That Big Clear Rock On Your Left Ring Finger… Is An Ostentatious, Useless Piece Of Crap.

“A kiss on the hand may be quite continental, but diamonds are a girl’s best friend,” sang late starlet Marilyn Monroe in the 1953 movie “Gentlemen Prefer Blondes.”

But since when did diamonds become valuable?

And how did clear pieces of carbon, nothing more than mere coal, a dirty fossil fuel, come to symbolize – of all things – “love”?

They’re certainly not rare (though for a brief time, they were), and in fact, they are significantly more abundant than gold – though you likely wouldn’t be aware of it, per se – and because diamonds are the hardest substance known to science, it’s not uncommon to find diamond abrasives in any hardware store, or construction site. They’re even on fingernail files. But since when did you ever see a golden saw, or golden fingernail file?

But first, some  supply-and-demand “backstory” mixed with market manipulation and eventual monopoly… and then back again.

In 1870, gigantic diamond mines were discovered near Orange River, South Africa, and very quickly, diamonds were being scooped out by the ton. Consequently, the market was quickly flooded with diamonds which became almost as common as water.

Equally as rapidly, in response to an almost precipitous drop in diamond prices because of abundance, organizing British venture capitalists that funded the mines quickly realized that their investment was in jeopardy. Diamonds had almost no intrinsic value, their price depended almost exclusively upon their so-called “rarity,” and financiers worried that if new mines were developed in South Africa, diamonds would become considered as semi-precious gems, at best.

What to do?

In response, the mines’ major investors realized their only practical alternative was to merge into one entity powerful enough to control production and perpetuate the illusion of the scarcity of diamonds. Created in 1888 by British businessman Cecil Rhodes, and funded in part by South African diamond magnate Alfred Beit, and the N M Rothschild & Sons bank of London, that organization was incorporated in South Africa, and called De Beers Consolidated Mines, Ltd.

When De Beers took control of all aspects of the world diamond trade, it took numerous widely varied names. In London, they operated under the innocuous name of Diamond Trading Company. In Israel, they were called “The Syndicate.” In Europe, they were called the “C.S.O.,” meaning Central Selling Organization, which was an arm of the Diamond Trading Company. And then, among Black South Africans, they disguised themselves as having South African origins under subsidiary names like Diamond Development Corporation, and Mining Services, Inc. At De Beers’ height, and for most of the past century, they either directly owned or controlled every diamond mine in southern Africa, and owned diamond trading companies in England, Portugal, Israel, Belgium, Holland, and Switzerland.

In 1926, Ernest Oppenheimer, who had earlier founded the mining company Anglo American PLC with American financier J.P. Morgan, was elected to the De Beers Board of Directors.

Still, however, diamond prices were suffering continual price decline, and rapidly losing sales.

But it was over a decade later, in September 1938 that Harry Oppenheimer, then aged 29, son of De Beers’ founder Ernest Oppenheimer, at the recommendation of Morgan Bank, traveled from Johannesburg to New York City, to meet with Gerold M. Lauck, president of N. W. Ayer & Son, a well-established American advertising agency founded in 1868. J.P. Morgan had helped the young Oppenheimer’s father consolidate the De Beers financial empire, and had recommended Lauck and N. W. Ayer to him.

The job Oppenheimer hired N W Ayer & Son for, was to devise a marketing strategy for De Beers, in order to sell more diamonds following a steady decline in sales, and in response to worrisome bankers concerned about not losing the money they had loaned to establish South African diamond mines, because the price of diamonds had declined significantly worldwide.

Ayer & Son sought to quickly devise a marketing strategy to sell more diamonds, and embarked upon research to learn more about the market. What they found was probably no shock to anyone. They learned that Americans wanted to spend their money on goods they considered as “investments,” which were items that appreciated over time, and could generate profit when they were resold, or things that could help them earn money, like an automobile, which even though it depreciated over time, could transport them to work, where they could earn money. And by those standards, diamonds were definitely NOT “a girl’s best friend.” Instead, diamonds had no intrinsic value, and were seen as having rapidly depreciating value. Ayer & Son also found that only the very wealthy could afford diamonds, and since diamonds did not provide any value to Americans, there was no demand for them.

