Engagement Rings

How Do De Beers Control The Prices Of Diamonds?

Engagement Rings
Engagement Rings

The most important factor that determines the selection of diamond engagement rings is its cost. In other words, you can also call it the 5th C because high-quality diamonds are costly. It is common to find diamonds having the same grade sold at different prices. The purpose of this article is to find out how the prices of diamonds are determined.

De Beers Corporation

The De Beers Corporation founded in 1888 by Cecil Rhodes largely determines the diamond market and thereby the prices of diamonds. This is because they control 35% to 50% of the world’s rough diamonds, and in the past, this used to be 85%. The famous tagline “A diamond is forever” was part of the De Beers 1948 campaign to boost diamond sales.

The De Beers Sights

The prices of diamonds are set every season during an event hosted by De Beers called Sights. During this event, diamond dealers called Sightholders are invited to view and purchase stones directly from De Beers ten times per year. Also, keep in mind that diamond dealers across the globe compete to be one of the 84 Sightholders invited to this event.

The De Beers decide the type, number, and the price at which diamonds are sold to a Sightholder. Dealers cannot negotiate, but they can either accept or reject. Also, the Sightholders cannot sell the stones to retailers who will lower the prices. Apart from this, De Beers can survey the market of the dealer, know their inventory, and audit them. If the Sightholders breach the rules, De Beers can block them or give them bad diamond roughs. In this way, diamond prices are kept high and stable.

The Control Of Diamond Market Value

The price of diamonds is controlled by the principle of supply and demand. If the prices are low, either the supply is reduced by selling fewer diamond roughs to the Sightholders or the stones are priced higher. Besides, De Beers floods the market with rough diamonds similar in quality to the one supplied by a new supplier, and these stones will be priced extremely low to drive out the competitor. Moreover, De Beers has even bought stones stolen from its mines so that they are not sold for a lower price by the thieves. It is obvious to you by now that the De Beers corporation is very protective of the diamond market.

We hope that this article gave you an understanding of how De Beers controls the diamond market and the price behind expensive diamond rings.