Course Syllabus: Registered Gemologist Diploma Course
(Free preview available at the top of the course list lower on this page.)
Course is Currently Available to United States, Canada, and Mexico Students Only. (English Required)
This course consists of 50 sections that cover all aspects of becoming a Registered Gemologist and member of the Global Claims Associates, an international insurance services company providing high value jewelry related service to the insurance industry world-wide. The lesson outline can be found below on this page with a lesson-by-lesson listing of the program. The Registered Gemologist program is presented through written courses, photographs, videos, graphics, and practice quizzes to assist the student with learning the material in the most efficient manner possible. There are hand’s on practice gemstones available to the highest extent required for a student to feel confident about their knowledge before challenging the Final Exam. The ISG offers certified courses, trained instructors with the industry’s highest credentials, and a program that has been listed as one of the top gemological education organizations by many industry leaders.
No dues and no memberships required.
Gem Equipment Available
For those who do not already own gem testing equipment we offer professional quality tools at special low prices. You can choose from our ISG Gem Equipment Package, or spread out the cost by purchasing item by item. Gemology testing tools are required to complete this program. However, you are welcome to already own your equipment or purchase where ever you wish. For those interested, the ISG offers professional quality gem testing tools that are all you need to complete this course and get started professionally. Click the equipment image at left to visit our Gemology Tools Page.
Polariscope with conoscope
Refractometer with polarizing filter
Diffraction Grating Spectroscope
10x Triplet Jeweler’s Loupe
15 piece StudyGem Set of gemstones for study and to keep
Special: We now provide a digital mm gauge for more accurate measurements.
Classroom-at-Home Practice Identification Sets
The ISG Classroom-at-Home Program includes loose colored gemstones, diamonds, and created-treated gemstones for your hands-on study. Our available Classroom-at-Home Study Inventory includes over:
- 500 Colored Gemstones,
- 150 Certified Loose Diamonds, and
- 400 Created and Treated Gemstones
These are sent to you for hands-on practice with your gemology tools. Effective February 22, 2023, these are sent to you in separate request packages for you to study and get hands-on experience, then return to the ISG office. These gemstones and diamonds will come to you pre-identified and pre-graded to help you practice your gemology skills. You will use use the request form in the course notes to request your gemstone and diamond packages. We ship one set at a time.
Once you complete your requested hands-on practice sets, you will go to the next section to challenge the Final 20 Gemstone Gemology Exam.
20 Gemstone Final Exam
- The Final Exam for the Registered Gemologist Diploma is the 20 Gemstone Final where a 100% grade is required on the identification of 20 gemstones.
- Once you complete the order form, the first attempt at the Final Exam is at no charge.
- The Final Exam includes 20 colored gemstones sent to a proctor designated by you in advance.
- Once you complete the identification you will submit your completed identification form and return it and the gemstones to the ISG for grading.
Once you pass the Final Exam…
Once you have successfully completed your 20 Gemstone Final Exam, you will be sent your ISG Registered Gemologist Diploma . You will also be listed in the Registry of Gemologists and Appraisers in the Global Claims Associates website to be presented to the international insurance industry.
If you do not pass the Final Exam…
In the event that you do not achieve the 100% grade on the identification of the gemstones, you may retake the 20 Gemstone Final at a fee of US$75.00 for each future retake. You may retake the Final Exam as many times as required with each retake incurring the US$75.00 fee.
Your instructor is Robert James FGA, GG. Mr. James is a Fellow of the Gemmological Association of Great Britain, Graduate Gemologist of the Gemological Institute of America, and former Certified Gemologist of the American Gem Society. He is a state licensed Property and Casualty Insurance Adjuster with 50 years of experience in jewelry related litigation and expert witness work in the United States and Europe. He has served as an expert witness and litigation consultant in U.S. State and Federal Courts, as well as the United Kingdom. He holds a Business Law Certification from Cornell Law School and is a former Senior Gemologist and Special Investigations Unit (SIU) investigator with USAA insurance.
