Are diamonds really rare? Diamonds have long been synonymous with luxury, romance, and everlasting beauty. But have you ever stopped to wonder – are diamonds really as rare as we’ve been led to believe? Let’s delve into this sparkling world and uncover the truth behind one of the most coveted gemstones on the planet.
What does Rarity mean?
According to Collins Dictionary, if someone or something is a rarity, they are interesting or valuable because they are so unusual. A key synonym for rarity is scarcity, which means insufficiency or shortness of supply.
For a diamond to be considered rare there must be a very limited supply and global demand must exceed supply thus creating scarcity.
The Illusion of Diamond Rarity
The diamond industry has done an exceptional job of marketing diamonds as rare and precious stones. From iconic slogans like “A Diamond is Forever” to the idea that diamonds are a symbol of eternal love, the myth of their scarcity has been deeply ingrained in our collective consciousness. But the reality is far more complex.
The rarity of diamonds is not a complete myth, but it is often exaggerated. While diamonds are not as rare as some marketers claim, they are still a relatively scarce gemstone compared to many other precious stones.
PHOTO 1: Are diamonds really rare? Most diamonds are not rare. However, some diamonds like the Argyle pink diamond pictured above are exceedingly rare and coveted. Rare diamonds like this will appreciate in value over time due to their scarcity. Photo credit: Pink Kimberly Diamonds, AU.
That said, contrary to popular belief, diamonds are not as rare as one might think. In fact, diamonds are found in various parts of the world, including Africa, Australia, Russia, and Canada. The abundance of diamond deposits has led to a steady supply of these gemstones in the market. Additionally, advancements in mining technology have made it easier to extract diamonds from the earth, further contributing to their availability.
Seven countries have led the world in the production of gem-quality diamonds for over a decade. Russia, Botswana, Canada, Angola, South Africa, the Democratic Republic of the Congo, and Namibia. These countries have all been consistently producing over one million carats per year.
ILLUSTRATION: How common are diamonds? Diamond mining now occurs in many countries around the world. Key producer countries (yellow in the above map) include Russia, Canada and Botswana. However, the core of natural gem-quality diamond production remains in Africa.
In reality, diamonds have never been more readily available. Moreover, diamonds are not hard to find. Scientists at the Massachusetts Institute of Technology (MIT), released a study stating that an estimated quadrillion tons of rough diamonds lie deep below the Earth’s surface. Yes, you read that correctly, 1,000,000,000,000,000. While yes, many of these diamonds are so deep below the earth’s surface that they are harder to extract, the truth is there are more than enough “natural” diamonds mined to go around for generations to come.
It is also very important to note that the global supply of diamonds, while not unlimited, is sufficient to meet current demand. Technological advances in diamond mining and synthesis have also increased the overall availability of diamonds in recent decades. Moreover, the advent of synthetic diamond means demand for natural diamond has significantly dropped so supply capacity of natural diamond exceeds demand. In sum, this means, that with limited exceptions – diamonds, even gem grade diamond are more readily obtainable and NOT rare.
The Geology of Diamonds
Diamonds are formed deep within the Earth’s mantle under extreme pressure and heat. They are brought to the surface through volcanic eruptions. Diamonds are then mined and cut into the dazzling gems we see in jewelry stores. While the process of diamond formation is indeed rare and unique, the actual abundance of diamonds in the Earth’s crust may surprise you.
According to IGS, a global authority in gemstones, gemologically speaking, diamond is a mineral with a chemical formula of C (carbon) that crystallizes in the isometric system. By comparison, the mineral graphite also has the chemical formula of C. However, it crystallizes in the hexagonal system and has very different properties.
PHOTO 2: A rough diamond. A transparent yellow diamond of approximately three carats from a mine in Kimberly, North Cape Province, South Africa. Many natural diamond specimens exhibit an octahedral crystal form and have inclusions. Photo Credit: Specimen and photo by Arkenstone, Richardson, TX.
As isometric crystals, diamonds have a single RI, so they don’t show pleochroism or birefringence. They have a specific gravity or density of 3.51 to 3.53, a bit more than average for gemstones. These properties can help distinguish real diamonds from some of their look-alikes.
Synthetic Diamonds are shaking up the market
While diamonds occur in nature, laboratories can also synthesize them. According to Business Research Insights, the global jewelry synthetic diamonds market was USD 1566.6 million in 2022 and is projected to touch USD 6895.66 million by 2031, exhibiting a CAGR of 17.9% during the forecast period. The sudden rise in CAGR is attributable to the market’s growth and demand returning to pre-pandemic levels once pandemic is over.
By the end of 2023, the market share of gem grade synthetic diamonds had increased to 17% of the overall diamond market. Jewelers are making money selling synthetic diamonds and consumers are saving money by buying them. Therefore, it’s not hard to understand why everyone is running toward synthetics.
PHOTO 3: The diamond industry will remain under pressure as geopolitics and the rising popularity of lab-grown diamonds cause a fundamental restructuring of the market. Diamond is not the only gem being synthesized. Above is a synthetic emerald ring from Luxuria® Diamonds.
Synthetic diamonds have shaken the diamond industry in two ways.
First, manufacturers are curbing their rough intake. For 2023 De Beers’ rough sales slumped 28%. The biggest gain for synthetics over the past year has been in the bridal and engagement market. Consumers with a budget in mind can buy an engagement ring with a larger and higher quality (4 C’s) synthetic diamond stone. This has come at the expense of demand for natural diamonds.
Second, with decreased customer demand for natural diamonds, especially from millennials, the supply / demand balance changed. When supply exceeds demand – price drops. Not surprisingly, the diamond industry has seen significant price drops in 2023. The RapNet Diamond Index (RAPI™) for 1-carat polished diamonds fell 20% from the beginning of the year to October 2, 2023 after the rate of decline accelerated in recent months. Such precipitous price drops underpin that natural diamond is largely a depreciating asset.
Are Diamonds a good investment?
With very limited exceptions, diamond is not only not rare, they are also not a good investment.
In finance, there is concept called intrinsic value. An asset’s value is essentially driven by the discounted value of the future cash that asset will generate. For example, when Avis Car Rental, LLC Hertz buys a car, its value is the profit they get from renting it out and selling the car at the end of its life. The later is called the terminal value. For Avis the terminal value will depreciate over time as the car loses value over its lifetime.
In nearly all instances, a diamond is a depreciating asset masquerading as an investment. There is a common misconception that jewelry and precious metals are assets that can store value, appreciate and hedge against inflation. While that’s not wholly untrue, the problem is when you buy the diamond its typically mounted in ring and you pay retail price for it. This means once the diamond jewelry leaves the store it loses typically half or more of its value as that represents the mark up of the jeweler.
PHOTO 4: Are diamonds a good investment? In theory, diamonds make great investment sense. They have high intrinsic value, they’re always in demand and they last forever. Moreover, diamonds are small, portable and easy to store. In practise, diamonds have very sketchy investment potential.
Resale prices give the game away. Retail jewelers, especially the prestigious Fifth Avenue stores, prefer not to buy back diamonds from customers, because the offer they would make would most likely be considered insultingly low. The “keystone,” or markup, on a diamond and its setting may range from 100 to 200 percent. Depending on the policy of the store; if it bought diamonds back from customers, it would have to buy them back at wholesale prices. Thus, the terminal value of the diamond is half to one third of what you paid for it. Therefore, most usually, diamonds are NOT a good investment.
In contrast to diamonds, precious metals like gold and silver are commodities that can be purchased on financial markets. Gold and silver can appreciate and hold value in times of inflation. Unlike gold – which is valued by weight, diamonds don’t have a universal price per gram. When no two stones are exactly the same, every diamond has to be valued on its individual merits and, most of the time, that valuation is going to be somewhat subjective. This lack of certainty on the valuation of a diamond adds to investment risk.
Diamond is not the rarest gemstone
All gem-quality materials are rare in the sense that they compose just a tiny fraction of the Earth. However, diamonds actually number among the most common gems. Ask yourself this: “How many people do you know who own at least one diamond?” Now, ask this question about other gems, like rubies, sapphires, or emeralds? Around 130 million carats of jewelry-grade diamonds are sold annually. As such, many people own diamonds!
Many believe that diamond is the rarest gemstone. While diamonds may be rare in nature, the diamond industry has significantly increased the supply of diamonds through mining and production. In countries like Botswana, Russia, and Canada, large-scale diamond mines have been established to extract diamonds from the Earth’s crust. This has led to a steady supply of diamonds in the market, challenging the notion of their rarity.
According to IGS you can’t judge one gem species as the most valuable. To compare gem value, you must evaluate gems according to size and quality. The table below shows values for top quality gems of different sizes. However, please note that pure red rubies are so rare there is no trade data available. The ruby prices listed are for Burmese rubies.
As you can see in the above table, while costly, diamonds aren’t the most expensive gem in any size. If you compare diamonds with gems based on other qualities, you’ll get similar results.
Gemstones that are rarer than diamonds include Burmese rubies, emeralds, and Kashmir sapphires because they are harder to find. Other gemstones like tanzanite, alexandrite and red beryl are all rarer than diamond and can be more valuable too.
Are there any truly rare Diamonds?
While diamond is not the rarest gemstone, there are some diamonds which are exceptionally rare.
Truly rare diamonds typically exhibit unique color variations, extraordinary clarity, and exceptional size. Color plays an important role particularly in the realm of fancy colored diamonds, where hues like pink, blue, and red fetch premium prices. In fact, according to the GIA, only 0.4% of all natural diamonds graded in the last twenty years have been fancy colors.
Red diamonds are the rarest. They are so rare that the GIA graded no red diamonds at all between 1957 and 1987. By some accounts, only about 30 gem quality red diamonds have ever been mined.
PHOTO 5: Are diamonds really rare? Some are! Although all natural fancy coloured diamonds are extremely rare, none are more so than the red diamond. Found mostly in Africa, Australia and Brazil, red diamonds are so rare that only about thirty true red diamonds are known to exist and most are less than half a carat in size. Photo Credit: Cape Town Diamond Museum, Cape Town, South Africa.
Blue diamonds, made famous by the Hope Diamond, owe their color to boron impurities and are treasured for their striking hue and rarity. Less than 0.02% of all mined diamonds are blue.
Pink diamonds, particularly those from Australia’s Argyle mine, command very high prices at auction due to their scarcity and color. The overwhelming majority of natural pink diamonds are mined in Western Australia, with the Argyle mine being responsible for approximately 90% of the world’s supply before its closing in late 2020. Despite this, authentic natural pink diamonds accounted for less than 1% of the mine’s production.
Because of the scarcity of the above-coloured diamonds, these diamonds, unlike nearly all other diamonds are considered investment grade. For example, according to the Pink Diamond Trade Centre, certified premium pink diamonds from the Argyle mine have appreciated over 600% in the past 2 decades.
Are Diamonds really rare? Summary
A diamond may be forever, but does that mean they are rare too? The answer is no. Compared to other precious gemstones like emerald, sapphires and rubies, diamonds are actually quite plentiful. However, gem quality diamonds, i.e. those used high quality engagement rings, are rarer, but not scarce. After all, you probably don’t know anyone who doesn’t own a diamond of some sort – right?
While the word is out – that diamonds are not rare – many wonder why diamonds remain expensive? The answer is natural diamonds are expensive because they are hard to locate, expensive to mine, and take a long time for highly skilled workers to cut and polish them. Diamonds also pass through many hands. Diamonds need to mined, sorted, cut, polished, graded, distributed, wholesaled and retailed. At each step costs and margins are added. Retail mark up alone can be 100% or more of the wholesale value. Understandably, consumers mistakenly equate high natural diamond prices with rarity. In reality, high quality natural diamonds are expensive because they cost a lot to bring to market, not because they are scarce.
So are diamonds really rare? The answer with limited exceptions like fancy coloured diamonds is no. Diamonds are found in many parts of the world, including Africa, Australia, Russia, and Canada. The abundance of diamond deposits has led to a steady supply of these gemstones in the market. It is also very important to observe that the global supply of diamonds, while not unlimited, is sufficient to meet current demand. Moreover, looking towards the future, it is widely anticipated that customer demand for natural diamonds will continue to fall as customers embrace synthetic diamonds as an alternative.
Want to learn more?
Read more about how De Beers has reinvented Itself in the face of Chinese Synthetic Diamonds. De Beers shocked the world when it abandoned its 130-year history of focussing on mined diamond. For the past six years it has been selling jewelry with lab-grown stones, but they have recently decided to stop producing lab grown diamond for jewelry.
Simulated diamond has become an increasingly popular choice for budget conscious jewelry purchases. But what are simulated diamonds made of and how long do they last?
Moissanite versus cubic zirconia, which looks most like a diamond? Both moissanite and cz imitate diamond visually – but which one is the best for you?
About us
Luxuria Diamonds is a designer and marketer of diamond simulant rings and colored gemstone engagement rings. Luxuria is a professional member of the International Gemological Society (IGS), USA and a member of the Jewellers and Watchmakers Association of New Zealand (JWNZ).
