When Diamonds Are Dirt Cheap, Will They Still Dazzle? | Hacker News Reader

When Diamonds Are Dirt Cheap, Will They Still Dazzle?

nytimes.com

57 pointswglb70 comments

The engagement ring is useful when there is an asymmetric relationship in the earning potential of the proposer and proposee, and simultaneously a potential irrecoverable cost on the part of the proposee from agreeing to marriage. (Historically, high wager earner male, and child bearing years female - this historical antecedent has less relevance in contemporary times) In order to fulfill their economic role in proposing marriage, the engagement ring (or whatever token is used) needs to have two properties:

o It needs to be scale ably expensive, that is, there needs to be a way for someone who is making any range of income to find something that is "expensive" for them.

o It needs to have little to no resale value.

This allows the potential proposee to ensure that they aren't just one of many target (it would be expensive for the proposer to offer this token to many people) demonstrating long term commitment on the part of the proposer, and, at the same time, protects the proposer from "gold diggers" - the token, (e.g. Diamond Ring) - has little to no resale value.

Should Diamonds no longer fulfill that role, then other tokens may arise - I've often wondered whether expensive / lavish wedding parties could server this purpose.

I don't think women care these days about getting a diamond. They just want something pretty to show their friends.

50 years ago, it really mattered - a woman who moved in with a man before they were married was taking a big gamble - she'd lose her reputation if the marriage fell through.

OK, there's still some asymmetry in relationships, but there's no real asymmetry in courtship - women aren't really worse off than men for having had previous relationships.

Kids can be asymmetrical (single mothers and fathers have very different issues), but if you're talking about kids than a few months salary shouldn't be a major factor.

> I don't think women care these days about getting a diamond.

Unfortunately, most of the women I know do care about getting a real diamond. Doesn't matter if the grown diamonds will be better quality dollar for dollar - it's fake and it won't do.

I think it says something about someone's character when they prefer jewelry [possibly] mined by a 12-year old slave at gunpoint, at great environmental cost, over jewelry produced in a lab.

Unless you get certified ethically mined Canadian diamonds. They are a good way to get guilt free diamonds (at an even greater premium).

Sustaining a cultural norm that causes children to mine for diamonds at gunpoint is not "guilt free". Your particular diamond is fungible. Diamonds should be as taboo as fur coats.

My fiance and I designed an engagement ring set around a large blue-green sapphire set in yellow gold; it's a stunning piece that suits her far better than a diamond would.

We both love it, but when she shows it off some people just can't get over the fact it's not a diamond even when they acknowledge it's a really nice ring.

Show them this: http://www.theatlantic.com/magazine/archive/1982/02/have-you...

HN discussion: https://news.ycombinator.com/item?id=4535611

BTW the ring sounds gorgeous.

You mean 'fake', not fake. It's a real diamond.

This is an interesting one. You mainly identify synthetic jewels by how they're the same as mined ones, but higher quality (bigger, no inclusions, better color, etc). That higher quality gets you a substantial drop in the price. I was amused to learn that DeBeers backed a campaign to convince people that "real" diamonds should have serial numbers inscribed within them -- let's keep natural diamond prices high by artifically making their quality even worse!

Another interesting aspect is that whereas natural rubies really are hard to find, and synthetic rubies are dirt cheap to produce... synthetic diamonds aren't all that easy to produce.

When I started dating my future wife, she gave me a silver Celtic knot ring of hers as a token of affection + a reminder of her because at the time she was working several hours and a plane ride away. It was an inexpensive, but loved, token as it was personal to her.

When we decided to get married, we approached several jewellers to make us a pair of wedding rings using the silver one as a template. Most 'commercial' and many small jewellers didn't have the skills or inclination to make the rings from scratch, preferring to suggest we bought a pair 'off the page', but eventually we found a local guy who'd just opened his first shop having followed his father into the trade after an 'old school' apprenticeship - he'd just obtained the right qualifications to be classed as a proper jeweller and when we explained our idea he was positively enthusiastic about the project, so he hand-pierced and finished off two Celtic knots in 9ct gold (they had to be low-gold content to keep the rings tough enough to stay in shape with all the knotwork holes in them - but the metal type/content wasn't important to us).

We were delighted, the young jeweller was thrilled that he had done a good job and also had a commission he could show off to other prospective clients in a photo portfolio. Apparently his father was also proud of his work.

After a couple of months we went to see the jeweller because we found the bands were pinching a little underneath our fingers and asked him if he would curve/narrow the backs; he replied that he would consider the work to be 'finishing off', so 'no charge', but how about he kept the small amount of gold he'd be removing. Fine by us.

So, 15 years on, we have two completely unique, hand made wedding rings that were crafted by someone with a real passion for his art. We have a 'story' and love them for what they symbolize and not because they hit a price point (in fact they were much cheaper than factory stamped ones).

