“The price of diamonds is too high”
The price of diamonds has always been a greatly debated and widely discussed issue. Diamonds were first discovered in South Africa in 1867, soon after there was a rush to begin mining these precious stones.
The above statement puts forward the idea that the price of diamonds is too high, I agree with this statement. This essay will discuss the above statement, using microeconomic theory, with respect to the following points: Firstly, the history and origin of the diamond cartels and market. Secondly, the structure of the diamond market today. Finally, how the history as well as market structure have led to high prices of diamonds.
Soon after the discovery of diamonds, Cecil john Rhodes came to South Africa and got involved in diamond mining, he eventually began purchasing mines. It was not long after this that Rhodes as well as a number of other suppliers began to realise that the increasing number diamonds flowing into Europe would lead to a decrease in demand (Spar, 2006). “The major investors in the diamond mines realized that they had no alternative but to merge their interests into a single entity that would be powerful enough to control production and perpetuate the illusion of scarcity of diamonds” (Epstein, 1982). Thus they created DeBeers Consolidated Mines Ltd. The idea was that this would provide diamonds to suppliers who would then on sell them.
After this Ernest Oppenhiemer took control of DeBeers and felt that there was still not enough control over the market and he created the Central Selling Organisation. This then meant that diamond supply was even more tightly controlled. A limited amount of stones was released each year to a very select group of buyers who had to choose spec...
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...s always been a central focus of the company. DeBeers is also responsible for creating an illusion of diamonds being precious and scarce and linking this illusion to the convention that a diamond engagement ring is an eternal symbol of love. This is definitely invalid as diamonds are highly over valued and have very little practical use or value once purchased. Furthermore the cartel has managed to limit the number of players in the diamond market due to the barriers of entry. This means that price and supply of diamonds is still controlled by an oligopoly. And elasticity of supply and demand is very inelastic thus creating a situation where high prices are charged regardless of quantity demanded or supplied. Overall it is definitely evident from the above points that the price of diamonds is far too high and they are not the only acceptable gifts for an engagement.
Engagement rings initially served a double purpose. In the days when brides were purchased, these rings were partial payment for the bride in addition to symbolizing the groom's intentions and woman's agreement. Diamonds were first found in Medieval Italy and due to their hardness symbolized enduring love.
Final contribution of de beers to the diamond pipeline is the promotion of diamond jewelry for the industry; through advertising campaigns developed from extensive market research; trade promotional activities and jewelry design competitions
A beautiful precious diamond can last forever, but what most people do not know is that a majority of our diamonds come from Africa. The civil wars in Africa over diamonds began around 1961 and ended in 2003. Conflict diamonds were rampant and it would be difficult to say if any jewelry sold prior to 2003 was conflict free. Conflict diamonds are diamonds that have been mined and were controlled by African rebels. The rebels would use the profits from selling conflict diamonds to fund illegal activity and to purchase more weapons for their armies. While rebels had control of the diamond mines they killed approximately 4 million people and countless families were displaced.
It’s hard to imagine that a mineral could be fueling wars and funding corrupt governments. This mineral can be smuggled undetected across countries in a coat pocket, then be sold for vast amounts of money. This mineral is used in power tools, parts of x-ray machines, and microchips but mostly jewelry. Once considered the ultimate symbol of love, the diamond has a darker story. "Blood" diamonds or "conflict" diamonds are those mined, polished, or traded in areas of the world where the rule of law does not exist. They often originate in war-torn countries like Liberia, Sierra Leone, Angola, and Côte d'Ivoire were rebels use these gems to fund genocide or other questionable objectives. Even with a system known as the Kimberly process which tracks diamonds to prevent trade of these illicit gems, infractions continue as the process is seriously flawed. The continuation of the blood diamond trade is inhuman, and unethical, and in order to cease this illicit trade further action to redefine a conflict diamond, as well as reform to the diamond certification prosess is nessasary.
You’re browsing along various websites searching for a new piece of jewelry to add to your collection. Suddenly - you see it. The piece that screams your name. It’s an elaborate piece with large cut diamonds and you just know those can’t be real. But they look so real, so you check out the price.
Deep within African mines, elusive diamonds lay enveloped in the Earth’s crust. Possessing much influence, beauty, and tension, nature’s hardest known substance causes parallel occurrences of unity and destruction on opposite sides of the globe. Diamonds, derived from the Greek word "adamas", meaning invincible, are formed deep within the mantle, and are composed entirely from carbon. Moreover, only under tremendous amounts of heat and pressure can diamonds form into their preliminary crystal state. In fact, diamonds are formed approximately 150km- 200km below the surface and at radical temperatures ranging from 900-1300 C°. When these extremes meet, carbon atoms are forced together creating diamond crystals. Yet how do these gems, ranking a ten on Moh’s hardness scale, impact the individual lives of millions of people besides coaxing a squeal out of brides-to-be? These colorless, yellow, brown, green, blue, reddish, pink, grey and black minerals are gorgeous in their cut state, but how are these otherwise dull gems recognized and harvested? Furthermore, how and why is bloodshed and violence caused over diamonds in Africa, the supplier of approximately 65% of the world’s diamonds? (Bertoni) The environmental, social, and economic impact of harvesting, transporting, and processing diamonds is crucial because contrary to popular belief, much blood has been spilled over first-world “bling”.
