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Diamond

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Diamond (after being cut is called brilliant) is the most well-known and promoted jewelry stone. But no step or emerald cut makes a diamond a brilliant. This stone is surrounded but thousands of myths and legends, though many of them are just a result of clever propaganda. There is hardly a person in the world who had not heard such expressions which became proverbs long time ago: Brilliant is the king of precious stones; Diamonds are a girl’s best friend; Diamonds are forever; Brilliant is a frozen teardrop, etc. These myths are not as harmless as one may think, as they did not appear out of thin air and they do not exist on their own.

A diamond is unique. It occupies the top of the Mohs scale (hardness=10) and is 140 times harder than the second stone on this scale, corund. Diamond has the highest fusion temperature – 3820 K. But to get it to such state may become quite a task, as a diamond burns at 900°C (The corunds are even harder to burn because they can stand even 2050°C.) Diamonds have the highest thermal conductivity rate – five times as much as silver. They also have the tightest set of atoms of carbon among all known compounds. But the main difference is that unlike all other materials, a diamond is transparent in the wide wavelength range, from the ultraviolet part of the spectrum to the infrared.

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But, of course, the buyer does not pay for hardness or for how tight the atoms are set. The most important thing for a consumer is that diamond makes bright transparent stones brilliants. The reason for this very special shine is the diamond’s high reflective capability and dispersion, the play of light, though there are more dispersive crystals such as demantoid or phianite. Diamonds are not only good deflectors and reflectors of light, but they also have one very important optical property which gives them their particular beauty: The difference in refraction factors for violet and red rays (dispersion) of a diamond is five times more than of a rock crystal and two times more than that of the best kind of glass. Due to the high dispersion, diamonds have strongly marked properties of the partition of white to its constituents, the colors of the rainbow. This is the reason that the same stone may seem to reflect different colors depending on the position of the source of light and the watcher. All this creates that unique play of brilliance, which is expressed in the combination of shiny facets with bright light flashes and the constant opalization in the depth of the stone when you slowly turn it in your hands.

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A diamond is not the only form of pure carbon existing; its alternative is called graphite. Despite having a similar chemical composition, these two minerals have absolutely different structures and properties. Diamond is the hardest mineral, while graphite is the softest; diamond is a perfect electrical insulator, while graphite is a great conductor; diamond is the best abrasive, while graphite is a good lubricant; diamond is transparent, while graphite is not. So what is the reason of such drastic difference? Graphite is the stable form of carbon in the average temperature and pressure. Diamond is born under extreme temperatures and pressures. Further still, all diamonds lying on the surface or near to it are slowly turning into graphite. But this process takes so much time that one should not take it into consideration at all, especially coming from the point of view of a human civilization.

Carbon is one of the most common chemical elements on the planet. In its bosom re a lot of diamonds, too. The slightest problem is these diamonds stay where the necessary conditions for their appearance exist: deep in the depths of the Earth. They surface due to volcanic activity. Volcaniс orifices turn into kimberlite pipes, many of which reach over one kilometer in diameter and half a kilometer deep. To mine diamonds from such places is a hard task requiring serious organizational work and proper technical equipment, which has become possible only in the age of industry. Also, there are scattered, alluvial, and eluvial deposits which diamonds get from the kimberlite pipes due to the soil erosion. These places were used for diamond mining in the ancient times and continue to be used today.

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Sizes of the jewelry diamonds are rarely over 5–10 carats; the stones weighing dozens or hundreds carats usually get proper names such as Sancy, Orlov, Dresden Green, Koh-i-Noor, Great Mogul, etc.

A diamond in its raw state is not very attractive becausenatural crystals rarely have the form of regular polyhedrons. Usually, their planes are developed unevenly, covered with cracks, dashes, and knots; foreign inclusions are also frequent. That is why these crystals usually have no play of light, and until the time when cutting and polishing were invented, the diamonds did not have the price they acquired until long afterwards. At the same time, a diamond’s particular hardness has always interested people. There are legends telling of a diamond that split the anvil of Hephaestus, the Greek god of smithery. The exceptional qualities of diamonds were noticed by Pliny the Elder, but he paid attention mostly to their technical usage. If a diamond got split somehow, it was used as a valuable material for tools that could pierce absolutely everything. In the Middle Age, some knights put diamonds on their armor. It was thought that the one with the biggest diamond would be just as tough and invincible in a fight.

Famous Diamonds

The popularity of diamond grew gradually as the techniques and forms of gem cutting developed. Large, beautifully cut stones were rare; they were objects only found during a real hunt. Such diamonds were constantly changing owners, becoming famous, getting proper names. These diamonds, however, were masked in intrigue that could easily beat the plot of any adventure film.