How much did the young jeweller charge you the first time?

I believe it was about £180 for the pair.

I had an Irish Claddagh ring before I met my husband. It's a traditional friendship/engagement/wedding ring, all in one. Had it for years. When I got engaged, put it on the left hand with the pointing out (to show that I was engaged). When we got married, it pointed in. We spent $50 to replace the glass center with a synthetic emerald. I get more questions and comments on it than a diamond would (questions about culture, symbolism, etc). I personally don't like diamonds for various reasons, neither does my sister who got a blue sapphire or something like that. So I agree, women don't care as much about diamonds. Some want them since they are culturally programmed to, some like the storybook feeling of having a diamond, some get diamonds since that is what the men think they want.

My wife also didn't want a diamond, and we went with a synthetic emerald too. Technological progress and the triumph of humans over nature maybe isn't the ideal symbolism for an engagement ring, but it's better than blood and oppression (at least, given our views on marriage - others may disagree...).

My husband and I met online, so maybe tech over nature is a perfect symbol ^_^.

I agree with your signaling hypothesis for the earning potential. I personally think that weddings are already taken for other signals, though since language drifts, these signals could as well.

This is entirely anecdotal, but currently there are big, expensive and pragmatic weddings. These lavish wedding party tends to be signaling for the family in relation to others in a diaspora situation. As an American, I think our concept of "love" and Christianity have blurred the original point of marriages which have existed for long before our current Victorian ideals.

As an example: a friend of mine is ethnically Cambodian, and weddings in her social circle tend to be orchestrated on reputation as well as connection. IE, at the wedding participants will leave an envelope with the name of the clan who gifted it. Supposedly the bride and groom (or, possibly their family members) will spend part of the wedding accounting for the debts to neighbors. Her wedding, largely put together by her father, involved more than 500 people of a group that is not very populous in my area.

As she put it, lavish weddings were fundraisers for capital investments for members in a spread-out community. They are tabulated and redistributed to other newlyweds after a while, effectively socializing it.

I'm not sure I agree with your second point (that it need little resale value). Not only does the cost of the ring signal that the proposer is genuine. The value of the ring compensates the proposer if the proposer divorcees. Presumably, the proposee is signalling her genuiness because (s)he has an asymmetrically high cost associated with the marriage.

Without having zero (or close to zero) resale value, there is a risk that proposee is incented to leave the marriage with the ring and capture the value. If there is no value, then there is no incentive to leave. The incentive for the proposer is that they can't afford to keep purchasing rings.

In the case of western marriage, where love, commitment are the emotional glues and financials are not outspoken diamonds are well positioned. But hope Wedcoin succeeds..Wedcoins ensure a cryptographically secure financial marriage bond. (just imagining:-)

Not necessarily. The whole expensive diamond engagement ring tradition is fairly new, and was created and adopted mainly in the US after a successful De Beers marketing campaing started in 1938.

I'm familiar with the history of the Diamond Ring in the United States - but what sustains it is not De Beers marketing, but the fact that Diamonds actually serve a useful purpose, despite their apparent flawed (no pun intended) properties.

What sustains the price is primarily the restricted supply which is tightly controlled. The long (and impressive) marketing campaign was only one part of the strategy.

If "restricted supply" was relevant to the price, then you would be able to sell a diamond after you purchased it, which, from everything I've read, you can't (unlike gold).

De Beers contribution isn't so much restricting the supply, as it is ensuring that once purchased, diamonds lose most of their value.

You can certainly buy diamonds second hand. Sotheby's sell them: I brought one in a room of a few hundred 50-60 year old diamond merchants in 2008.

That's interesting. I wonder if the same opportunity available to Sotheby's is also available to your average diamond consumer (minus a reasonable handling fee). I.E. If I go buy a Diamond for $1000, And Sotheby's sells it second hand for, let's say, $750, could I sell it to Sotheby's for $500?

I'd be interested in hearing what mechanisms exist for your average consumer to sell a diamond. There is quite an active market for second hand Gold, and the handling fees are quite reasonable. My understanding, from everything I've read, is that such a market does not exist for Diamonds.

Yes, you could. Most of the diamonds on offer were from deceased estates, sold by ordinary consumers.

The real question is, where the diamonds subject to a "reasonable" handling fee, or where they sold for pennies on the dollar to Sotheby's?

"What sustains the price" and "what sustains the tradition" are not the same thing.

2nd hand diamonds are cheap as hell. You aren't alleging a store of value right? You're referring to their cutting properties in saws and other machinery

Useful social purpose in signalling games, is what the parent was referring to. Proof of burn, roughly.