Between 1999 and 2000, there is a Y2K bug with the computers and many other electronic items because of the early setting with the computer program. People set the year with only two digits in the computer program, as the changing of the year 1999 to 2000, the digit will change from “99” to “00” which might cause the confusion of the data storage and might change from “1999” back to “1900” or “19100”(See [1]). As this might have a big influence to the society, the price of the gold also might have a big change. Therefore in the article, Swart gave out the example of the changes of gold’s price between 1999 to 2000 because of the scare from Y2K and the millennium fever. The use of financial concepts and Linear Algebra tells the readers about how the price can be changes at that period of time. The difference of the increasing or reducing the price of gold for $1 will cause the huge difference of profit after 2000. So the business needs to determine a price of gold that fair to both customers and the business. Swart uses the...
Santarossa, B. (2004, January 13). Diamonds: Adding lustre to the Canadian economy. Retrieved November 06, 2017, from https://www.statcan.gc.ca/pub/11-621-m/11-621-m2004008-eng.htm
In 1785, the court jewelers, Bohmer and Basange, constructed a necklace with five hundred and forty diamonds of varying sizes in an ugly arrangement that resembled the collars worn by circus animals. They hoped that King Louis XV would purchase it for his favorite, Madame du Barry. Unfortunately, the king died before the necklace was completed. So, naturally the jewelers tried to sell the piece to the newly crowned Queen, Marie Antoinette, because she was known for her extravagant spending and taste. They priced the jewelry at and equivalent of two million dollars in modern money. The Queen declined the offer. She did not like the necklace and the price was even too high for her. Knowing that they would be ruined if the Queen didn’t buy their product the jewelers continued to plead with her for ten years. Each time she turned them down. Then, one day the Queen received a note signed by Bassange which said, “We have real satisfaction in thinking that the most beautiful set of diamonds in existence will belong to the greatest and best of Queens.” Puzzled by the message, the Queen, put the note to flame by a candle sitting on a nearby table (Komroff 85).
iii. India dominates the world’s cut and polished diamonds (CPD) market. In value terms, the country accounts for approximately 55 percent of global polished diamond market and nearly 9 percent of the jewellery market. According to GJEPC's provisional estimate, cut and polished diamonds registered 19.06 percent growth in exports at US$ 7.11 mn.
In “ “Blood Diamonds” and Africa’s Armed Conflicts in the Post – Cold War Era, “ Orogun (2004) said that diamonds are referring as “clean stones”. This article explains about the black market is really happening in African. I am using this article to support how the black market of diamond trades is still not regulated, and they defined it as “licit” trade.
[5] Diamond Industry Annual Review, De Beers Signs New Angolan Agreement, [internet] Accessed on: 13th November 2005, http://www.pacweb.org/e/images/stories/documents/addendum%20angola%202005-english.pdf
The film marker is trying to raise awareness of the illicit conflict diamond trade and reinforcing the Kimberley process1 and showing how it will stem the flow of conflict diamonds. This is successful mainly due to the public outburst after the movie. The great impact of the movie has caused diamond companies like De Beers2 to start a pre-emptive PR (public relationship) campaign, even before the movie was released to inform people that their diamonds are conflict-free.
In this project, we attempt to find out the causes for this price rise, the trends of the rise and the effects that this rise has had on us.
One morning, a well-known gentleman went into a bank in London, and was received immediately by Mr. Alexander Holder, head of the bank. He asked for a loan of fifty thousand Pounds. Mr. Holder asked him to present collateral to cover that large sum of money; the man showed him a crown that belongs to the country. Knowing the risk, Mr. Holder agreed to lend the gentleman that large sum of money if he pays it back in a few days. After the gentleman left Mr. Holder decided to keep the crown all the time near by him, so he took the crown to his home in Streatham. There he lived with his only son Arthur and his niece Mary who was an orphan. He told them about his story with the crown of diamonds. When the father was going to sleep, Arthur asked for two hundred pounds. He refused to give him thinking his son was spoiled by his rich friends who had nothing to do except watch horses. Before going to sleep, he went to check that all windows and doors were locked. He saw Mary at a side window at the hall. She closed it quickly, and Holder noticed that she looked anxious. After he went to sleep, he heard some noise that woke him up; he waited until he heard it again coming from his sitting room. He jumped out of his bed and saw his son holding the crown broken from the side and three diamonds were missing. In grief, he accused Arthur of being a thief and a liar. Meanwhile Mary came in and seeing the crown fainted. Arthur asked if he could leave for five minutes but Holder refused and called the police to take his only beloved son to jail. The police searched the house but could not find anything and advised Holder to get the help of Mr. Holmes the famous detective.