Let us start with the famous Sancy. This diamond was brought from India and cut in 1475 by the legendary cutter and jeweler Ludwig van Berchem, who discovered the methods of cutting and grinding the diamonds. Sancy was considered the biggest in the world at that time – a whopping 139.5 carats.

The Sancy diamondThe Sancy diamond The Shah diamondThe Shah diamond The Koh-i-Noor diamondThe Koh-i-Noor diamond

The Sancy’s first owner, Charles the Bold, Duke of Burgundy, dreamed of conquering the whole Europe. He believed in the magic power of the diamond and ordered it to be attached it to his helmet during battle. It had a practical purpose, too, as during fights, the diamond sparkled and was blinding to the enemies. It is said that the diamond saved the life of its owner more than once, but not even the stone could help when Charles the Bold confronted the Swiss – the terror of Europe at that time. During the bloodbath of Nancy (1477), Charles the Bold was killed.

A Swiss soldier who had found the diamond on the frosted battlefield had no idea of its value and started to strike sparks with it to light his pipe. His officer noticed the curious stone and took it away from the soldier. But even he did not understand the gem’s value, so he sold the diamond to a priest for just one gulden! The priest then sold it to a Spanish merchant and the latter, knowing the price of the stone, profited greatly by selling it to Alfonso, the King of Portugal. Soon, being scarce of money, the king sold it--also at a profit--to the richest French family after which the stone was named: Sancy.

In 1588, the diamond just barely escaped a robbery attempt. The owner of the stone at the time, Marquis Nicolas de Sancy, was a supporter of Henry III, the last French king of Valois dynasty. Henry’s affairs were far from great: The country had been torn apart between the Catholics and the Huguenots, he had no valuable allies left, and as for the enemies,their name was Legion. The last hope was the Swiss mercenaries. Thus, Marquis de Sancy had been sent to Switzerland to gather the army for his king. To cover the expenses, the Marquis had to mortgage his diamond. But his loyal servant delivering the stone to the lenders was ambushed by robbers.  The clever servant managed to swallow the stone like it had been previously arranged in the case of an attack, so when he was killed, the diamond could not be stolen. Later, after a long search, the Marquis has found the grave, dug up the body, and recovered the diamond, which he then mortgaged.

The Marquis eventually bought back his gem, but later sold it to Queen Elizabeth I of England, after which the whereabouts of the diamond disappear for some time. It reappeared only at the coronation ceremony of Louis XVI, but still nobody knows how the stone got back to France. It would be reasonable to suppose it was sold to supportthe kingdom during the Civil War in England in 17th century. Some historians attribute this deal to the French cardinal Mazarini, while others link it with the English King Jacob I.

Brilliant is often meant to be the center of attentionBrilliant is often meant to be the center of attention

Pave flower with brilliantsPave flower with brilliants

For the second time, the diamond disappeared during the French Revolution–only to pop up again in 1830 as a property of the Duchess of Berry Marion Bourguignon. Her dream was to use the diamond in order to secure the French throne for her son Henry, but then the Russian millionaire P. Demidov appeared and paid 500,000 francs for the stone, so the dream has never come true. Demidov gave the diamond to his fianc?e Aurora Chernval and later found himself in trouble with the French, who accused him of buying stolen state property. It is rumored that Demidov bribed the judges with another 150,000 francs get himself out of the predicament. Later, the millionaire passed away, but his widow paraded around wearing the luxurious stone for quite some time. When she died, the Sancy was lost again. Who has it now? When and where did it ever reappear again?

The tale of Koh-i-Noor is no less dramatic and interesting. It is believed this stone, which means “mountain of light” in Persian, was found 5,000 years ago in the famous Mines of Golkonda. If it is true, this stone was mentioned even in the ancient Indian epic tale, Mahabharata! It is well known, though, that during the Middle Ages, the diamond belonged to the rajas from the Malwa dynasty. This was the legend: if the stone fell down from the raja’s turban, his people would turn into slaves. One day, the dark prophecy was fulfilled: the state of Malwa was conquered by the sultan Ala ad-Din, who laid his hands on the stone, as well. Later, the rajas finally managed to get the stone back.

In 1526, the army of the sultan Babur, the founder of Great Moguls’ state, invaded India. The raja Bikeramit from the Malwa dynasty fought him and was killed during the battle. His family tried to escape but was eventually captured by Babur’s son, Humayun. The widow of the raja begged the conquerors to have mercy on her and her children, and to secure their safety, she gave Humayun all her jewelry. Thus, Koh-i-Noor fell into the hands of the Great Moguls. The son of Humayun, Shah Jahan, added the stone to his luxurious “Peacock Throne,” which was completely made out of gemstones. (You will read more about this exceptional artifact later.)