- Instructor Email Contact: firstname.lastname@example.org
- Instructor Phone Contact: (001) 210-464-1473
Student Registration Agreement:
Registration Period. The Registered Gemologist program registration is for a period of 9 months from the date of complete registration. Failure to complete the course in the allotted time voids the registration. Time extensions may be available for a fee based on availability as determined by the ISG office.
International Students: Since jewelry insurance world-wide is based on British Maritime Insurance Laws, our program is recognized and accepted world wide. We have years of experience in the professional insurance field that extends to all continents.
Right of Cancellation. The Student has the right to cancel this agreement within 3 days (72 hours) of start date on course registration, based on the laws of the State of Texas, USA and the elements of this agreement. The Gem Equipment packages (if purchased) will be shipped after this three (3) day grace period. By submitting this Student Registration Agreement, the Student agrees to this and the limitations set forth in this agreement. The Student further agrees to not make any attempt to create a credit card charge back after this 3 day time limit. The student will have access to the written course notes sections in order that a full evaluation of the course material can be made during the initial 3 day time period. Full refunds will be given to anyone who requests same within this 3 day review period based on the above. Anyone experiencing extenuating circumstances may call the ISG office and we will work with you whenever possible.
Maintain Services. The ISG agrees to provide the courses in a 24 hour internet based format, and to provide all due diligence in maintaining the website services, course quality, timely customer service, and support for The Student. ISG office hours will be 0900 until 1400 hrs CST Monday through Friday. The ISG makes every effort to insure that our program is as mobile friendly and responsive as possible, but limitations beyond our control still exist due to the many different formats on the internet. If your anticipated study format will not operate with Flash, you may have restricted access to the Quick Quizzes (practice quizzes). If this becomes a problem we can make the Quick Quizzes available to you in printed format for a fee.
Program Items . The ISG reserves the right to alter the items listed in any program offerings at any time based on availability of gemstones and gemological equipment. In the event that an item is added or removed from a special offer, that change will be published in advance of the change whenever possible. However, the ISG reserves the right to make changes and substitutions of equal or greater value if the availability of certain items becomes limited.
Hold Harmless. The Student agrees to hold harmless the ISG and all employees for loss of service due to internet service provider problems, Acts of God, Acts of War, criminal acts against the website by hackers, and any other problems resulting in loss of access to the ISG internet courses that are beyond the direct control of the ISG.
Respect of Copyrights. The Student agrees that the ISG course materials are copyrighted by the ISG, and further agrees to not copy, publish, or otherwise disseminate the ISG course materials for any reason other than their own personal study and reference.
Professional Conduct Code. The Student agrees to conduct themselves in a professional and courteous manner at all times when dealing with other students and ISG staff members. This includes, but is not limited to, emails, forums board participation, and phone calls. Violations of the professional conduct agreement may lead to temporary or permanent suspension at the discretion of the ISG.
Legal Jurisdiction. The International School of Gemology is registered in Bexar County, Texas, USA. It is agreed that all parties will abide by the laws of the State of Texas in all matters relating to this agreement. In the case of any dispute, the legal jurisdiction of resolution shall be Bexar County, Texas.
By submitting your ISG Student Registration Tuition Payment with your information, you acknowledge and agree to the above Student Agreement form and agree to abide by the conditions of registration as set forth.
How to Begin:
- When you pay for this course using a credit card use our new STRIPE Credit Card Payment Gateway.
- SSL Secure Payments can be made through STRIPE.
- Click on the BUY NOW button on the upper right side of this page.
- The payment gateway will take you to the Stripe payment system icon.
- Once you receive payment confirmation you will be brought back to your course to begin or to the Gemology.pro website. Either way, go to the course home page to begin. You can also access the course page through your Profile Page available at your user name in the top right corner of the home page.
- Once you have returned to the course home page click the Start the Course button to begin.
- Once complete you will be sent your digital Registered Gemologist Diploma via email on PDF. US students can request a printed copy.
History of Diamonds
Diamonds. The very name conjures up visions of wealth, intrigue, and fortunes. Are they real or imagined? Is diamond really the “King of Gems” as claimed by many advertisements? And is it really true that Diamonds are Forever ™, as claimed in the now famous ad slogan created by N. W. Ayers in the 1940s that has been voted one of the best ad slogans of the Twentieth Century?
