For those of you interested in the diamonds business,American journalist Edward Jay Epstein wrote a history of the De Beers corporation.You can read the whole book - for free - on his website,Edwardjayepstein.com*

*For some reason,the site wouldn't load properly when I tried just minutes ago.There seems to be some temporary problems.

Diamonds have been manufactured for years, but de Beers has never liked people talking about it.

Except for the supersized or otherwise odd, they retain their new value only because people believe and the market is tightly controlled. Second-hand ones take more depreciation than Alfa-Romeos, despite not requiring ludicrously expensive repairs.

You gotta love smart folk.

A person named Guy Herbert, a suspiciously French sounding name, talking about cars? Haha :)

Seriously, though, most manufactured diamonds are of low quality and wind up in industrial use.

This topic reminded me of a company whose spokesperson I saw interviewed a few months ago:

www.lifegem.com

Basically what they do is take a portion of the cremated remains of someone (loved one, pet, etc.) and create a diamond from it. From what I can remember of the interview the product was so popular that they were having problems keeping up with demand.

And what will South Africa have to offer the world now? Even less.

Don't you mean Botswana?

Seriously, diamond-as-expensive is so doomed that I'm surprised anyone still thinks of them as investments. Not just from this gem growth stuff, but the moment folks invent nanotech properly, what's the first thing they'll use it to make? Diamond. Simple to assemble, cheap meaterials, perfect for car frames, building frames, windows, lenses, knives, abrasives, heat sinks, computer chips... pretty much anything except high priced jewellery. D'oh!

Every few years, someone announces that "Due to [something] the de Beers cartel is about to lose its monopoly on the world diamond market, and their cartel and consequently prices are about to collapse. However, de Beers always somehow manages to cope with the change in the market, and nothing changes. If we get to the point where it is possible for people to make gem quality diamonds in their garage, which truthfully doesn't look all that far off, then this time they probably are genuinely doomed. However, historically they have been awfully resilient.

Sorry, am I missing something? I thought it was common knowledge that diamond 'rarity' (and therefore value) was a manufactured figment of the collective de Beers wealth-machine. Billions of the silly things tucked away in vaults and such...

General Electric has been able to make synthetic gem-quality diamonds for 30 years. It turns out that the only way to tell them apart from natural diamonds is that they're too good; natural diamonds all have slight flaws, but the GE diamonds are perfect crystals. (They could probably "fix" that, but have little reason to try.)

Don't de Beers have a sort of 'watermarking' scheme that's supposed to combat this? I remember seeing something about this years ago, when some Russian scientists (probably the same Russians responsible for the technology in the article) dreamt up a way of synthesising diamonds (albeit poor quality, yellowish ones). Each of their diamonds has a tiny logo etched into it, 'proving' the authenticity. Of course whether anyone pays attention to these markings when otherwise totally indistinguishable diamonds become available is another matter.

BTW, Anglo doesn't own De Beers. AFAIK, the Oppenheimer family owns half of DeBeers and a hefty chunk of Anglo, making the two pretty close, but one doesn't own t'other.

With regards to the threat posed by synthetic diamonds, I doubt this will be a problem. People will pay over the odds just so they don't have to wear a synthetic diamond. Luxury goods do not follow normal market rules. It is quite possible to buy a fake Rolex watch equally as good and identical to the original, but at half the price. This has not caused Rolex to go out of business, because there are always people who want an original.

Yamaha pianos are equally as good and half the price of a Steinway, yet Steinway still sell pianos. Why? Because people want a Steinway, not a Yamaha. Similarly, people will want a real diamond not a synthetic one.

I agree with Tim. It's the "cachet" of a "real diamond." Unless there is a successful PR campaign that can tarnish the image of a "real diamond" I can't see de Beers (or their ilk) suffering. And I don't imagine the type of people who are willing to pay major bucks for a "real diamond" give a rat's ass about the human exploitation aspect of that industry.

cj,

I believe that we have recently seen a PR campaign to tarnish the image of real diamonds--orchestrated by de Beers. It is an example of the remarkable resilience Michael Jennings mentioned.

There was, and is, a big fuss about "conflict diamonds" coming to the market as a result of dreadful African civil wars. The message: buy diamonds from other than de Beers approved dealers and you have the blood of Congolese children on your hands. The public is not to know that the "unofficial" market has thriven for many years on the basis of ex-Soviet, Indian and other unapproved sources.

Thanks for the comments. I would imagine that most of artificially-created diamonds will be used in current and future industrial applications, rather than in jewellery. As some have said above, having a "real" if flawed diamond will remain a status symbol for those that value those things. But it will mean that some will prefer the new diamonds to, say, "conflict diamonds" on moral grounds, and the likely increase in production for industrial use is bound, other things being equal, to cut the price of the sparklers.

Correction, Anglo American is not THE owner of de Beers. It owns 45 percent of the tradeable stock, according to a check I did on the London Stock Exchange.

Yamahas aren't as good as Steinways. They're far better. I think most pianists have realised that now, and you don't see as many Steinways being used by pros anymore. But the name Steinway retains its cachet in the minds of the non-piano-playing general public.

Maybe that'll happen with diamonds one day. We could reach a stage where jewellers prefer artificial diamonds but their customers still want natural ones.

Or maybe not.

It doesn't matter if the diamond is real aka flawed or not. No one's gonna know. Just you. And if your fiancee buys a manufactured or grown diamond, how would you even know he'd tell you?

Frankly, I'd want the perfect stone.

Watch, the EU will define what can be called a Diamond.

The real trick will come when the diamond engineers can cheaply separate carbon-13 from carbon-12. Then we'll have synthetic isotopically pure C-13 diamonds with shorter bond lengths. C-13 diamonds can scratch normal diamonds but not vice-versa.

A 1 kg flawless C-13 diamond sure would make a nice paperweight . . .