Wholesale Diamonds And The Economics Of Bloodshed

The diamond industry is worth literally billions ofbecause demand was kept high by restricted
pounds a year in the trade of wholesale gems tosupply, the major companies could set a nominal
industry and the domestic market. The wayvalue for an end product. For example, the price
these markets work vary dramatically; one has aof a reasonably sized diamond engagement ring
high demand for the physical properties of theshould remain at around three months wages.
stone as the hardest natural material, the otherThe other factor that needed to be addressed
has a high demand created by the desirability of awas the second hand market. De Beers at this
rare and beautiful gem.point launched one of the most successful
Diamonds are actually not as rare as we are ledmarketing campaigns of all time by essentially
to believe and the market is a highly organisedpersuading the public that 'a diamond is forever',
infrastructure to keep prices stable and demandimplying that rather than ever selling a piece of
high. Couple this with the wholesale trade of illegaljewellery with the gemstone in, it should be kept
or 'blood' diamonds and the financial structure ofas a precious heir loom. Starving the market of
diamond market becomes increasinglythese antique pieces not only boosted the
complicated.demand for new rocks, but increased the
Until the late 1800s diamonds were a rarepopularity and affected the actual worth of the
gemstone and highly prised. Only the wealthieststone at the point of wholesale.
could afford a good quality gem and owningThe trade of so called blood diamonds does not
diamond jewellery was a status symbol or sign offit into this category, and where there is demand,
wealth. There was a small commercial trade inthere is an opportunity to supply on the black
diamonds from Africa and Australia, with othermarket. The way these stones differ is that the
diamonds entering the market as second handmoney raised from them goes directly into the
jewellery.pockets of the war lords that run the mines. The
The stones from Australia are famed for beingpeople in the areas where the mines are get little
the hardest in the world, and so have beenif any money at all, and commonly the level of
designated for industrial use, whereas the Africanconflict over the commodity leads to bloodshed.
gems are desired for their aesthetics, makingTo curb the trade from illegal sources, a
them destined for the jewellery market. Suddenly,classification and certification system has been
due to the discovery of a new mine in Southintroduced.
Africa, the market became flooded with newNow all official diamonds are registered so they
gem quality stones, and the value of the diamondcan be traced from the source to sale. The
dropped dramatically.catalogued stones are engraved with a laser to
It took a massive advertising campaign by the Deidentify them to any expert under magnification.
Beers group, one of the world leaders in diamondThis is going a long way to ensure that
mining to stabilise sales and persuade the public toconsumers are not unintentionally funding criminal
keep hold of the diamonds they have as well asactivity, but as with any black market
controlling the rate of wholesale stones appearingcommodity, restricted supply still creates a
on the market. Firstly, the control of supply wasdemand. While diamonds are considered the gem
at the source, only allowing a certain percentagedu jour, there will always be those willing to spill
of the mineral onto the market.blood to take their share of the profits.
This then allowed the price to be stabilised;