Ayer & Son definitely had their work cut out for them.
They had to:

1.) Find a way to create value for diamonds;

2.) Find a way to ensure that buyers were not reselling diamonds, and;

3.) Find a way to create demand for diamonds.

Ayer & Son decided that the best way to do those three things, was to create emotional attachments to diamonds. Thus, they connected love and marriage to diamonds. In fact, their marketing strategy worked so well, that it has become commonplace in peoples’ imaginations to consider diamonds as investments.

Consider the price of diamonds compared to other things.

Gold’s current price (as of Monday, 22 January 2018) per gram: $42.947

Cocaine’s current price per gram: $169

Heroin current price per gram: $150

Diamonds current price per gram: $78,375

So, in a way, a diamond is now considered an “investment.”

Why?

For men who want to purchase or buy a woman’s heart, diamonds are an “investment.” It’s almost like slave trading.

N W Ayer & Son convinced the public that diamonds were somehow, connected to love. So, if a man wants to confess his love for a woman, he is supposed to show his love to her by buying her a diamond necklace. If a man wants to marry that woman, he can do so if he buys a diamond ring for her. Cheap trade, eh? And remember… the size of the ring determines the amount of love you have for her, you cheapskate chiseler.

Are diamonds the world’s greatest fraud, or marketing strategy?

Maybe it’s not THE greatest, but it’s right up there with Ponzi schemes. Not only was N W Ayer & Son able to connect diamonds to Americans on an emotional level, but they also invented diamonds as manipulative social status tools.

Here’s how:

The more noticeable status disparities become, the more concerned people become with conspicuous consumption by others who do so merely to pronounce what they think of as being their social status, and their insecurities. Ayer & Son took advantage of that little piece of psychology.

Diamonds are now part of Conspicuous Consumption – buying things so that others can see it, and hopefully, admire it in your presence. What they say behind our back, you rarely know. But as far as the myth of diamonds = love & social status goes, the more carats you have, the higher status it’s supposed to show for you, and the more “love” you’re supposed to have.

So, why do women like diamonds? Why do men gift diamonds? Men and women use diamonds to demonstrate what they think is their social status.

Men propose marriage to women using diamond rings, and the more carats a diamond has, the “better” the ring is supposed to be. It is nothing more than mere conspicuous consumption.

Men’s incentives to buy diamonds are to not only get the girl of their dream, but also to show everyone around them that he can provide for his girl. Funny thing though, even the Beatles knew it when they sang “Money can’t buy me love.” Any woman who is fooled into believing that a big clear piece of carbon demonstrates love, and concern, is a sad sack.

Women like diamonds not only because they are “bling,” and look shiny and pretty, but it also shows off in a boastful way of her new found status. She shows other people that her man is able to provide her with that expensive piece of carbon. Not that he can provide emotional support, and demonstrate tender love, and compassion, but money. She might as well be a whore, because in essence, having sold herself, body -and- soul, that’s what she’s become.

It is amazing how De Beers created demand for a useless thing from nothing.

And in the end, diamonds are nothing but an emotional investment, not a financial one.

Humans crave acknowledgement, and are built on social relationships, and that is exactly what N W Ayer & Son’s fraudulent marketing strategy for diamonds created – a false expectation based upon a lie.

When most people learn about the diamond marketing strategy that N W Ayer & Son created, theyt understand that Ayer & Son purposely equated diamonds with love and emotion, and they then learn that they also used diamonds to create and increase more social disparities so that diamonds are considered conspicuous consumption… well, it’s not a pretty picture.

That way no one will want to resell their diamonds, but instead, will continue buying more and more of them.

Diamonds are nothing but useless, self-centered social status symbols.

In most recent years, De Beers sought to cast aspersions upon their competition by labeling diamonds NOT dug out from their mines as so-called “blood diamonds,” or “conflict diamonds,” as if purchasing an inanimate object from a willing seller was a bad thing… simply because De Beers didn’t want anyone else to have a bite of their diamond pie.

Consequently, because De Beers was losing control of market share, prices began falling. But they’ve not fallen enough. Here’s a graphic that illustrates De Beers’ current market share.