Perhaps many people don't know De Beers, but they will certainly remember its extremely successful advertising slogan "A diamond lasts forever", because it uses this sentence to make this stone with a chemical composition of 99.98% carbon still mislead the world. What is the connotation of this sentence? The answer given by Edward Epstein in "The Fluctuation of Diamonds" is: Let you keep the diamonds, don't throw them away, otherwise the market price of diamonds will be unstable.
Background: Russia officially announced to the outside world that an incredible diamond mine has been discovered in eastern Siberia, with an estimated reserve of several trillion carats, which is more than 10 times of the previously known global reserve, and can meet the demand of the global gem market for 3,000 years. This news made the public cheer the arrival of the era of "cabbage price" for diamonds.
Diamonds are scarce resources?
In fact, in the eyes of geology, diamonds are really an ordinary "cabbage price" ore. Most diamonds are only used for industrial purposes because of too many impurities, so they are almost worthless, so they will not be sold.
Ironically, it is this kind of stone made of carbon atoms that is the printing machine for businessmen, the symbol of love, and even the motive of war-Sierra Leone, Angola, Congo and other six countries successively, and more than 2 million people have fallen into the war for as long as 10 years because of it.
As early as18th century, Adam Smith, a classical economist, put forward the value paradox of diamonds. There is nothing more useful than water, but the things that can be exchanged with it are very limited, and there are very few things that can be exchanged for water. On the contrary, diamonds are useless, but they can be used in a large number of commodities.
Adam Smith thinks this is due to the scarcity of diamonds. Water is so rich that you can get it just by mentioning it; Diamonds are so rare.
/kloc-Before the 0/9th century, diamonds were really scarce. Only a few are found in rivers in India and rainforests in Brazil, and the global production of gem-grade diamonds is only a few kilograms per year. Diamonds have always been monopolized by the royal family and powerful people because of their extremely hard characteristics and gorgeous appearance.
Although the diamond production at that time was not high, the content was not small.
Its essence is carbon, the fourth most abundant element in the solar system. The rich carbon elements in various celestial bodies form diamonds under some great pressure of the universe. On 20 12 10, scientists from the United States and France jointly announced the discovery of the diamond planet-the whole planet was covered with diamonds, and it was named Cancer 55.
There are also many diamond resources on the earth, but it is not easy to mine them. Its real home is in a place called mantle deep in the earth, and the whole place is under great pressure. At a high temperature of several thousand degrees Celsius and a pressure of tens of thousands of atmospheres, carbon particles slowly crystallize into diamonds.
After the modern diamond industry began, tons of diamonds were mined. By 20 1 1 year, hundreds of millions of diamonds have been dug underground, and the global annual diamond output is as high as 65438+24 million carats, about 24,800 kilograms, or nearly 25 tons.
However, the price of diamonds has not fallen sharply, but has been rising steadily since 1930 Great Depression.
This is because diamond dealers like to intimidate the public, and diamonds are about to run out. Since 20 10, diamond dealers, led by De Beers, have been preaching the theory of diamond peak: according to them, the diamond resources in the world are drying up, and the proven diamond reserves are about 3 billion carats. According to the current annual output of 1 100 million carats, diamonds can only be mined for 30 years.
Will the newly announced giant diamond mine in Russia break this illusion?
In fact, geologists discovered this huge diamond mine as early as 40 years ago. At that time, the former Soviet government kept it a secret considering its own interests in the diamond industry. Forty years later, Russian diamond producer Elosa surpassed monopoly giant De Beers in diamond production for the first time. The expansion of the Asian market has led to a high global demand for diamonds. Russia's move is to stabilize its interests in the diamond industry and will never let this giant diamond mine affect the price of diamonds.
Li Mu, director of Shanghai Diamond Trading Joint Management Office, even thinks that even if Popigai can produce gem-grade diamonds, it will not affect the price of diamonds. Because South African diamond giants such as De Beers and Russian Airosa have already reached a monopoly alliance, controlling the source and price of diamonds.