Reference: http://blog.priceonomics.com/post/45768546804/diamonds-are-b...

If you have to play some abstract signaling game rather than trusting your partner implicitly, you shouldn't be marrying the person.

"It needs to have little to no resale value."

I don't think that is true. It is a common misconception among the general population that diamond rings are "valuable" and in times of hardship they could perhaps be sold to recoup their original value.

That's why I'll propose to my partner with bitcoin proof-of-burn, by irrevocably sending coins to an address named for them.

Of course, first I'll have to find someone who will accept that as a proposal...

If she wants someone to provide for her, why not propose with a house deposit?

I wasn't thinking of spending that much :)

What couples think like this? I understand the reasoning but none of my friends who get married concern themselves with such tokens. For people who do think of marriage this way (more of a contract), they can't afford (or don't value) diamonds like this at all. Instead, they give gifts of gold jewellery to the bride and her family as it does have value.

As such, this feels like post-hoc rationalisation of a particular behaviour, even though it sounds reasonable.

This phenomena isn't as novel and modern as the article seems to imply. We see it in technology all the time -- pocket watches and car phones were both seen at one point as signs of wealth and exclusivity, but as they became more affordable that status was lost and other signals take their place. Of course, it seems unlikely that the human race will all of a sudden lose all desire to show off how much more we have than others. We'll just collectively find a new, more exclusive way of expressing it. :) Dr. Suess's book "The Starbelly Sneeches"[0] comes to mind.

[0] http://en.wikipedia.org/wiki/The_Sneetches_and_Other_Stories...

I believe the 'known' maximum size for CVD (synthetic) diamonds is approx 1.5ct, for a round brilliant cut, costing ~$7k. Those that own the technology are cautiously entering the gem-grade market and have been selling premium stones to fund their venture. You really can't tell the difference, even with a refractometer.

Gem cutting predominantly exists within the traditional diamond trading centers and is an intensive educational process. If a large quantity of 'perfect' rough diamonds hit the market, they will know.

Fwiw, I own a jewelry store and most recently I acquired what I believe is a CVD diamond.. It's stunningly flawless with a very slight color and a slightly shallow cut. It weighs in at 2.8ct, which is very puzzling. I sent it to GIA for certification.

Why do people with the technology have to be so cautious?

Likely related to price stabilization and its relationship with existing distribution channels. But, there may be other risk elements associated with disrupting diamond cartels.

We are talking about the people who trade Ak-47 for blood diamonds in Africa despite a ban.

I'd assume that when the sizes grow even further then the CVD diamonds will start be be intentionally colored in different colors.

It seems strange to form an analogy between a manufactured diamond and a forged painting. A painting is valuable because of the artist who created it, while a diamond is just another carbon crystal with an unremarkable history.

Aluminum was once more valuable than gold, but the Hall-Héroult process didn't spawn a market for certificates of authenticity.

Also relevant: Edward Jay Edstein's "Have You Ever Tried to Sell a Diamond" (http://www.theatlantic.com/magazine/archive/1982/02/have-you...).

This article has been submitted quite a few times (with interesting discussions):

https://news.ycombinator.com/item?id=4535611

https://news.ycombinator.com/item?id=1405698

https://news.ycombinator.com/item?id=1110283

search url: http://hn.algolia.com/#!/story/forever/prefix/0/have%20you%2...

Epstein commented once here: https://news.ycombinator.com/item?id=5414757.

As an almost broke student getting a $1k engagement ring for my fiancee (now wife), looking back, it was one of the worst financial decisions we've made.

After being married for 10 year or so, it doesn't even matter what the ring was or the type of stone or how much it cost.

Some people might find getting a $1000 engagement ring a bad decision because they would get it thrown back in their face. :) Just kidding, but this is very subjective.

Hopefully they'd consider this a blessing for uncovering what would surely be a miserable long-term partner.

I was in a similar boat (student, spent $1500 on a ring). I think the ring meant more to me than to her (she wanted a small stone). I decided to spend more on the ring than I did on my most prized possession, my laptop (a Macbook Pro). At the time it was the largest single purchase I had ever made.

I don't regret it. The symbolism behind the purchase makes it more meaningful. It set a tone in our marriage of placing each other first, above anything else we have.

Silicon Carbide is comparatively cheap (factor ten less than diamond), the refractive index is greater, and it's almost as hard. I've bought a few "moissanite" stones as gifts; they're pretty.

Edit: Also, if you've not played with a large cubic zirconia, and you have $3.60 to spare, http://www.esslinger.com/10mmroundpremiumcz.aspx

I order synthetic rubies and sapphires from pehnec.com (minimum order: $50; typical lot price: $35-45). They also sell CZ in all different colors, but again, you have to buy in batches.

