Why Diamonds Are Expensive: The Greatest Marketing Trick in History

Diamonds are not rare. They are not particularly hard to find, and they are far more common than rubies, sapphires, or emeralds. So why does a small diamond cost a fortune? The answer is one of the most brilliant, and most cynical, business stories ever told — and right now, it is falling apart.

Ask most people why diamonds are expensive and they will tell you it is because diamonds are rare. It is the most natural assumption in the world. It is also almost entirely wrong. Diamonds are not rare, and their price has very little to do with how hard they are to find. The real reason a diamond engagement ring costs several months' salary is that, more than a century ago, a single company set out to control both the supply of diamonds and the very meaning of them — and succeeded so completely that it reshaped the traditions of the entire world.

This is the story of how a rock that isn't scarce was made to feel priceless, how that illusion held for a hundred years, and why, in the last few years, it has finally begun to shatter.

The problem with too many diamonds

The modern diamond industry was born out of a crisis of abundance. In the late nineteenth century, enormous diamond deposits were discovered in South Africa, producing far more diamonds than the world had ever seen. This was, paradoxically, a disaster for anyone hoping to sell them. Diamonds are valuable only if they are scarce; flood the market with them, and the price collapses. Suddenly there were so many diamonds coming out of the ground that they threatened to become cheap, ordinary stones.

The response to that threat was the creation, in 1888, of a company that would dominate the diamond world for the next century: De Beers, founded by the businessman Cecil Rhodes. Its strategy was simple and ruthless. By buying up and consolidating control of nearly all the major diamond mines, De Beers could control how many diamonds reached the market. And by controlling supply, it could control the price.

At the peak of its power, De Beers controlled something like 80 to 90 percent of the world's rough diamond supply — one of the most complete monopolies in commercial history. It bought rough diamonds from producers around the world through a central organisation and released them to a small, select group of buyers in carefully limited quantities. When too many diamonds threatened to reach the market, De Beers simply stockpiled them, holding vast quantities back to keep prices artificially high. The scarcity of diamonds in the shops was not a fact of nature. It was a business decision.

Manufacturing desire

Controlling supply solves only half the problem. You can keep diamonds scarce, but you also need people to desperately want them — and to keep wanting them forever. This is where the story moves from ruthless economics to marketing genius.

In 1947, De Beers and its advertising agency produced one of the most successful advertising slogans ever written: "A Diamond Is Forever." The line, credited to a copywriter named Frances Gerety, did something extraordinary. It fused the diamond, permanently, to the idea of eternal love and marriage. A diamond, the campaign insisted, was not a luxury or an indulgence; it was the necessary, non-negotiable symbol of a lasting commitment. To propose without one was to signal that your love was somehow lacking.

The campaign essentially invented the modern diamond engagement ring as a near-universal expectation. Before this sustained marketing push, there was no deep-rooted global tradition requiring a diamond ring to get engaged. Afterward, it became so culturally embedded that questioning it felt almost unthinkable. The genius went further still: the idea that you should spend a certain fraction of your income on the ring — the famous "two months' salary" guideline — was itself a marketing invention from the 1980s, with no traditional basis whatsoever. In Japan, the suggested figure was pushed as three months. The company was, in effect, telling people not just that they needed a diamond, but exactly how much they should pay for it.

And "A Diamond Is Forever" contained one more masterstroke, hidden in plain sight. If a diamond is forever — if it is a sacred symbol of eternal love — then you must never sell it. That single idea quietly removed almost all second-hand diamonds from circulation. If everyone hangs on to their diamonds as priceless heirlooms rather than reselling them, then the market is never flooded with used stones competing with new ones. The slogan protected the scarcity model from the inside.

The scarcity that was never real

Here is the fact the whole edifice was built to obscure: diamonds are not rare. As a category, they are relatively abundant, dug up in enormous quantities by mining operations around the world. Genuinely large, flawless, high-quality gemstones are uncommon, but ordinary diamonds — the kind in most rings — are not scarce in any meaningful geological sense. Other gemstones, including rubies, sapphires, and emeralds, actually occur in smaller quantities.

The consequences of this show up brutally the moment you try to sell a diamond. Retail markups on diamonds are enormous, often ranging from 100 to 300 percent. And when you go to resell one, you will typically recover only around a third to a half of what you paid, because the resale price reflects something much closer to the stone's real market value once the marketing premium is stripped away. The gap between the price you pay and the price you can get back is, in effect, the cost of the illusion. You are not paying for a rare object; you are paying for a story.

