The value of diamonds – Lesson 2
The price of diamonds is calculated in thousands of US dollars per carat (1 carat is equals to 0.2 grams). There is no other material in the world with such a high value in relation to its volume.
Diamonds are a natural resource. The rarity of diamonds is what makes them unique. It is also why they are so valuable.
The average yield of a diamond mine is 1 gram of rough diamond for every 10 tons of rock extracted.
Of this 1 gram, only 1 carat (0.2 grams) will be used in jewellery. The rest is redirected to various industrial needs.
Once determined that the gemmological quality needed of this 1 carat is available in a single crystal, we would end up with a polished diamond, cut to just 1/2 carat, which is 0.1 grams (during mining activity, only 5% of the gems extracted are weighed at greater than 1 carat).
So, to get 0.1 grams of polished diamonds, cut, processed and ready to be made into a jewel, we need to extract 10 tons of rocks!
A recent study commissioned by the Antwerp World Diamond Center shows that the average remaining existing mines are about 25 years old and none have been discovered for at least 15 years. So the offer is steady while demand grows.
The most famous investor in the world, Warren Buffet, has said that he never regretted having bought diamonds. If he says so…