The truth is diamonds have a rather shady past, and uncertain future. Why? Because the entire diamond market has been based on a monopoly market system that has lasted for over 100 years. In fact, it is one of the only monopolistic markets that has survived and flourished within the structure of the modern capitalistic world economy. Before we talk about the current and future status of the diamond markets, let’s go back in time a bit and understand just how these crystals of pure carbon became such a mainstay in the world economy.
India was the place of original discovery of diamonds dating back almost 2400 years ago. In fact, until the 1730s India was the world’s only known source of diamonds. The diamonds were first found in fields after thunderstorms had moved through the area of central India. The locals believed that the diamonds were formed by lightning strikes hitting the ground and were therefore considered to be a gift from the gods. It was unknown to these early diamond gatherers that they actually lived over a colluvial deposit of diamonds, which is a deposit close to a diamond pipe where the diamonds were being re-deposited by wind and rain. And when the thunderstorms moved across the area, the rain would wash away a layer of the topsoil thereby exposing the diamonds contained in the ground deposits. As these thunderstorms produced a lot of lightning strikes, it was therefore assumed that these lightning strikes actually created the diamonds.
The region of these earliest known diamond finds is known as Golconda and is located between two rivers in central India. Most of the diamonds were found in alluvial deposits of those rivers. Alluvial deposits are those found in rivers and stream beds where water is still flowing. This was the main source of the Indian diamonds before the prime volcanic source was located.
It is important to know that most of the world’s most important diamonds came from the Golconda region of India. Names such as the Koh-i-Noor, the Orlov, the Hope and the Sancy diamonds all came from this region. And to this day, these diamonds are considered the finest diamonds in the world. Virtually all of these diamonds came from the alluvial deposits in the Golconda region, and it was only with the find of the prime source at the Majhgawab lamproite diamond bearing volcanic pipe, that the true source of the Indian diamonds was finally known. And to this day, the Indian diamond deposits produce almost 20,000 carats annually…after almost 2400 years of production! And the Golconda name is often used to refer to the finest quality diamonds since the deposits there produced some of the finest in the world. And on occasion, you may get a customer who requests a “Golconda diamond.” You should be aware of this name and the history behind it.
As the European demand for diamonds grew at a fast pace, the production of the Indian diamond deposits began to dwindle by comparison. A new source was needed and was found by accident. In 1725 a group of gold miners working alluvial deposits in the mountains of Brazil stumbled upon an area that produced diamonds mixed in with their gold ore. A new diamond source had been found!
There were two aspects of the Brazilian diamond find that proved to be important. First, once formal diamond prospecting was begun, it was found that many areas of Brazil produced diamonds. In fact, no less than 12 regions encompassing the entire country produced diamonds in various qualities and quantities. These ranged all the way from the southern region outside of Sau Paulo, to an area that encompassed the entire Amazon River delta. Second was the fact that Brazil was able to produce a huge amount of diamonds from her many sources, so many that there were more diamonds being produced than the European markets could absorb. The result was that diamond market prices fell by almost 70% shortly after the Brazilian diamond discovery.
With the availability of a huge source of diamonds at cheap prices, the demand for diamonds in Europe increased. And eventually the easily mined alluvial diamond deposits in Brazil started to diminish as the deposits were worked out. This caused an eventual shortage of rough diamonds in a market of huge demand, which in turn caused prices to increase dramatically. As is the case in any economy of supply and demand, the sudden decrease in diamond availability in the late 1740s, and the ensuing dramatic increase in price, caused the diamond markets to virtually collapse, as only the very rich could afford to own diamonds once again.
The Age of Mercantilism
An interesting fact about 18th century European economies would make an impact on the diamond markets in the mid-1740s that lasts to this day. During this time the main economic theory was not one of capitalism, but instead one of mercantilism. Mercantilism was Europe’s first effort to establish international trading partners and build a national wealth. The key was that certain trades, such as ship building and banking, were far more profitable than being a cobbler (shoemaker) or cartwright (one who makes carts). The result was that those who established themselves in ship building would want their children to also have the ship building business. Not just to carry on the family tradition, but to carry on the family wealth.
The result of mercantilism was that many trades of the day became family heirlooms. The knowledge and trade would simply be passed down from father to son, and it was understood that the son of a cobbler would become a cobbler. The son of a banker would become a banker. The problem was that if you were born into a cobbler’s family…you were stuck. That was what you were expected to do. That was the trade you were taught because you spent your growing up years learning the trade from your father, who learned it from his father, and so on. And you were expected to carry on the tradition and teach it to your son.
Here is where mercantilism had a long ranging impact on the diamond markets.
One of the facts about mercantilism was that once your family was involved in a business, you were pretty much there the rest of your life. And there were trades that no one wanted to do…either because they were demeaning, or because they did not make any money. In 1740 Europe, diamonds did not make any money. The supplies were gone, the cutting ability was not well advanced due to lack of technology, and the future of the diamond markets was quite glum as both the Indian and Brazilian deposits were virtually wiped out with no more known sources on which to draw. It was also during this time that most European countries were monarchies. Meaning that the king or queen wielded a lot of power. So much that they could decide who was awarded what level on the mercantilism ladder of respectability and profitability. And since the Jewish communities of most European countries were considered of low status, it was determined to limit the Jewish ability to enter into a profitable trade. So….the Jews were severely limited as to what trades they could enter in an effort to insure that they had the lowest economic potential of the day. And in 1740 Europe, one of the most unprofitable trades you can work in was….diamond cutter or diamond merchant. So, one of the few mercantile trades that Jewish workers were allowed to work in was…diamonds.
What the mercantilism system did not anticipate, however, was that in 1850 a major diamond discovery would be made in the Bahia region of Brazil. And once again the diamond markets flourished as both supply and demand were up significantly. Of course, by this time the only people who were involved in the diamond markets were members of the Jewish communities…everyone else abandoned the trade as it had become something of a low status trade. And it was with few exceptions that only the Jewish diamond cutters knew how to properly cut diamonds, so they flourished along with the new diamond demand throughout Europe. Something quite the opposite of what the governing powers expected at the time. And in spite of a depressed market in the early 1860s, the theory of mercantilism ensured the Jewish community a thriving trade, now centered in the Belgian town of Antwerp, as the art of diamond cutting was passed down father to son within their families. And due to it taking many years to learn how to properly cut a diamond, this system served quite well as master diamond cutters were able to start their training at a very young age as they helped with the family business.
The real impact was just beginning…
On a December day in 1866, a young man named Erasmus Jacobs found a transparent and very shiny stone on his father’s farm that was located alongside the Orange River. This turned out to be the first of what would become an avalanche of diamonds from the South African mines and would start one of the world’s greatest monopolies that would last for over 100 years. There were two important events that combined to make this one of the most momentous events in world economic history.
First, it proved to be the greatest find of diamond deposits in the history of the world. According to many sources, the South African mines produced more diamonds in the next 15 years than the Indian deposits had produced in 2,000 years. The African diamond deposits proved to be extremely widespread, and extremely rich.
The second event was the ending of the Civil War in the United States that ushered in a period of great prosperity and a resultant high demand for diamond jewelry. Plus…with the industrial age just now dawning, the demand for diamonds for industrial purposes was also growing. These were joined with an already healthy diamond market established in Europe. Together they all created a huge demand for diamonds. And many men got on ships of all shapes and sizes heading to the South African diamond fields to make their fortunes.
Until now, the majority of diamonds found were in alluvial deposits. However, with the South African diamond discovery, the alluvial deposits could be traced upriver until the prime source was found. These were called kimberlite pipes and were the remnants of ancient volcanoes that had discharged the diamonds from deep inside the earth millions of year earlier. More on that in a later lesson. For now, it will be important for you to know that the South African diamond deposits were traced back to their original source, and now diamonds could be dug from the earth…rather than just washed from a stream bed.
The problem became one of too many people trying to dig too many diamonds out of relatively small places in the ground.