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The descendants of Shah Jahan lead the empire to decline. In 1739, it fell under the attacks of the Persian ruler, Nadir Shah. The conquerors took all the treasures, including the famous Peacock Throne. But the Koh-i-noor was gone. Soon it became known that the stone was in the hands of the defeated Mohammed Shah, who had hid the diamond in his turban which he wore both day and night. What was to be done? Nader Shah lured Mohammed Shah to negotiations and asked him to follow the old tradition, which was to exchange the turbans. Mohammed Shah was forced to agree. Later in his room, when Nader Shah unwrapped the turban, the stone fell on the floor, and the treasure was reclaimed.

But the diamond turned out to be quite unlucky for its new owner. Nader Shah was later killed by the rebellious Kurds, and his sons started a fight for power. One of them, Roch, occupied the throne but very soon was dethroned. He managed to hide the stone and did not give up his location even when tortured. The furious enemies blinded Roch, then let him go hoping he would at last bring them to the stone. But before his death, Roch had given the diamond to some a wandering Afghan, Ahmad Abdali, also known as Durr-i-Dauran, who was the founder of current day Afghanistan.

The descendants of Ahmad were also unlucky in ownership of the diamond. His grandson, Zaman Shah, was dethroned by his own brother, Shuja Shah, and hid the stone in the wall of his cell. The brother tortured Zaman Shah, struck him blind and, finally, got the diamond. But he, too, was dethroned and blinded by the third brother, so now it was time for Shuja Shah to hide Koh-i-Noor. But this prisoner was luckier than his predecessor: he got out of the jail and ran from Afghanistan to India. The Maharaja of Punjab, Rajit Singh, forced Shuja Shah to sell him the diamond, but he paid well for it, which is most likely why he had better luck with it. (Shuja Shah is still remembered in Punjab as a noble and fair ruler, and you can see his portrait hanging in many households.)

Later, Punjab was conquered by the English, and the diamond ended up in the hands of Queen Victoria. She gave it to the court jeweler, who recut it according to the fashion of the time. As a result Koh-i-Noor, lost its initial historical look and “lost weight,” slimming down from 186 to 106 carats, though its shine remained almost unchanged.

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In Russia, there are also some famous diamonds. The diamond bearing the name of Shah (88.7 carats) is now in the Diamond Fund. Unlike many other ancient stones, this gem was not recut, and its form was preserved almost untouched until recent years, when jewelers only gave it a little polishing. A yellowish oblong diamond, the size of a little finger, Shah was found in India in the 16th century in the same Mines of Golconda as Koh-i-Noor. The sultan of Ahmadnagar, Burhan the Second, considered this stone to be “the finger of Allah,” and so he ordered his name to be engraved on the gem. Two other owners who also decided to have their names engraved on the stone happened to be Shah Jahan and Nader Shah.

For Russia, Shah is the symbol of tragedy. It was presented to Russia as compensation for the assassination of the Russian ambassador, A.S. Griboyedov, in Persia, who is more known as a writer than as a diplomat. He is the author of the timeless comedy Woe from Wit and could have continued to have such an important impact in Russia’s literary legacy.

The diamond named Orlov (also in the Diamond Fund of Russia) has less tragic story. This is a 189.6 carat crystal of unique purity. It is believed that this diamond, like many others, found its way to Russia through the gemmary of the Great Moguls and the Persian treasury. Nobody knows how the Armenian merchant Grigoriy Saphras, who had his business on the Caspian Sea, got the stone. Saphras used his nephew Ivan Lazarev to pass the stone to Catherine the Great, who kept the stone for herself, as a gift for her birthday by her favorite courtier, the Count Orlov. Therefore, it was believed that Orlov bought the stone himself,  and so the diamond got its name after the Count.

The diamond known as Regent has human blood in its history. It was found in 1701 by a slave in the Mines of Golconda. The stone weighed 410 carats, and the Hindus decided to buy their freedom with this gem. The slave cut his leg with the pick and hid the stone under the bandage, then searched for somebody to help him. A skipper of a British ship agreed to help and hid the runaway in the cargo hold. But when the ship took to the open sea, the greed won over the word of a gentleman - the skipper murdered the Hindus and took the stone from the slave. The skipper sold his booty to the merchant named Jamhund, who then sold it to Pitt, a former pirate who was now the governor of Saint-George, for 20,000 pounds—an incredible sum at the time. The slave’s death did not bring luck to the skipper; he spent all the money on drinks and women, and he later committed suicide by hanging himself—although it is entirely possible that it wasn’t suicide after all.