Your link is weird... their synthetic gems seem to be mostly simulated. I could understand that for rarer stones, but why bother to simulate amethyst? And prices for created stones are bizarrely out of whack:

pehnec 10x12mm oval CZ: $46 for a batch of 25

esslinger 10x12mm oval CZ: $4.35 per

pehnec 7x10mm pear created ruby: $40 for a batch of 50 gems

esslinger 7x10mm pear created ruby: $108 for one gem (?!?!?)

On a more "enthusiast" note, I always bought synthetic rubies and sapphires for your basic crummy reasons of "genuineness", but I recently bought a batch of clear CZ as a birthday gift for a teenage girl. She loved it -- and when she sent me pictures, I had to agree, they look gorgeous.

Ooo. Thanks for the link.

Hey, not at all. It's a true pleasure to meet someone who understands the appeal of loose gemstones (far and away the most common reaction I get when showing them off is "but what good are those?"... the second most common is "they look fake").

Why don't more intelligent people realize that the whole expensive engagement ring tradition stupid and ostentatious? I understand the value in signaling to others that you're married, but no need to spend more than 20$ to do that.

My parents went with simple silver (colored?) bands. I'll do the same or just nothing at all. My girlfriend couldn't care less about a ring and doesn't want a formal wedding either... I'd have a hard time being with anyone who felt the need to constantly show off their status with a shiny rock on their hand.

I've been reading about these CVD diamonds for 10 years and still haven't heard of anyone actually buying one. It's beginning to remind me of commercial fusion and battery breakthroughs.

They have some industrial uses, for instance in optics.

Back in the late 1980's I got a catalog from a jewelry company that was selling jewelry with their lab-grown stones, including diamonds of various colors. I bought a silver ring with one of their sapphires ($100 or so) that I've worn almost every day since, and a larger loose sapphire that I never did anything with but still have lying around somewhere.

Van Pler, I think they called themselves. They disappeared without a trace a couple of years later. I don't know if they used CVD or some other process.

The stones are obviously synthetic -- from the right angle you can see banding suggesting that the color dopant was added in layers -- but reasonably attractive nonetheless. In fact, they have a deep, pure blue color the natural stones don't seem to achieve, at least not for any price I could afford :-)

As an (armchair) economist, when looking at these cases of Veblen good consumption one of the things that always interests me is: is there some clever way to nudge our culture in such a way that the product of such consumption becomes socially useful? Diamonds have a negative external/internal benefit ratio, since child labor wars in africa etc, apartments on the edge of Central Park are neutral (the apartment in not helping or hurting anyone but yourself, and as per the Veblen good definition the people you're competing with). But what about Veblen goods with a positive external/internal benefit ratio? Charity auctions try to do that, and if the government were to monopolize access to one not-particularly-industrially-significant mineral and then sell it off at huge markups that would also work, at least among the subset of the population that believes government spending has >0 external benefit. I am also aware of the use of large public individual donations in traditional cultures. The cleanest solution seems to involve cryptocurrency, but that would only really start to work once everyone is wearing Google Glass and can, um, efficiently verify the results from a challenge-response protocol against a long-range RFID inside people's wedding rings.

Any charitable donation with your name on it is a Veblen good that (hopefully) becomes socially useful. If people donated out of a genuine sense of charity they would donate anonymously.

Dimaonds seems like a poor choice as they were made artificially scarce to inflate price in the first place by a monopoly built with this objective in mind.

Later when diamonds started to lose their appeal in the 30's the monopoly built an artificial demand for diamond in the US through manipulating minds (also called advertisement, marketing and propaganda aka public relations) into associating diamond as symbols of love and commitment creating artificial demand of diamond engagement rings most known as "a diamond is forever" campaign. A scheme later exported in other countries.

When major discoveries of diamond were made threatening to lower the market price, the monopoly bought all the production to hold onto it. When countries refused to sale they would release a large number of similar diamonds into market to kill any profit those countries would make.

More recently they settled a class action lawsuit for fixing prices of gem diamonds and pleaded guilty in another suit about fixing prices of artificial diamonds.

So diamond dazzling is a total fabrication and diamonds would never have got expensive without De Beers conspiring to inflate prices.

http://www.businessinsider.com/history-of-de-beers-2011-12?o...

There have been several companies who did CVD diamonds at gemstone quality. It's not a terribly hard problem given modern technology.

The problem is the same problem as when the original diamond mines opened. If you succeed, you flush the value of diamonds straight into the toilet. At which point, there is no profit.

Consequently, it is always more profitable to sell your technology to DeBeers and cash out quietly than to enter the diamond market.

There's less profit, yes, but you'd halt diamond mining, which may have important human and environmental gains. Furthermore, it'd help redirect a lot of money in other directions.

We're all stardust anyway. