Diamonds Are Not Your Friend . . or Hers

The diamond industry is trembling anew under the possible impact of more publicity about "blood diamonds" or "conflict diamonds". These are the gems that are essentially mined by slaves in war torn areas of Africa with the proceeds going to support warlords and gangsters.

Leonardo DeCaprio is starring in a new film on the subject and the diamond barons are afraid the blood buzz will hurt the rock biz.

It seems to us that DeCaprio is the least of their problems. The 8000 pound gorilla in this story is the fact that diamonds aren't in the least rare and are worth next to nothing after you buy them. That's right. Not rare. Worth nothing.

The "rarity" of diamonds is based entirely on the machinations of the DeBeers Company that created and maintains a monopoly on cut diamonds. There are, in fact, mountains of uncut diamonds in Africa, Russia and elsewhere. Check out Edward Jay Epstein's 1982 book, The Rise and Fall of Diamonds. Don't sweat reading the whole thing. Page One of Chapter One tells the story. That takes care of rarity.

For the skinny on "value", check out this revealing exchange between a would-be diamond buyer and an expert. The chump asks which grade of diamond will have the most resale value and the expert tells him not to be an idiot. The high-grade of diamond he is considering is sold only by the "best" vendors who would not consider buying from him and the pawnshops will give him 20-30% at best. And this is the "high grade" stuff, not the junk you get at WalMart. Or try Epstein's chapter "Did You Ever Try to Sell a Diamond?"

We like rubies and emeralds (email us for a mailing address is you have spares). If you are planning on buying diamonds, read the Epstein book, think long and hard and

Stay Naked
jd