The Orlov diamondThe Orlov diamond

The Cullinan diamondThe Cullinan diamond

Pitt came out best off it all. He returned to England and ordered the cutting of the stone. The work lasted for two years, but the resulting brilliant was sold at a great profit to the Regent of France, Philippe, the Duke of Orleans, for 135,000 pounds. This is when the stone got its name - Regent. The era of the Duke of Orleans became the zenith of the French “F?tes galantes”– the high society had a long-awaited reprieve from the piety of the last years of Louis XIV, Le Roi Soleil, who was so much absorbed in the wars that he became almost ascetic--at least from the point of view of the French court. Now the elite were making up for lost time by spending lavishly and without restraint. The Regent himself, dipping both hands in the state treasury, showed the best example.

Later, during the Great French Revolution, the diamond was sold abroad. It was later returned to France, thanks to the efforts of Napoleon Bonaparte. The emperor believed in the magic powers of this stone, which, on the other hand, did not prevent him from mortgaging the diamond more than once. After all its numerous owners, the Regent can now be seen in the Louvre Museum in Paris.

Diamonds with shorter lives cannot boast such biographies, of course. They are known mainly because of their size. The biggest of these is the Kullinan, which was discovered in South Africa in 1905. The giant weighs a mighty 3106 carats. After cutting, two huge brilliants resulted–530 and 317 carats–that were used for decoration of the British Royal crown;  seven other smaller stones were also created as a result.

The Many Faces of De Beers

It is widely believed that diamond is the rarest jewelry stone, which is why it costs so much. This, however, is a myth; in fact, the diamond is not that rare. Moreover, among the jewelry stones, diamond is the most common. So why, then, does it cost so much, and why, of all precious stones, is it considered to be so unique?

The answer is quite simple. Unlike diamonds, the prices for all other stones are defined by the current market. There is no one special company controlling large segments of the color stones market. The diamond is the only stone which mining and supply are strictly controlled by a transcontinental monopoly, the De Beers Family of Companies. This company is the one that maintains the high prices for diamonds, as well as stimulates the demand by means of a well-planned and aggressive advertisement campaign.

The company was founded by Cecil John Rhodes, a famous British businessman and colonialist whose domain of interest was South Africa. Rhodes got interested in diamonds in 1871 when he was only 18 years old. These stones became the source of his initial wealth. Then Rhodes came to the conclusion that his business would be a good match with the politics. His career reached the apex when he was appointed the Prime Minister of the Cape Colony.

Rhodes’s plans were quite far-reaching: he dreamed of his own colonial empire stretching from Cape Town to Cairo. He did manage to succeed in many of his initiatives; for example, he acquired large territories that were later named after him: Rhodesia. Now the former Rhodesia’s land is shared by two African state, Zambia and Zimbabwe. To reach his goals, Rhodes stood ready for anything, including illegal military operations. The major failure of one of them, a battle against Transvaal, led to Rhodes’s dismissal from office. But that setback didn’t mean that he abandoned his Napoleonic plans! His last triumph–the Boer War–led to the final defeat of his sworn enemies, the Transvaal and the Orange Free State.

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Rhodes did not harbor any illusions about British bureaucracy. When creating his own empire, he relied only on himself, a strategy that obviously required a lot of money. Thus, the diamond deposits in South Africa became Rhodes’ financial staple. In 1880, Rhodes and his partner, Charles Rudd, bought the plots of land from Johannes and Diderik de Beers, hoping to find rich diamond deposits there. Thus, De Beers Mining Company Ltd. began. But Rhodes lacked much-needed funds for the expansion of his business, so he approached the investment firm, Rothschild. Rhodes was then able to buy all the major mines of South Africa, which, at that time, were responsible for about 90 percent of the world’s diamond production. The miners whose businesses could have not been bought formed an agreement with Rhodes and were united with him under the name of the London Diamond Syndicate.

De Beers shored up its position even more during the Ernest Oppenheimer era. Oppenheimer began his career in the diamond trade in 1902 and was well acquainted with all its peculiarities. At the same time, he was dealing with another one of the South African riches: gold. This clever businessman was very astute when, in 1919, after Germany was defeated in WWI and lost all its African colonies, he bought German diamond deposits and created his own company, Consolidated Diamond Mines, with the help of an investment from American banker J.P. Morgan, Jr.

