Diamonds are among the world’s rarest and most precious gems. They are sought all over as pieces of jewelry-from the giant flawless diamonds of the wealthy stars to the slightly yellowed, small and flawed engagement rings of ordinary Americans. Diamonds were first discovered and mined in India in about the year 800 B.C. Very few were mined, and only royalty and those of high wealth could afford to own diamonds. Diamonds have been a popular stone for engagement rings since the founding and exploration of the South African diamond minds by the British in the late 19th century. Before then, only royals and the excessively wealthy could afford jewelry made of diamonds, but these mines made diamonds reasonably priced enough for the public to buy.
Diamonds are formed under extreme pressure under the earth’s surface and with very high heat: 2,200 degrees Fahrenheit. When a diamond is formed, it gradually makes its way to the surface of the earth, often in and near volcanoes. These diamonds are then mined by companies. The raw diamonds look nothing like the diamonds one sees in jewelry stores. They are large, covered in dirt and have very little shine if any. The big and dull diamonds are usually sold by the mining company at this stage to someone else who will cut and polish the diamonds, often breaking very large diamonds into multiples to increase sales value. These diamonds are the ones which are sold to jewelry companies to be added to rings, necklaces and other kinds of jewelry.
The South African mining companies were placed by the British, whose explorations of imperialism led them to South Africa. One of the most notable diamonds to come from this region was the Great Star of Africa which is now part of the Scepter with the Cross in the Crown Jewels. The Second Star of Africa, cut from the same rough diamond as the first Great Star, is part of the Crown Jewels as well, in the Imperial State Crown. The diamond mines of this region have been the most productive and lucrative in the world for more than a century.
Things are changing, however, in the South African diamond mines. The problem lies in two areas. One is that not enough rough diamonds are being mined. In 2007, production saw a drop from 16m carats to roughly 15m carats. There is a shortage of large, usable rough diamonds in the mines. Rough diamonds need to be of a substantial weight to begin with, because the cutting process will make them smaller. Not only is their trouble concerning production, but there is also corruption to deal with. Traders are not buying the amounts which they used to, and job security has become a major issue as well. The local beneficiation industry has consequently shrunken to only half of its former number of cutters and polishers.
So, what does all of this mean for the diamond industry? Diamonds have always been one of the most expensive gemstones on the market. Even a slight decrease in supply will have a staggering effect on the global market of diamonds. The best possible scenario is that people will see a minimal increase in price. In the worst case scenario, the South African diamond industry could enter crisis mode, cutting global diamond production by an enormous percentage, sending diamond prices skyrocketing. In either case, the price of diamonds is going to be increasing. Diamond prices are always rising slowly and gradually, anyway, but there will be at least a blip of a rise even from that normal trend due to the South African diamond mines situation. The average American may not even notice this shift, as many only look into diamonds upon engagements and special occasions. Regular diamond shoppers, however, will definitely notice this shift in price.
At a point such as this, the best idea is to buy diamonds. Who knows how much higher the price of these gems will go? Diamonds at this stage could make a profitable investment. It is not advisable for someone without the adequate financial means to go out and sell all of their belongings or plunge into debt to buy up some diamonds. The increase may only be slight. People should only buy diamonds as an investment if they are financially prepared for no immediate rise in value. Even if prices did not rise at all, at least one would have a jewelry box full of sparkling gems. Diamonds are a greatly desired and valued commodity. Depending upon how this South African situation resolves itself, the way people think about diamonds could change entirely. Hopefully this will not be the case, and managers assure the press that the local diamond industry is by no means in crisis.
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