The main mining effort was at the Kimberley mine which at the time was the largest diamond mine in the world. Each miner was able to stake a claim measuring 31 feet or 9.44 meters square. And since everyone had different methods of mining encompassing variable numbers of helpers and variable techniques, each claim was worked at different speeds. And different mining speeds meant that the claims dug into the earth at different rates. This allowed some claims to quickly be several meters deeper than the one next to it, allowing for a very dangerous situation as the higher would collapse onto the lower. Clearly something needed to be done to make the mining more uniform, more profitable and less dangerous. Enter Cecil Rhodes and Barney Barnato.
These two gentlemen arrived in South Africa in the early 1870s and separately began a process of accumulating claims from other miners in an effort to gain overall control of the Kimberley mine. The concept being that a single unified effort at mining would be more profitable and bring the control of the distribution of diamonds under a single office. The market could then be better controlled as the supply of diamonds would be controlled by one man rather than a huge number of individual miners.
The ensuing battle between these two men has been the subject of many books and is a story worthy of your continued research. The fight for control of the Kimberley mine was nasty in size and scope, encompassing many legal battles and bar room brawls. The necessity of a unified mining effort was further confirmed when the mine reached a particular depth and ground water began flooding vast areas of the mine. Many miners were quick to sell their claims as they believed there was no longer any reason to own that claim. The truth was that Cecil Rhodes had a plan to pump the water from the deepening claims, thereby making them continue to produce profits far in excess of the bargain prices he had paid the others who had given up on them.
Eventually, Cecil Rhodes won the battle of control of the Kimberley mine and bought out his rival, Barney Barnato, for a price of what would be over US$25,000,000.00 in today’s dollars to consolidate the Kimberley mine into single ownership. This was the birth of the De Beers Consolidated Mines Company which exists to this day.
Central Selling Organization
Of course, for the De Beers Consolidated Mines to have real control of their distribution, it was required that they not have to deal with all of the small-time diamond merchants in order to sell their production. In true form to the legacy of Cecil Rhodes, a unified distribution network was established between De Beers Consolidated Mines in South Africa, and what was known as the Central Selling Organization in London. The CSO as it was called was established to serve as the distribution channel for the diamonds and to help control the market and prices of diamonds. This organization served to control virtually the entire world production of diamonds…since virtually all came from the South African mines owned by De Beers…by withholding rough when prices were low and selling more rough when prices were higher. This established De Beers as holding a monopoly on the world diamond markets, a matter of great concern to the US government since monopolies are against the law in the USA.
The result was that De Beers could not directly do business in the United States, in spite of the fact that the US had become its biggest customer. The US jewelers were by far the driving force behind the world demand for diamonds, and yet the De Beers organization could not participate in the market. For many years the De Beers organization paid the US advertising company, N. W. Ayers, to handle their public relations and promotion of diamonds in the United States. In fact, it was N.W. Ayers who come up with the famous De Beer’s slogan: A Diamond is Forever. ™ With the mines under their control, the distribution under their control, the prices under their control, and the marketing under their control, De Beers finally had a complete and utter monopoly on the world diamond markets. And here is where the story turned a bit ugly.
World War II
With the outbreak of World War II came a worldwide demand for many commodities to power the war machines of the Allied and Axis powers. One of these commodities was industrial grade diamonds needed for grinders and cutting blades to speed up production of war machines. And, you guessed it, De Beers controlled the whole world’s production of industrial grade diamonds. And since De Beers was only interested in who was willing to pay the most for their products, and not so much on what their customer’s politics were, the scramble for industrial grade diamonds put great amounts of profits into the pockets of the De Beers owners regardless of who made the purchase.
Although this did not sit well with the US government, they were relying on the US industrial complex to provide some alternatives to De Beer’s strangle hold on this important war time commodity. Enter General Electric.
The General Electric company set about to create the world’s first synthetic diamonds. Many other gemstones had been synthesized for many decades. It was only natural to believe that diamonds could also be synthesized, thereby taking the De Beers monopoly out of the production chain and saving the US government millions of dollars. And the GE Company was successful…to a point. Although they were able to synthesize diamonds, they reported that they were not able to do so in the volume and quality required for military and industrial purposes. This turned out not to be totally true….