Meanwhile, after Rhodes’ death, De Beers’ affairs were in steep decline. More and more diamond deposits were opening; more and more new companies, not related to the London Syndicate, were being established; and the competition was growing more and more fierce. So it was only natural that in 1921, the prices for diamonds plummeted. The first companies to perish were the small players, the trading and cutting companies. The juggernaut of De Beers was still holding on, but the overall panic that started in the diamond business led to the downfall of its shares. Oppenheimer was the one to seize this opportunity. Due to the strong income from gold mining and the money he borrowed from the Americans, Oppenheimer was able to buy for cheap a major share of the company. In 1926, he became a member of the De Beers board and later bought the controlling stake.

Oppenheimer’s philosophy was quite simple: to prevent the diamond business from giving in to the pressure of cheap raw material, the diamond trade needed to be put under control. He put best foot forward by creating the Central Selling Organization (CSO) to control the sale of stones. The new strategy was formulated as follows: “Common sense tells us that the only way to increase the value of diamonds is to make them scarce; that is, to reduce production.” Oppenheimer managed to convince all the remaining diamond kings to sell their merchandise through De Beers. He told them, “When you play by our rules, you will get the income guaranteed; if not, you risk getting nothing at all." The crisis still taking its toll in the diamond industry was the best proof of his words. The hardest thing for him to do, however, was to convince the independent South African government, which still owned some diamond mines; an agreement was reached only after WWII.

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Now the owner of the diamond monopoly, Oppenheimer set up the parameters for diamond mining, as well as for supplying the stones from reserve stocks. The number of corporate participants in the diamond market under De Beers control reached tens of thousands. Oppenheimer’s son, Harry, played a major role in the development of the company, which he had been at the head of since 1957. The family business E. Oppenheimer & Sons is currently in the hands of Ernest’s grandson, Nicholas Oppenheimer. One of the current major roles in De Beers is played by its managing director, Gary Rafe.

By the middle of 2000, De Beers controlled about 65 percent of the raw diamonds market, and during some periods, this rate rose up to 85 or even 90 percent. Eighty percent of the jewelry diamonds market is also controlled by De Beers, which gets its raw material mainly from Africa, while the trading is done by Diamond Trading Company (DTC). In the last few years, the sales volume fluctuating between $5 and 6 millon.

The power of De Beers is in its incredible management of the diamond market: buying out and stocking the diamonds during the overproduction years and carefully controlling supply to the market during the more favorable years. The main De Beers stock house in London is a multi-story building filled with sorted diamonds, all of which are waiting patiently for their turn to be sold. These reserves have been collected for dozens of years; there is no official information on their actual value, but it is supposed to reach $5 million.

The main principle of the company’s trading policy is that “the diamonds should always be slightly fewer than needed.” This is quite true: to maintain a steady price rise, the supply should be slightly less than the demand. This method allows the company to maintain its high prices even when taking into account inflation, which is not characteristic of the market merchandise. De Beers’ policy turned diamonds into a sustainable source for long-term investments. If only the new deposits were not discovered and mined…

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A special role in the diamond industry is still played by the Central Selling Organization. If the demand slows down and the supply grows, this organization regulates the market. The method is quite simple: De Beers buys all the surplus from the producers until the moment when the world diamond market starts to mine fewer diamonds than the cutting enterprises can process. This surplus will be sold later when the slight “diamond hunger” comes, though very gradually so as not to disrupt the market.

De Beers skillfully leads the long-term diamond advertising campaign throughout the world, spending about $300 million per year, a figure that will increase in the near future. Harry Oppenheimer created the most effective slogan for the company was created: “A Diamond is Forever.” But De Beers is still not resting on its laurels; the company met the new millennium with a new advertising slogan: “Show me your love for the next one thousand years.”

Perhaps the biggest achievement of De Beers is that it established the consumer’s strong loyalty to diamonds. Nobody knows how it happened except that it did: in the 20th century, a new cultural tradition appeared in the U.S., which was for a man to present a woman with a diamond ring when he asked for her hand in marriage. Therefore, a diamond ring on a woman’s left hand signified that she was spoken for. Some women can be very particular about the ring that is placed on their fingers, and so in the U.S., it is not uncommon for a man to spend thousands of dollars for the purchase of the perfect ring. As the price of a diamond depends not only on its weight, but also on other factors like clarity and cut, this tradition took root even in the lowest classes of the American society. The importance of this tradition for the world diamond market is clearly shown by the psychological price barrier: stones weighing one carat are 20-30 per cent more expensive than stones weighing 0.99 carat, and many soon-to-be brides prefer their diamond rings to be at least one carat. It is quite ironic that in the U.S., where diamonds are bought most often and where they are widely promoted, De Beers’ activity is prohibited, as its monopoly breaks U.S. anti-trust laws. But the smart diamond traders bypass these laws easily, using the intermediary companies.

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Having enjoyed the success of its ad campaign in the U.S., De Beers now uses the same methods in other countries. Even in traditional Japan, it is now fashionable to give a diamond to one’s fianc?e, and this little rite of marriage is only getting more and more widespread throughout the world.

A huge stroke of luck for the diamond traders was the fact that diamond became a part of the American mass culture, which now promulgates its values around the world. To be sure, this “luck” was not entirely accidental; it is the result of a well-planned work. So, if ever you see the main female character in some American film who is wearing a jewelry piece with diamonds, or, especially, when she is given such piece, remember that this movie is likely to have been produced in some part by De Beers. The same goes for if diamonds are flashing all over the movie; it means that production costs were covered with a little help from De Beers.

Thus, this is how myths about diamonds are created. We read about them in the glossy magazines, where the stories of the prestigious gems glitter amidst the hottest celebrity gossip, diet advice, and horoscopes. At the turn of the millennium, De Beers organized an exhibition of the unique diamonds in London, featuring the fourth largest brilliant in the world, the Millennium Star (203 carats), bought by the company in Zaire in the 1990s. This exhibition was televised and watched by 12 million people.

The uniqueness of the De Beers’ advertising techniques is in the fact that they promote the third-party product. This is because the company was previously selling only the uncut diamonds, which were cut afterwards by the third-party companies. The profit of De Beers was obvious, though: the bigger the demand for brilliants, the bigger the demand for diamonds in general. But this idea has its flaws: a considerable part of profit gets lost on the intermediary stages.

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De Beers is now transforming its strategy: it has started its own cutting and selling business,  something that never happened before in the diamond industry. The trademark of De Beers brilliants is DTC (Diamond Trading Company). It has been quite a successful start: in 2007 the income reached $877 million. The company is planning to cut half of its raw material stock (valued at $2.5 million) and brand it with its hallmark, which De Beers on the girdle (a narrow belt defining the form of a brilliant), and then sell it. The brilliant trade is much more profitable than the raw material business; a yearly volume of the brilliant market in the jewelry pieces constitutes about $50 million.

Another advantage for De Beers is its thorough approach to raw material sorting. Different deposits produce diamonds of different quality, and there are many gradations as a result; in fact, De Beers sorts its raw material according to 5000-position scale. For example, the jewelers who create sophisticated pieces with lots of gems need the diamonds to be of the same size and color. So when you deal with De Beers, you can be sure that you will always get the diamond you want as far as shade, quality, and size and not simply what they have in stock. This is also one of the many reasons that a serious buyer deal work with De Beers when it comes to diamonds.

As for the diamonds of different quality, the company’s price policy differs, too. Prices for low-quality stones are stable or even lower. As for the high-quality diamonds--large in size, high in purity, and without visible hues or inclusions--their prices grow drastically. So one should take this all into account when shopping for diamonds.

Let us now consider the cheap brilliants. At mineralogical and jewelry exhibitions, one can often observe a very interesting and funny situation: At one of the pavilions, one can see a long line. What’s going on? The answer is simple: the rings with brilliant dusting are for sale at a special price. Those who rise to the bait do not understand that these rings should go for much cheaper. It is all because such brilliants are made of the off-grade material—which can easily fall out--and that their setting is far from good.

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Any stone cutter would consider it a great windfall to become a site holder for De Beers. A site holder is a company that is admitted to the specialized exhibitions of the stones for sale, which are organized 10 times a year and where only those who can buy such merchandise are permitted. Previously, De Beers had 120 site holders, but now they are only 90. Therefore, others must buy raw material from the site holders and be charged extra. The criteria of choosing the site holder involves matching their business plans with the company’s strategy of development. Strangely enough, the latest elimination of site holders has been done under the hypocritical slogan of “starting away from the previous monopolistic policy.”

De Beers also has other marketing tools. What is the Western world crazy about these ays? Ecology and human rights. It would have been a costly mistake if the diamond traders had not used such great opportunity. The ecological slant was easy to pursue, as De Beers is very interested in the limitations on world’s diamond mines, so the company simply tries to prevent new deposits from being mined. Ecology is a great reason to hold on to the mining industry in this or that region; for example, this was how De Beers put restrictions on the diamond mining in Canada.

