Why Are Diamonds so Expensive? Inside the True Cost of Gems

Despite their widespread popularity and cultural significance, it turns out this popular engagement gem isn’t as rare as we may think. So, why are diamonds so expensive?

Several factors contribute to their high price. Let’s unpack each of them to see if it’s worth shelling out a small fortune for these precious stones or if we should seek an alternative.

While diamonds might not be the rarest minerals on the planet, the specific type of diamond used in jewelry isn’t that easy to come by. Formed deep within the Earth’s mantle billions of years ago, only a small amount makes it to the surface. According to Info Diamond, only about 20 percent of rough diamonds are suitable for gem purposes.

Beyond mere scarcity, the value of a diamond is deeply intertwined with its characteristics. GIA says the Four Cs (cut, clarity, color, and carat weight) are the universally accepted method of assessment.

Achieving an optimal cut that maximizes brilliance and sparkle requires meticulous craftsmanship and specialized tools. These factors significantly impact the price, with flawless, colorless, larger stones reaching astronomical heights.

The diamond mining giant De Beers famously employed targeted marketing campaigns in the 20th century to associate diamonds with romance, commitment, and everlasting love.

This carefully crafted image and their control over a significant portion of the diamond market helped drive demand and solidify diamonds as the stone for engagement rings and other sentimental jewelry. It was such a successful campaign that Hubspot (the marketing gurus) wrote an article about it.

Extracting these precious stones is a complex and expensive endeavor. Diamond mines can be kilometers deep, requiring heavy machinery and skilled labor. Environmental regulations and ethical mining practices also add to the cost.

Responsible sourcing initiatives like the Kimberley Process Certification Scheme aim to combat conflict diamonds, but their efforts mean higher operational expenses.

Sadly, there’s also a dark side to diamond mining. More commonly known as “blood diamonds,” Britannica describes conflict diamonds as diamonds mined in war-torn regions to fund armed conflicts, perpetuating violence and human rights abuses.