None of this means diamonds are worthless or fraudulent. They are beautiful, genuinely useful in industry, and gem-quality stones do take real effort to mine — a modern mine may extract only a single carat's worth of gem diamond from several tonnes of rock. But the towering price of a diamond has, for most of the last century, been a monument to controlled supply and brilliant marketing far more than to any natural rarity.

The illusion cracks

For most of the twentieth century, the model worked almost perfectly. But an illusion built on manufactured scarcity has a fatal weakness: it survives only as long as no one can produce the "rare" product cheaply and at scale. The moment someone can, the whole castle built on controlled distribution starts to crumble — and it crumbles fast.

The first cracks came from competition. Beginning in the late twentieth century, major new diamond sources opened up in countries like Russia, Australia, and Canada — producers outside De Beers' control. This alone eroded the monopoly, and De Beers' share of the global market fell dramatically, from around 80 percent in 1990 to roughly 30 percent two decades later.

But the truly decisive blow came from technology: the lab-grown diamond. Using processes that recreate the conditions under which diamonds form, manufacturers can now produce diamonds that are not imitations or "fakes" but chemically, physically, and optically identical to mined ones. A trained gemologist needs specialist equipment to tell them apart. And crucially, their supply is not controlled by anyone with an interest in keeping prices high. As the technology has scaled — with Chinese manufacturers in particular ramping up production enormously — the price of lab-grown diamonds has fallen through the floor, now often 60 to over 80 percent cheaper than a mined diamond of the same size and quality.

Lab-grown diamonds did not merely offer a cheaper option. They destroyed the central premise of the entire industry. For a century, the diamond's price rested on the belief that it was rare. Lab-grown diamonds proved, on the shelf, for anyone to see, that a diamond is not rare at all — that when you remove the artificial scarcity, this is simply what a diamond costs.

The fall of an empire

The result has been a collapse that is playing out right now. De Beers' response to lab-grown diamonds was revealing in its confusion. At first, the company tried to ignore the threat, apparently unable to believe its storied brand could be undermined. Then it launched its own lab-grown jewellery brand, marketed as cheap and "fun" rather than serious or "forever," priced deliberately low and never given the trappings of a real engagement stone — a strategy widely read as an attempt to contain and belittle the category rather than embrace it. That brand was shut down in 2025.

The wider numbers are stark. In recent years De Beers' sales have fallen by more than half in the space of just a few years. Its parent company has written down its value by billions of dollars and has been trying to sell or spin off the business — the very company that invented the modern diamond market — with few eager buyers. As one analysis put it, the company did not lose to a competitor; it lost to a technology that made its central claim, scarcity, untrue.

What a diamond is really worth

So, why are diamonds expensive? Not because they are rare, but because one company spent a century engineering both their scarcity and our desire for them — restricting supply on one side, and on the other, convincing the world through the single most effective advertising campaign in history that a diamond was the irreplaceable symbol of love. For a hundred years, the myth was the product, and it worked spectacularly.

What we are watching now is that myth failing in real time, undone by a technology that can make the "rarest" of stones by the tonne. The lesson is a genuinely useful one for anyone standing in a jewellery shop: much of what you are being asked to pay for is not the stone itself, but a story told about it. The diamond is real. The scarcity, mostly, was not. And "forever," it turns out, had an expiry date after all.

Sources and further reading

• Histories of De Beers and Cecil Rhodes (founded 1888), the Central Selling Organisation, sightholder system, and stockpiling, on the company's ~80–90% control of rough diamond supply for much of the twentieth century.
• Accounts of the 1947 "A Diamond Is Forever" campaign (N.W. Ayer, copywriter Frances Gerety) and the invention of the engagement-ring tradition and the "two months' salary" guideline.
• Analyses of diamond scarcity as manufactured rather than geological, retail markups (100–300%), and resale recovery (roughly 30–50%).
• Reporting on lab-grown diamonds (HPHT and CVD methods), their ~60–80%+ lower prices, and the collapse of De Beers' market share from ~80% (1990) to ~30% (2010).
• Coverage of De Beers' recent decline (2024–2026): sales falling more than 50% in three years, multibillion-dollar write-downs, the closure of its Lightbox lab-grown brand (2025), and the attempted sale of the business.