Domination of the market
No one knows the price of diamonds in a truly free market, because the diamond trade lost its freedom 24 years ago, since De Beers monopolized diamonds in South Africa.
1870, a large diamond mine was discovered near the farm of the De Beers brothers in South Africa, and several tons of diamonds were mined. Suddenly, the market was flooded with diamonds, and the price of diamonds began to fall.
British financiers who mine diamond mines in South Africa realize that diamonds are of little use and the price of diamonds depends entirely on their scarcity. If we continue to put diamonds on the market without restriction, their prices will plummet.
Investors who drill mines have no choice but to control diamond production and continue the illusion that diamonds are scarce. De Beers United Mining Company came into being.
De Beers controlled almost all the diamond mines in South Africa at the end of 19, when South Africa's diamond production accounted for more than 90% of the global diamond production.
De Beers, which controls more than 90% of the world's diamond supply, laid off thousands of people and cut diamond production on a large scale.
More importantly, at that time, the head of De Beers, the Englishman Rhodes, established two diamond sales methods that are still in operation today-the scarcity of artificial diamonds. After De Beers monopolized drilling in South Africa, South Africa's diamond production decreased by 40%; Established a single channel for diamond sales. De Beers' diamonds are only sold to a few buyers of the London Diamond Group, who then put them on the market. De Beers is the control valve of this single channel.
Under the control of De Beers, the price of diamonds almost doubled in one year.
The founder of Harry Winston, the top American jewelry brand, complained about De Beers' "evil" and was immediately kicked out of the buyer list. But Winston couldn't find a new source of diamonds, so he had to admit his mistake and return to the buyer list.
Of course, the obedience of merchants is good, and a stable source of diamonds means considerable profits. Buyers buy rough diamonds from De Beers, polish them in cutting centers such as Antwerp, Belgium and Tel Aviv, Israel, and sell them to large wholesalers, middlemen and finally to retail jewelers.
Matthew Hart mentioned in "The History of Diamonds" that when a small diamond producer tries to break away from De Beers and sell diamonds without authorization, De Beers will put a lot of diamonds into the market, which will lead to the price drop and drag down competitors.
For most of the 20th century, this diamond trading system operated normally under the strong monopoly of De Beers on diamond resources.
Worth more than gold?
Jewelers and the media always like to tell stories about celebrities selling diamonds for profit, such as Elizabeth Taylor diamonds. When Dentelle got the diamond, the price was $654.38+$00,000, and when she sold it, the price was $3 million. However, this huge diamond weighs 244 carats before processing and 70 carats after cutting and polishing. It is nothing compared with the millions of small diamonds sold in the market every year.
The public has been instilled with the idea that only diamonds with a carat or more can preserve their value, and it is rising at a rate of 5% every year and has never fallen.
Is that really the case? 1970, a consumer magazine in London had a whim to test the investment value of diamonds. I spent 400 pounds on two 1.5-carat diamonds in a jewelry store. On 1978, when Dave Watts, editor-in-chief of the magazine, tried to sell the two diamonds, most shops refused to pay cash. Watts received the highest offer of 500 pounds, which was equivalent to 1970 167 pounds if the inflation rate at that time was taken into account. Watt decided that it was a terrible loss.
The Dutch Consumers Association also conducted an experiment. They bought a diamond over 65,438+0 carats, and eight months later, they sold it to the 20 largest jewelers in Amsterdam. Among them, 19 jewelers refused to buy it, and only one was willing to buy this diamond, and the offer was only a fraction of the purchase price. You buy a diamond at the retail price, which is several times the wholesale price of the diamond. When selling, it can only be sold to jewelers at a price lower than the wholesale price, and the added value of diamonds is lost in the process of selling.
Although it has been proved that diamonds are not valuable, rare or even of much use, as long as vanity and greed, the two major elements of the diamond industry, are not exhausted in human society, the diamond industry will continue to prosper.
I hope it helps you.