De Beers also used the political situation already existing in the world. In October 1999, the UN appealed to all the countries to stop buying diamonds from the UNITA rebels in Angola, as well as democratic Congo and Guinea. Having supported these initiatives, De Beers allowed itself to define the circle of “outcasts.” Its new principle is the diamonds should be clean, as in not one of the “blood diamonds.” Under such pretext, the company got an additional tool to cut off the market for uncontrolled diamonds suppliers.

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To sum it all up: when you invest in brilliants you, in fact, pay for the monumental work done by De Beers to maintain its monopoly and to increase the demand for diamonds.  Nothing is wrong with this; you get what you want for your money, and the seller uses the extra money to make the prices even higher, including the price of that newly bought brilliant!. So if you are the proud owner of a brilliant, it will eventually turn quite profitable.

The problem is whether De Beers’ position can remain as steady as it is now. The company runs into more and more difficulties nowadays, including the U.S and European anti-trust laws, the constantly growing world production of diamonds (though De Beers does everything to slow it down), and the growing stocks of raw material. In 2000, a huge deposit was discovered in Zimbabwe, then another one in Canada; the proven reserves in Botswana grow, too, and Botswana is the main producer of diamonds today. Thus, we have a steady tendency towards the overproduction of diamonds. The company is planning to invest in the advertising again to help patch up the situation. But do they have enough funds? Australia has already refused to sign any agreements with De Beers, and many countries could follow suit.

So when you invest in brilliants, you invest in the market control of De Beers’. If this control suddenly ceases, as it happened between Rhodes’ death and the arrival of Oppenheimer, you risk losing your money. It is entirely possible, however, for the diamond market to be saved by China. The young generation of the rich Chinese is willfully adopting the lavish Western lifestyle, featuring cars, designer clothes, and luxurious homes. If they started to buy milk products (if you do not know, the Chinese have never drunk milk or eaten any milk products considering them harmful), they will most definitely wear diamonds – sooner or later.

Diamonds of Russia

Now as we understood how things are in the foreign giant, let us talk about Russia. This country ranks No.2 after Botswana in the mining of diamonds and is first in known diamond reserves. Today Russia mines diamonds for about 1,5 mlrd USD per year. Its contribution in the world production of jewelry diamonds grows and now exceeds 25 per cent. Exact numbers are the state secret, though, and the difference in numbers taken from different sources can be explained only by the fact that such publications are ordered by the concerned parties.

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A black-coated gold ring with citrines and cognac-colored brilliantsA black-coated gold ring with citrines and cognac-colored brilliants

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Generally speaking, a Russian brilliant is not that big – about 0.2 carats, with the total product line from 0.01 to 1 carat and over). The places where these diamonds are cut and processed are still guarded so thoroughly that it is easier to escape from a jail than to get there. And all this, as mentioned before, means extra costs.

The processing of precious stones is also defined by instructions, so the jewelers often joke they have “no right to faulty work.” This is the main reason that Russian brilliants are the most expensive in the world, nothing else. Though there is one advantage: the quality of our gems is very high and they are greatly valued abroad. The processing procedure and the cutting standards in Russia are strictly observed and the stones get mercilessly cut. Which, again, means high losses of raw material and extra cost for the work. Can this strategy be justified? The low level of profit speaks for itself, actually. Also, as we have already said, most of our brilliants rarely exceed one carat. In this segment our main competitor is India.

The cutting business in the world is structured as follows: stones weighing up to one carat are cut in India; from one to five carats are cut in Israel; and over five carats are cut in Belgium and New York.

The Sergei Yesenin diamond. 94,28 ct. Found: 27/07/2007. Photo c/o Alrosa website.The Sergei Yesenin diamond. 94,28 ct. Found: 27/07/2007. Photo c/o Alrosa website.

The Jores Alferov diamond. 70,20 ct. Found: 21/12/2000. Photo c/o Alrosa websiteThe Jores Alferov diamond. 70,20 ct. Found: 21/12/2000. Photo c/o Alrosa website

Now, let us talk about the quality. One of the most important components of pricing a brilliant is the subcolor–a slight hue of some other color. However, this is something that one will never be able to evaluate at the jewelry. In fact, no expert is able to do it without tools and the proper conditions. But it is useful to know that the colorless stones and gems with the blue subcolor are valued more than those with a yellowish-brown one. As there are many more stones with the latter than with the former, a fantastic marketing move has been invented – the Champagne-colored brilliants. To exploit the success, the diamond market specialists now introduced the Cognac-colored brilliants. Previously, these brown stones were used to make industrial tools, but now they find their way to the regular customer. The next stage, probably, will be to create the “cocoa-colored brilliants” or the “ripe banana-colored brilliants,” but one should not be fooled by the merchants.

