It was just natural that after the huge world depression few people could afford to buy luxurious goods. So, in 1938 Harry Oppenheimer, the 29-year-old son of the founder, traveled to New York and hired N. W. Ayer, a leading advertising company, to create a new image for diamonds among Americans. The target was to make them buy more expensive pieces than the 80-dollar-ones they were buying in average.
Ayer did a great job by identifying that it should focus on strengthening the association of diamonds with romance. It would be crucial to inculcate young men that diamonds were a gift of love: the larger and finer the diamond, the greater the expression of love. It would be also crucial to get young women view diamonds as an integral part of romantic courtship.
To change their mindset this way, Ayer focused on the rather new medium of movies, and movie stars were given diamonds to use as symbols of indestructible love. They also set up a weekly service called “Hollywood Personalities” that offered magazines and other media information (and pictures) of celebrities and their diamonds. Four color ads on exclusive magazines, showing diamonds before paintings by Picasso, Dali and others, showed that this stones were unique works of art.
The plan worked and by 1941 the sale of diamonds increased by 55%. Diamonds were being sold that well that by 1950 a new threat raised: that of a secondary market of used diamonds. So Ayer (yes, it was Ayer, not Ian Fleming nor James Bond) came with its most famous line: “Diamonds are forever”. Even though diamonds can in fact be shattered, chipped or incinerated to ash, the concept of eternity was the one that De Beers needed to attribute diamonds its magical quality. And of course, to discourage women of selling their diamonds.
By 1979 De Beers was selling in the USA more than US$2.1 billion, nearly a hundredfold since its 1939 figures: just US$23 million.
De Beers has created such a perfect monopoly that, even though commodity prices tend to fluctuate a lot (see precious metals as gold or silver), diamond prices are extremely stable. But don’t fool yourself. If you try to make business by buying and selling diamonds, you won’t be able to, unless you buy to De Beers (or one of its wholesalers) and sell directly to the public. In 1970 a British magazine did an experiment: it bought a £400 diamond and tried to sell it nine years later, after a 300% inflation. Instead of selling it on £1200, they couldn’t get more than £500. In 1971 they bought another one at £2600. One week later the maximum buy offer they could get was a £1000 one. Their conclusion? “Diamond investments have proved to be very poor”. Big jewelry companies such as Tiffany & Co. and similar have a no-buy policy on diamonds. They actually don’t want to offend their costumers by buying back from them diamonds at half their original price.
In July 2004, De Beers pleaded guilty to the charge of “conspiracy to fix prices for industrial diamonds” and now, after 10 years and a payment of a US$10 million fine, they are trading again in the American market. Its size today? US$500 million in industrial stones and US$60 billion in diamond jewelry. Annually. Great deal, isn’t it?
What was not such a great deal was your buying of a diamond for your bride.
Ladies, enjoy your diamonds while they last for diamonds are not forever.
___________________________________________
The information presented here was obtained from the following sources, and you’re invited to visit their pages:
- Have You Ever Tried to Sell a Diamond?
- Wikipedia: De Beers
- De Beers Group
- Diamonds, Gold, and South Africa
- The History Behind the De Beers Diamond Cartel
By that year one South African company, De Beers, controlled 90% of the diamond production and almost 100% of its declining market. It was just natural that after the huge world depression few people could afford to buy luxurious goods. So, in 1938 Harry Oppenheimer, the 29-year-old son of the founder, traveled to New York and hired N. W. Ayer, a leading advertising company, to create a new image for diamonds among Americans. The target was to make them buy more expensive pieces than the 80-dollar-ones they were buying in average.
Ayer did a great job by identifying that it should focus on strengthening the association of diamonds with romance. It would be crucial to inculcate young men that diamonds were a gift of love: the larger and finer the diamond, the greater the expression of love. It would be also crucial to get young women view diamonds as an integral part of romantic courtship.
To change their mindset this way, Ayer focused on the rather new medium of movies, and movie stars were given diamonds to use as symbols of indestructible love. They also set up a weekly service called “Hollywood Personalities” that offered magazines and other media information (and pictures) of celebrities and their diamonds. Four color ads on exclusive magazines, showing diamonds before paintings by Picasso, Dali and others, showed that this stones were unique works of art.
The plan worked and by 1941 the sale of diamonds increased by 55%. Diamonds were being sold that well that by 1950 a new threat raised: that of a secondary market of used diamonds. So Ayer (yes, it was Ayer, not Ian Fleming nor James Bond) came with its most famous line: “Diamonds are forever”. Even though diamonds can in fact be shattered, chipped or incinerated to ash, the concept of eternity was the one that De Beers needed to attribute diamonds its magical quality. And of course, to discourage women of selling their diamonds.
By 1979 De Beers was selling in the USA more than US$2.1 billion, nearly a hundredfold since its 1939 figures: just US$23 million.
De Beers has created such a perfect monopoly that, even though commodity prices tend to fluctuate a lot (see precious metals as gold or silver), diamond prices are extremely stable. But don’t fool yourself. If you try to make business by buying and selling diamonds, you won’t be able to, unless you buy to De Beers (or one of its wholesalers) and sell directly to the public. In 1970 a British magazine did an experiment: it bought a £400 diamond and tried to sell it nine years later, after a 300% inflation. Instead of selling it on £1200, they couldn’t get more than £500. In 1971 they bought another one at £2600. One week later the maximum buy offer they could get was a £1000 one. Their conclusion? “Diamond investments have proved to be very poor”. Big jewelry companies such as Tiffany & Co. and similar have a no-buy policy on diamonds. They actually don’t want to offend their costumers by buying back from them diamonds at half their original price.
In July 2004, De Beers pleaded guilty to the charge of “conspiracy to fix prices for industrial diamonds” and now, after 10 years and a payment of a US$10 million fine, they are trading again in the American market. Its size today? US$500 million in industrial stones and US$60 billion in diamond jewelry. Annually. Great deal, isn’t it?
What was not such a great deal was your buying of a diamond for your bride.
Ladies, enjoy your diamonds while they last for diamonds are not forever.
___________________________________________
The information presented here was obtained from the following sources, and you’re invited to visit their pages:
- Have You Ever Tried to Sell a Diamond?
- Wikipedia: De Beers
- De Beers Group
- Diamonds, Gold, and South Africa
- The History Behind the De Beers Diamond Cartel
