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So if it takes an expert with a microscope to identify a produced diamond, why do I care? As long as it looks fine from say arms length I don’t give a shit.

A lot of things are different in regards to the market today than 30(+) years ago. Fraudulent “investment diamond deals” were also very common in the early 1980s and that again was over 20(+) years ago…The specific dollar value and scarcity of a solitary $100,000 plus diamond is what makes this different than attempting to sell a “lot” of diamonds. The market today and going forward is building a position of increasing values.

That’s no longer the case with diamonds “grown” by chemical vapor deposition. It’s basically growing diamonds atom by atom.

De Beers spent a lot of money into its Gem Defensive Programme, looking into how to tell synthetic diamonds apart from natural diamonds (you need a Raman photoluminescence spectroscope – but even this was disputed by experts).

The bank got back its $10 million, but in the form of diamonds. No problem, the bank manager thought, he’ll just sell them. Turns out, no one would buy the diamond from him – no one. Edward Jay Epstein has the story:

Walter S. Fisher, the vice-president of Security Pacific, was charged with the responsibility of selling the 115000 diamonds. He realized that diamonds were not a standardized, or fungible commodity, as were gold, silver and platinum. Different appraisals of the same diamonds varied widely dependent on what the prospective buyer thought he could sell them for. And, though all the bank’s diamonds were commercial stones for the mass market, Fisher found that it was extraordinarily difficult to find a buyer. None of the dealers in the United States were willing to buy such a large consignment of diamonds. Fisher found it necessary to deal through De Beers’ main broker in London, I. Hennig. Finally and accept the terms dictated by the buyer, if he wanted to sell the diamonds. He then had to deliver the diamonds to an unknown corporation in Liechtenstein, G. S. G. Investments, without receiving any money for them for eighteen months. These were terms that the bank probably would not have accepted in selling any other commodity. With a flourish of understatement, the banker concluded, “Selling diamonds is far more difficult than I had anticipated.” (Source)

as far as “scarcity” goes…with the growth of the “BRIC” (Brazil, Russia, India & China) countries middle classes, consumption of diamonds is out-pacing production (even more so as lately the mining companies are slowing output and conserving capital in this economy.

re/ “fake diamonds”, I’ve seen a new brand called O’ku Lani (uses a non-diamond seed and a similar vapor diamond deposit process) that is very realistic. Unsure of the pricing but they have a website okulani.com.

finally re/ “Diamonds as a bad investment”. True about the buy at retail and sell at wholesale, but a true investment grade diamond is priced well above $100,000, incredibly rare and can be bought for margins small enough that in a decade or so, profits will be made. PrivateDiamondVault.com is a spot to check out.

Thanks for an entertaining read…

De Beers doesn’t really create scarcity anymore either. while they still have a rather impressive marketing arm, the days of the true cartel are gone. pretty much every mine out there is selling as fast as it’s producing. the old days of stockpiling and releasing a dribble every now and then are gone.

–TwoDragons

Yes – think you can. Diamond is hard, but brittle. They can and do chip and crack (so they’re not “forever” in a sense)

Great info, though. I was reminded of Michael Rappaport’s character in “Beatiful Girls” and his engagement ring which was “Champagne”.

However, when I hear about them, I can’t help but think of big scary alien bugs pooping them out. (Readers of Dean Koontz may understand why – esp if they read the story ‘The Bad Place’).

“Better a diamond with a flaw than a pebble without one.”
– Confucius