What was later found out was that De Beers had actually conspired with GE to keep the new synthetic diamonds off the market so that De Beers would not lose their monopoly. And long after the situation occurred the nature of De Beers’ involvement was found out, and De Beers was charged with crimes against the United States by way of their monopoly over the diamond markets. For some reason, GE was never really brought to task over this matter, or so it has been reported. The actual events after the revelation of this situation are still up to interpretation as there are many stories surrounding the issue. One thing was certain; no officer of the De Beers company could enter into the United States without being immediately arrested. And for many decades the Central Selling Organization had to business in the US from a distance and through third parties because they could not set foot inside any US property for fear of arrest.
In 2004 De Beers finally pleaded guilty to the price fixing of industry diamonds that dated back to the World War II events and continues until current times. De
Beers paid a US$10 million dollar fine and cleared the way to enter into the United States market as a formal business presence.
It was during this time that De Beers ceased using the name and structure of the Central Selling Organization and formed the Diamond Trading Company. At this point the DTC was in charge of the sale and distribution of rough diamonds from many world sources. And De Beers?
After many decades of making billions of dollars from operating a monopoly of the diamond markets to wholesalers and retail jewelers, De Beers is now going into the retail business in competition with their own clients through their De Beers retail jewelry stores that recently opened in New York and other locations.
One of the really ugly stories that surfaced in the last few years is in regard to what is known as conflict diamonds. These are diamonds that have come from known areas where civil wars are being waged to control the diamond resources of diamond producing countries. The really ugly part is that there is such a nasty fight being waged for that control where local citizens are brutalized by the warring factions.
The brutality of these conflicts, particularly in Angola and Sierra Leone, has left many children without arms and legs…as one of the methods used to control the local population by the various militias is to sever the limbs of many of the locals to instill fear in everyone. The purpose obviously being to control them by fear so the local population will not assist legitimate government actions to control the problem.
There are many who believe that De Beers is complicit in this problem. Mainly because for many years no diamond of any size could be bought or sold without De Beers being in control of the pipeline somewhere along the way. And given De Beers total control of the diamond markets for many years, there was no way the conflict diamonds would find a market without De Beers being willing to buy them.
How much of this is true? There is a lot of speculation that common sense requires to be taken with a degree of credibility. Actual proof is missing since most of the conflict diamond dealings are strictly clandestine purchases for which there are no records, and very few witnesses willing (and sometimes able) to talk. So, the speculation continues.
One important note: at their greatest level, conflict diamonds are estimated to only have included less than 5% of the diamonds on the market. Meaning that the chance of having a conflict diamond would be about 5 in 100. And notwithstanding the concern for those damaged by the problem, it would also be wrong to throw out the whole industry because of the bad deeds of a few disruptive factions. The industry and many world governments met and created what is now known as the Kimberley Protocol to help control this situation.
The Kimberley Protocol was an agreement by many nations that action was needed to stop the use of diamonds to fund wars and terrorism throughout the world. This protocol gave rise to the Kimberley Process, which are the regulations that have been adopted regarding the sale and distribution of rough diamonds around the world.
The Kimberley Process was implemented in January of 2003, and states that all rough diamonds must come with a certificate of verification, issued by a proper government authority to insure that they are from a non-conflict source. The diamonds must be packed in a specially marked container. And all legitimately registered diamond dealers may only do business with other registered diamond dealers, and all must follow the above rules for all diamond shipments sent and received. The idea is that if the diamond industry only buys diamonds from known sources that are selling government approved diamond rough that has been legitimately verified, that the conflict diamond market will fade away.
Well….this looks good on paper. And it plays well in the media. However, many in the diamond industry know that this is going to have little impact on the conflict diamond issue. Currently there is no method available to identify a diamond as being from one source or another…as we can do with rubies, sapphire, etc. Small impurities in colored gemstones allow a fairly easy identification as to their source if one has the proper equipment. Not so with diamonds. As of this writing there is no known method of identifying diamonds based on geographical origin. So, it would be very easy for just one unscrupulous diamond dealer to do business with the bad guys and create an inroad into the legitimate diamond markets for conflict sellers. While that scenario is probably closer to the truth than anyone wants to admit, it is still an extremely small part of the overall diamond market. So much so that the efforts to prevent the actions have almost created a situation where the fix is worse than the problem.
The problem here is that too many activists want to ruin the whole diamond market for the sake of a few problem diamond sources.
The reason that this is true is due to many activists wanting to blame the entire diamond industry over the actions of a few militias in diamond producing countries that are beyond the control of local government military efforts. And rather than going in and solving the problem of the militias on a military level, all too many people want to blame the diamond industry for the funds received and try to control the problem through the diamond markets rather than through proper governmental and military action. The end result is that diamonds and the diamond industry are being blamed for actions beyond our control, which should be dealt with by local governments rather than the world diamond industry.
We can only hope that the Kimberley Process will serve its intended purpose at some point in the future. The last chapter of that story is yet to be written, and probably won’t be for some time to come.
The Current Diamond Market
The future of the diamond industry is in limbo. For while De Beers has controlled distribution and prices for over a century, the fact remains that diamonds are quite plentiful, and De Beers is quickly losing that strangle hold on the markets and prices. Yes, diamond prices continue to hold at fairly average levels, but that is due to a worldwide effort to continue the monopolistic pricing structure of the diamond market. It simply serves every diamond producer’s best interests to abide by the prices set by De Beers. But is that going to last?
There are two issues that affect the answer to that question that go to the heart of any economic force.
#1. Supply. The fact remains that diamonds are not rare. In fact, most colored gemstones are far rarer than diamonds. And if diamond prices are ever subjected to supply side economics as are rubies, sapphires, amethysts, etc… the prices for diamonds will be on par with other gemstones whose supply is comparable with diamonds. That means that if diamonds were sold based on actual supplies and not artificially bolstered prices, diamonds would be priced on about the same level as tourmaline, peridot, or chrysoberyl. Consider how much rarer tanzanites are than diamonds. Tanzanites only come from one location in the whole world. And that source is far smaller than some of the diamond producing mines in many places of the world. That means that tanzanites are rarer and should be more expensive than diamonds, but they are not. And why? Because diamonds are not sold based on availability, they are sold based on a monopoly (read: price fixing) created by De Beers and followed by the rest of the world’s diamond producers.
Now…it’s important to point out that the above is not an editorial. It is simply a statement of fact based on the market conditions surrounding diamonds. There is one more factor that will affect the future of the diamond industry.
#2. Demand. As with any economic equation supply is counter-balanced by demand. As supply goes up, prices go down, and demand goes up. If supply goes down, prices go up, demand goes down. A simple fact of an Economics 101 class, right? Wrong. At least with the diamond markets. Here is the equation of the diamond markets:
Supply is up, prices are up, and demand is up.
Wait a minute…that is not how supply / demand economics works! If there is an ample supply of goods, the prices should go down. But…not if demand is artificially enhanced, and supplies are artificially depressed.
This is what De Beers has done over the past few decades…artificially create demand while controlling prices and availability. By spending huge amounts of promotional money creating a demand for diamonds, and at the same time artificially controlling the supply of diamonds, De Beers has been able to keep diamond prices up. Far higher than diamond prices would be if they were allowed to float according to the supply and demand theory of a modern economy.
The key element here is this: can De Beers continue to hold the diamond markets in an artificially controlled environment? Or as is the case in most commodities, will the law of supply and demand eventually win out with De Beers losing control of the world diamond supplies and prices floating according to supply and demand? In the diamond markets section, we will discuss some even more dramatic possibilities that are coming in the diamond markets.
With more and more countries finding diamond mines within their borders, and more and more supply being potentially available at a time that demand is being artificially created, it may be that diamond prices start to fall within the next few years. Perhaps sooner, no one can really know. The important part for you as a gemologist, gem dealer, or home-based hobbyist to know is that the price of diamonds has been artificially controlled for over 100 years. The entity that has controlled those prices has been slowly losing that control for the past couple of decades. As a result, you should watch the diamond markets closely for subtle changes that may take place over the coming years, particularly if you are a buyer, seller, or appraiser.
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