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One thing I don't quite understand - why didn't a second-hand diamond market form, if one could get diamonds so much cheaper that way?

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The article touches on that:

* Marketing to discourage such sales ("a diamond is forever" "a diamond is a family heirloom")

* Few people would be willing to sell something for 1/3 - 1/5 of what they paid for it if said item in no way degraded. It just sucks psychologically

But if the second-hand diamond market existed, then they would only have bought it for 1/3 to 1/5 of the current price, too. (You could still face that problem getting the market going in the first place...)

DeBeers used to mandate Jewelers do not buy used diamonds under threat of inability to buy new ones from them

Because the 2nd hand valuation is so much lower than the purchase price, there aren't any sellers.

There's TONS of demand to get a diamond for 80% off retail, but many diamond owners would rather not sell than accept the massive write-down on their "asset".

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