The history of the diamond trade

Die Geschichte des Diamanthandels

A diamond is forever' was chosen as the slogan of the century in 1999. But have diamonds always been a symbol of love and eternity? In fact, diamonds only boomed after World War II and have been arguably the most sought-after gemstone ever since. In this blog post, we want to retrace the history and development of the diamond trade from the first diamond discoveries to the 21st century. So if you want to know how the diamond trade has developed over the centuries, what role the De Beers company has played in this and what the future of the diamond trade may look like, then feel free to read on here!

De Beers - only the name has stuck

The first diamonds were probably discovered in India in ancient times. For centuries, India and Brazil were the only places where the rare gemstones were found. For this reason, the worldwide mining volume was very low compared to today and only the elites and members of the royal houses could afford diamond jewelry. In the 19th century, however, this was about to change. In South Africa, a diamond was accidentally found on the farm of Dutch immigrants, the De Beers brothers. Word of the find spread quickly and people came from all over to mine diamonds there. The DeBeers brothers eventually sold their land and a huge diamond mine was created - the largest man-made hole in the world to date.

At some point, individuals began to buy out the interests of the many diamond miners in "The Big Hole," as it is known today, until eventually a man named Cecil Rhodes had complete ownership of the diamond mine. In 1888, De Beers Consolidated Mines was formed with Rhodes as chairman, in a merger with the company of Rhodes' competitor Barney Barnato. With this merger, De Beers now owned all the diamond mines in South Africa and laid the foundation for its decades-long monopoly in the diamond industry. The name De Beers has thus persisted and to this day is probably the name most associated with diamonds in the world, even though the De Beers brothers themselves had nothing whatsoever to do with the emerging diamond industry in South Africa. In 1928, Ernest Oppenheimer took over the chairmanship of De Beers and the Oppenheimer family remained the main owner and managed the company for over 80 years until they announced in 2011 that they wanted to sell their shares.

A diamond is a girl's best friend

But the demand for diamonds was rather limited at the beginning of the 20th century. It was still the aristocrats and the rich upper class, especially in France and England, who bought diamonds and diamond jewelry. The economic crisis in the 1930s did not make the situation any better for diamond dealers, and demand continued to fall. It took until the 1950s for the diamond jewelry industry to experience an upswing. A targeted marketing campaign by De Beers ensured that the diamond became a symbol of true love and eternity in all classes of society. The slogan 'A diamond is forever', invented for this purpose, worked so well that it has since become a common saying. Diamond jewelry was worn by actresses in movies, but also for appearances on the red carpet and for photo shoots in magazines, to constantly confront women with diamond jewelry and thus awaken in them the desire for some glamour in their own lives. Special shorter novels were published, aimed at young women and teenage girls, specifically to arouse their desire to own a diamond. These novels tell love stories in which diamond jewelry plays a major role as an expression of love. The song 'A diamond is a girl's best friend', made famous by Marilyn Monroe, also contributed to this marketing strategy. In it, Monroe sings that even if men grew cold and girls grew old, 'A diamond is a girl's best friend,' because it would retain its charm.

Thus, with the broad-based marketing campaign, De Beers managed to anchor in people's minds the idea that diamonds symbolize true love and that a diamond ring is an inevitable part of an engagement.

How does the diamond trade work?

De Beers' successful marketing strategy thus ensured that the demand for diamonds rose sharply in the second half of the 20th century and that the diamond trade experienced an upswing. But how exactly does the trade in the most precious of stones work? An important part of the international diamond trade are the diamond bourses, where both polished and rough diamonds are traded. There are over 30 such bourses worldwide, the largest and most important being in Antwerp, Tel Aviv, Mumbai, Hong Kong, Dubai and New York. These are huge office buildings to which only selected people have access. Either you have to be a long-standing and trustworthy member of the industry and have already established a good reputation, or you come in the company of such a member of the industry, who then in turn has to vouch for you. Because what is special about the diamond trade is that trust plays such an important role in the diamond business as it probably does in no other industry. There are no sales contracts, nothing is agreed upon by notary. If there is agreement, the purchase is sealed with a handshake, even in transactions worth millions.  In the industry, dishonesty or unfair business practices are immediately punished with exclusion from the bourse and it will be almost impossible to find business partners in the future. Thus, no one can afford missteps, so trading on a basis of trust usually works very well.

The diamond trade of the future

Diamond trading is still very traditional, but the technological advances of recent decades are also making themselves noticeable here. While it is still common to appraise and then trade diamonds on site at the exchange, diamonds are increasingly being traded digitally. The appraisal of the actual diamond is replaced by the appraisal of the certificate, which is issued by one of the renowned gemological laboratories. However, it is unlikely that the diamond trade will at some point be almost exclusively digital, because the industry likes to hold on to traditions. In Surat, for example, the diamond bourse, newly built in recent years, is finally scheduled to open in November 2023. With approximately 650,000 square meters, the Surat Diamond Bourse is the largest office building in the world - even larger than the Pentagon in the USA. Over 65,000 employees are to be located here, including cutters, polishers and also diamond traders. For Surat as the diamond cutting capital of the world, this diamond exchange means an important step to be able to keep up with the competing diamond centers like Mumbai, Antwerp or Dubai - but it also means that there are definitely no plans of an extensive digitalization of the diamond trade here.

However, technological progress has a great impact on the cutting and grading of diamonds. The creation of accurate 3D computer models of the respective stones opens up completely new and extremely helpful possibilities. Cutting can thus be made more efficient and diamond grading more reliable. Read our blog post on the history of the 4 Cs here, where we also explain how gemological laboratories are now using computer models.

Technological progress has also enabled the production of gem-quality laboratory diamonds for several years. Initially, the market for laboratory diamonds was still a niche and was not seen as a threat by the classic mining diamond industry. However, laboratory diamonds have now gained a good reputation and are established as a more sustainable alternative, provided they are produced in a climate-neutral way and under good working conditions. In fact, it is expected that more lab diamonds will soon be sold in the U.S. than mined diamonds. However, it is difficult to predict how the demand ratio of mined to lab-grown diamonds will develop in the long term. It is also quite possible that sales will level off evenly and that the two types of diamonds will coexist and be in demand as different products on the market.

In any case, it is clear that the diamond trade will continue to change in the coming years, as even such a traditional industry must adapt to certain developments.


Image: Adobe Stock | 265163964

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