Are Diamonds Actually Rare—or Just Overpriced Hype?

A closer look at sparkle, scarcity, and some brilliant marketing

Diamonds: they’ve been sold to us as forever, priceless, symbols of love. But is that shiny rock on your finger truly rare—or is the price tag a reflection of clever advertising and industry control? Let’s unpack what’s behind the glimmer.

Are diamonds rare in nature?

Here’s the plot twist: diamonds aren’t actually that rare. Geologically speaking, diamonds are found all over the world, from Africa to Canada to Russia. In fact, modern mining methods unearth millions of carats every year. What’s “rare” is the high-quality, flawless stones that make it to fine jewelry—but even those aren’t as scarce as the price suggests.

A 1992 study found that 80-85% of the world’s rough diamonds are controlled by a small number of players, limiting access and artificially constraining the market¹. So while plenty of diamonds exist underground, how many reach consumers is carefully managed.

The De Beers effect: How a monopoly shaped the story

We can’t talk about diamond prices without mentioning De Beers, the company that controlled the global diamond trade for most of the 20th century. Through strategic stockpiling, controlled release of supply, and exclusive contracts with suppliers, De Beers kept prices high by controlling how many diamonds hit the market².

Even more powerful than their business strategy was their marketing. The famous phrase “A Diamond is Forever” wasn’t an ancient proverb—it was a De Beers slogan from a 1947 ad campaign designed to sell engagement rings³. That campaign linked diamonds to romance, commitment, and status—creating demand where it hadn’t existed before.

In short? Diamonds became desirable not because they were rare, but because we were told they were.

The economics of “rarity” and luxury pricing

Economists point out that scarcity is often manufactured in luxury markets. A 1985 paper explains how De Beers adjusted supply to balance prices, keeping diamonds expensive even when production increased⁴. Other researchers note that diamonds are “durable goods” that don’t degrade or disappear, meaning old diamonds stay in circulation and reduce demand for new ones⁵.

If everyone suddenly tried to resell their diamonds, the market would be flooded—and prices would drop fast. That’s why jewelers discourage resale, and why diamonds don’t hold their value well on the secondary market.

What about synthetic diamonds?

Lab-grown diamonds have thrown a wrench in the traditional diamond narrative. These stones are chemically identical to mined diamonds but can be made in weeks instead of millions of years. They cost 30-50% less than natural diamonds and are becoming more popular as consumers question the ethics and cost of mined stones⁶.

Despite this, many jewelers still push mined diamonds as “real” and synthetic as “imitation,” even though the differences are practically invisible to the naked eye.

So… overpriced hype? Or precious gem?

It depends on what “value” means to you. If you’re buying a diamond as a geological rarity, it’s worth knowing that diamonds aren’t that scarce. If you’re buying it as a cultural symbol—a shiny token of love and tradition—then its value comes from the story we’ve built around it.

In the end, diamonds are as much about emotion and marketing as they are about carbon and carats.

References

¹ Bernstein, L. (1992). Opting out of the legal system: Extralegal contractual relations in the diamond industry. The Journal of Legal Studies. Link

² Shor, R. (2005). A review of the political and economic forces shaping today’s diamond industry. Gems & Gemology. Link

³ Proctor, R. N. (2001). Anti-agate: The great diamond hoax and the semiprecious stone scam. Configurations. Link

⁴ Ariovich, G. (1985). The economics of diamond price movements. Managerial and Decision Economics. Link

⁵ Braun, H., & Hotter, R. (2010). A simple microeconomic model illustrating rising diamond prices and the durable goods problem. South East European Journal of Economics. Link

⁶ Ali, S. H. (2017). The ecology of diamond sourcing: from mined to synthetic gems as a sustainable transition. Journal of Bioeconomics. Link