Rocks Off

If you tell a big enough lie and tell it frequently enough, it will be believed. -- Adolf Hitler

Back in 1938, the good folks at DeBeers must have had Der Fuhrer in mind when they hired the advertising firm of N.W. Ayer & Son to come up with a campaign that would convince the American public that diamonds were a "necessary luxury."

DeBeers, one of history’s most successful cartels that, up until very recently, completely controlled the world-wide production and supply of diamonds, saw their European market tank when Herr Hitler started getting feisty. Although the US was purchasing 80% of DeBeers' gems, we were terrible cheapskates. You can't make a bundle peddling small, poor quality stones that cost an average of $80 a pop, so that’s when DeBeers hired Ayer's to cook up a little marketing propaganda.

The result was a four-word tagline, sprung from the mind of a lowly female copywriter, that became the most recognized advertising slogan of all time:

"A Diamond is Forever"

This was the linchpin of a 50-plus years campaign, evoking the idea that chunks of carbon are rare, valuable and never to be parted with. Unfortunately for you, me and every other sucker who was lead to believe we were getting a solid bang for our bling, the slogan worked all too well.

Beginning with young American males, DeBeers convinced them a diamond engagement ring was a reflection of their true love and bigger was better. (When it comes to young American males, this precept doesn't only apply to diamonds, but that's another article.) Once they had that market cornered, they sold three-stone "Past, Present and Future" rings to long-married couples; dreamed up the multi-stone "Eternity Ring" to unload a glut of small diamonds mined in the Soviet Union; and even bamboozled unattached women into buying a diamond ring for their right hand as a statement of their gutsy independence.

But here's the thing with diamonds – they have no intrinsic value and their price depends solely on scarcity. Virtually every diamond that's been found and cut is still in existence, meaning the public holds 500 million carats of diamonds, more than fifty times what DeBeers produces in a given year.

If times get tough and you decide to pay the bills by unloading your ice, good luck. The retailer you bought it from won’t take it, not even a prestigious outfit like Tiffany’s. The best they can offer is wholesale, far below the 100 to 200% mark up they originally charged. Not only would they lose a customer, they’d gain a black eye. If you do find a reputable firm to take it off your hands, expect to get about $600 for a one-carat diamond that cost you $2000.

"A diamond is forever" alright. And we‘re forever stuck with them.