Colored Diamonds

A colored diamond is a unique phenomenon that deserves special attention. For every 10,000 regular diamonds, only one colored diamond is found. These gems are really the most expensive in the world. For example, at one of the auctions in London, a three-carat purple diamond was sold for whopping $20 million. In an other instance, a buyer paid $750,000 for a small brilliant of the same color weighing just 0.5 carats.

Yellow brilliant                                                               Yellow brilliant

The Blue Wittelbach diamond – the brilliant sold at the highest price ever paid at auctionThe Blue Wittelbach diamond – the brilliant sold at the highest price ever paid at auction

Green brilliantGreen brilliant

It is to be understood that at these auctions, only small, colored brilliants up to 4 carats are sold. Larger stones are sold in secrecy and through special channels, bought only from the most renowned merchants. Such brilliants are usually bought as investments by people who are not exactly eager to their covers, either; not so long ago, there was an attempt to sell openly a large yellow brilliant. It did not work; nobody ventured to buy it, though the initial price was a good one, and at auction, the price was reduced twice.

The most valued color in diamonds is red, especially when it is clear. Next comes purple, blue, green, pink, and yellow brilliants. Finding any colored diamond, even if it is a small one, is an exceptional event. In the last decade, though, they have been found more often, mainly thanks to Argyle, the new Australian deposit, which produces pink diamonds. Every year, an exclusive sale of colored diamonds is arranged in Argyle. Those who attend say that the entire merchandise inventory for sale can be held in the palm of one’s hand. Other colored diamonds usually come from Africa. For instance, the blue ones are still found in the old South African mine, Cullinan.

Pink and green brilliant in the jewelry piecesPink and green brilliant in the jewelry pieces

Pink brilliant, 8,02 ctPink brilliant, 8,02 ct Fancy yellow and canary brilliantFancy yellow and canary brilliant

There are no rules defining the price of such stones, and the Rappoport tables don’t help much. Let’s say, for example, that a seven-carat colored brilliant has been sold recently for $8 million. Why seven and not three or even 20? Even the most experienced dealers are at a loss for an explanation, other than that the seller wanted as much and that is all.

To make colored diamonds out of regular ones, HPHT technology (high pressure, high temperature) is used. The stones are held under pressure of 6-7 GPa and are heated to 2400–2500°C, which allows for achieving green, yellow, pink, and even the most expensive red diamonds. These stones cost less than natural-colored diamonds, but they are still worth enough to stay in the high realm of the precious stones.

An interesting thing to note: One of the cheapest types of diamonds is the cognac-colored one, containing a strong yellow hue. But if this hue had been a bit richer and brighter, the stone could rank in quite other category: the colored diamonds. Accordingly, the price will be different. In general, brightness and richness are the categories that count most for the colored diamonds, even more than the size. A blueish stone is one thing, but a rich indigo is quite another one. As for the brown diamonds, they are valued according to their hue. A simple brown diamond costs practically nothing, while pale brown is a bit more expensive. But brown with a red or orange hue is something else again: this, again,  is the big league.

Deep blue brilliantDeep blue brilliant

A necklace with pink brilliantsA necklace with pink brilliants

The most famous colored diamond is the indigo-colored Hope Diamond, a 45.5 carat gem that belonged to Louis XIV. The king received the gem from India, still uncut. There is no exact information on the previous fate of the diamond, but tradition says it was sett in the left eye of Rama, the Indian god. Rama’s left eye is what punished the sinners, and all those who would have dared to own the stone risked numerous illnesses and, eventually, death. At that time, India was under the Great Mogul rule, and the people were Muslims. One of them, Aurangzeb, was famous for his religious fanaticism: he plundered and destroyed many Indian temples, replacing them with mosques. It is quite possible he got the “eye” during one of those operations; still, he knew about the curse and sold the diamond to Europe.

Louis XIV ordered cutters to give the ill-famed stone the shape of a heart, but its loving shape did not alter its curse. When it appeared in Europe, the plague hit the continent. Jean-Baptist Tavernier, the banker who brought the stone, was torn to pieces by the dogs. Louis XIV himself stepped on a rusty nail while dancing, and died of gangrene. Other victims of the Hope Diamond were: Marie Antoinette, the French Queen; the English banker Hope (after whom the stone was named); the concubine of the Turkish sultan Abdul-Hamid; and even a married couple from the Titanic! (The stone, however, “decided” not to travel with the doomed couple.) The last victim of the Hope was the courier who delivered it to the Smithsonian Institute in Washington, D.C., where it remains till now. The poor guy was knocked down by a car, and though he survived, his house burned downed, taking with it his wife and their dog.