Myself and barski chatted about how Diamonds are monopolized recently and few days later Lex Fridman hosted Saifedean Ammous on his podcast Diamonds are a scam that was a strong topic that caught my attention. It might interest you to check it out just a 4:49 minutes video.
I am neither for diamonds nor against it, personally am less of a jewelry person so I careless about the precious stone.
Since we are looking at scarcity, how about a comparison of Diamonds with Bitcoin?
A major factor that have been impacting the price of Bitcoin is its scarcity nature with a max supply of 21,000,000 and 19,041,775 currently in circulation. Basically 21mil Bitcoin have been coded to exist and there's nothing anyone can do to add or reduce the supply. Therefore with demand and supply at play Bitcoin is bound to keep increasing in price value.
According to data by Statista Russia holds the world's largest Diamond reserves of 1.1 billion carat as of 2021, Botswana second with 300 million carat. Basically there's abundance of diamonds, June, 2021 Botswana found the world's third largest 1098 carat diamond. The question here is with so much abundance why are diamonds so scarce?
Alrosa and De Beers share approximately half of the world’s diamond production. In 2018, Alrosa comprised 26 percent of the world’s production and De Beers totaled 25 percent.
Source
De Beers gets mentioned a lot in the comment section of Lex's podcast, barski also mentioned De Beers when we had a chat about diamonds. Perhaps there is a case to restriction of diamonds supply to enjoy monopoly considering majority of the systems in place are monopolized. You establish a system/product, create demand for it, have it monopolized and you've got the power.
Most of us only buy our first diamond when we get married with the intent of giving our wives something valuable. Another question is how good are diamonds at retaining value?
Saifedean Ammous referred to diamonds as scam, the above comments are not far off Saifedean's view on diamonds considering the amount they go for at initial purchase and selling price years later. A look at the cost of diamonds on Browns SA, 0.3 carat with a color goes for $1,352 at minimum while top of the Protea Solitaire diamond ring range 3.0 carat goes for $85,372 one color as well.
As mentioned earlier am neither for diamonds nor against it but, I think I have incidentally touched on a topic that requires some deliberation if am to buy diamond ring for my bride someday. $85K on a diamond ring is a no for me, you really want to give your wife something that will appreciate in value so even in times of financial difficulty and you are no more, it can be sold to ease financial burden.
Diamonds restricted in supply to drive up its price? I think so.
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