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July 28, 2023
Diamonds have been placed at the center of American ideals of love, status, and image. The DeBeers Company, known for their control of the diamond supply, cultivated this perception to aid their business. A powerful marketing campaign put diamonds in 80% of engagement rings by the end of the 20th century, according to BBC. That may sound unsurprising; after all, haven’t diamonds always been an integral element of engagement rings? No, BBC reports that the 80% figure was closer to 10% right before the outset of World War II. The DeBeers campaign that propelled their prominence also propelled spending on diamond engagement rings.
Marketing often includes outrageous spending “rules,” encouraging two months’ salary to be burned on a ring. There is no greater misallocation of the American household’s budget. Engagement rings provide zero utility but apply severe financial pressure on young Americans. There is certainly nothing wrong with those who can afford to treat themselves doing so; the problem is many cannot afford it, but go ahead and spend large sums on these rings anyway. Reader’s Digest reports that the average amount spent is $5,000. That is unreasonable. The average American should not be spending such a sum on an item of decor.
Many may justify such large numbers with claims that diamonds are scarce and thus valuable. This is a misconception. TrueFacet points out, “Diamonds are not particularly rare. In fact, compared to other gemstones, they’re the most common precious stone found.” Despite this fact, DeBeers has done quite the number on American consumers, explaining their willingness to spend so much on these rings.
Since diamonds are not rare, logically, they make for terrible investments. Mike Fried of The Diamond Pro estimates when trying to resell diamond rings, “…you can expect to receive between 20% and 60% of what the ring originally cost….” These losses are indicative of the massive markups that dealers charge, amounting to a ridiculous premium that consumers will never be able to recoup.
The DeBeers Company has been incredibly successful in bringing diamonds to the forefront of the engagement process; however, as a result, consumers have paid the price, one that sometimes amounts to two months’ salary! There is really no rational justification for the prices these diamond rings sell for, and the resale market is reflective of that. Ultimately, it is up to individual consumers to decide whether or not a diamond is necessary for them, but their purchasing certainly makes for a fast means of burning money.
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