Why Are Diamonds so Valuable?

Why Are Diamonds so Valuable from North Carolina Lifestyle Blogger Adventures of Frugal Mom

Diamonds have permeated Western culture in a way few other precious gems have. In addition to their incredible strength, diamonds are a symbol of ultimate glamor. And if you’re at the point in a relationship where you’re thinking about the big questions, you might be considering something involving diamonds. But, what’s the big deal with diamonds? How did they become the ultimate symbol of love? And why are substances like diamonds and gold considered precious, while materials aren’t? And why are they so darn expensive? Keep reading to find out why are diamonds so valuable?

At its most basic, the idea behind our valuing of precious metals and gems is indeed scarcity. The harder something is to get, the more we are willing to pay for it. This principle is seen in everything from precious metals to the relative value of cards in collectible card games, and it works–more or less.

Of course, not all equally rare things are equally valuable. If you sat down and drew a one-of-a-kind piece of art right now, it would not be worth the same as a one-of-a-kind piece by Picasso, even though there would only be one of each. As always in economics,

So is the “demand” part of the equation here simply the fact that diamonds and gold look nice? That’s not the whole story, economists and historians would caution, but it’s certainly a part of it. Diamonds are valuable because they are rare and because they are pretty and used in important customs–like engagement, of course. If you were the only one on Earth considering a diamond engagement ring, prices would be a lot lower!

But we still haven’t told the whole story, because diamonds aren’t actually quite so rare as you might think. The scarcity of diamonds has long been controlled by big companies, and that means that it’s really a kind of “artificial scarcity.” In practice, this doesn’t change too much for the typical consumer. In the same way that baseball card companies could print more of the “rare” cards and lower their values, big diamond companies could make things easier on all of us–but, until they do, we’re stuck! Of course, this works both ways–if you ever wanted to sell diamonds, you’d benefit from their high value.

That doesn’t mean that diamonds are out of reach for average folks, though, say jewelers who craft intricate engagement rings in Brisbane. Buyers shouldn’t feel restricted by old rules referring to months of salary those rules were themselves the invention of a diamond company, so you’d be wise to take them with a big grain of salt). Diamonds come in all different sizes and cuts, and some couples choose to forgo diamond engagement rings entirely in favor of other stones.

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