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Why On Earth Didn't a Flawless 72-Carat Diamond Sell?
Written by whatsrequired 
It was reported today that Sotheby's, try as it might, was unable to sell a flawless 72-carat diamond at auction.
Photo:
72 Carats of Cubic Zirconia, baby. From edejoie on Flickr
The rock, which was appraised at 10-12 million dollars, had a final bid of 9.24 Million, well short of the reserve price. Why wouldn't the third-largest diamond of its type sell?
Obviously, there's some concern that the diamond market is weak right now. Sotheby's is claiming that there was some confusion over exchange rates from international bids, and that may have scared off bidders. But what does it mean, really, when somebody says that the market is weak? Records were being set for demand all last year as nations like China and the oil-rich states in the Persian Gulf began to drive costs up, not down.
Well, for starters, we don't really know what the value of a diamond is-- there are 30 diamond-producing mines in the world, but virtually every gem comes through the Central Selling Organization, run by De Beers. And De Beers, which controls 80 percent of the market anyway, has admitted that they have stemmed the flow of diamonds from Africa in order to drive up the cost. A quick Google search shows how invasive their reach is, and how long people have been willing to prematurely declare their downfall, but De Beers still remains. Frankly, diamonds are a bubble stock, and we don't know how big it is. So this could be the beginning of a correction towards the actual value.
Alternatively, there's the faint hope that the Western world is actually paying attention to what's going on in those 30 diamond mines-- the unfortunate fact is that diamonds help drive arms trafficking, finance revolutionary activity and governmental corruption, and often host deplorable conditions in the mines themselves, to boot. This has led to increasing international attention over "conflict diamonds", although for the moment, De Beers seems happy to assure us that there are no such things commercially available--when you can't tell the difference--and consumers seem to care only as much as it can dictate how their favorite celebrity will respond.
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Comments
Chris says:
Apr 18th, 2008 at 3pm
Phil I don't think you realise that the article was talking about a white diamond, the image was irrelevant.
C
Phil (not verified) says:
Apr 18th, 2008 at 6pm
OK, but then wasn't it a bit misleading to show a Cubic Zirconia and not the actual diamond?
whatsrequired says:
Apr 18th, 2008 at 6pm
As a matter of fact, I don't think so-- the caption is tounge-in-cheek. The point was to find a picture of a darn big rock, and the shot was just too funny to me to pass up.
If you're still upset, I'll have you know I would have been perfectly happy to picture the real diamond, but the AP has it on copyright. I decided to make a joke instead.
echo (not verified) says:
Apr 20th, 2008 at 11pm
I'm sure De Beers would be thrilled to know that their current 40% market share has swelled to 80%. I'm also sure that that folk at Partnership Africa Canada and Global witness should be told how badly they screwed up when getting the Kimberly process set up. Don't forget to tell good people of Botswana Namibia and South Africa would love to know that their prosperity is an illusion.
Don't give up your day job Ben. I don't think journalism is your bag. Failing that you could perhaps start with even a skim through wikipedia.
Adam (not verified) says:
Apr 21st, 2008 at 8am
This would have been an interesting piece maybe 10 years ago - but it is hopelessly out of date. Firstly DeBeers controls less than 40% of the diamond market. The EU has ruled that it is no longer able to sell diamonds from Russia's Alrosa and neither BHP nor Rio Tinto (world's number 2 and 3 producers) sell through DeBeers.
Next is the stock pile issue. DeBeers adopted a strategy known as 'buyer of last resort' to maintain diamond prices. In the long this was always an unsustainable strategy and it was abandoned in the early 2000s and the stockpile sold down. DeBeers are well documented as having confirmed this several years ago.
And lastly an economic lesson. The value of anything is what people are prepared to pay for it.
Richard Wicks (not verified) says:
Jan 29th, 2009 at 9pm
Diamonds can be made in the lab and they exist in huge quantities naturally. It's only because the DeBeers cartel exists that they are still considered to be a semi-precious stone rather than a semi-precious piece of carbon. DeBeers was created in order to restrict supply and to dominate diamond production in order to ensure profits of diamond mines. If it wasn't for DeBeers, a diamond would have about the same worth as rubies, sapphires and emeralds, which are nothing more than aluminum oxide with impurities to create the colors.
Still, there is no shortage of fools parting with their money. There just wasn't a big enough fool at the auction.
So anyhow, the picture of the cubic zirconia was apt.
Phil (not verified) says:
Diamond mines have nothing to do with it!
How stupid are you?
Cubic Zirconia is a man made fake diamond!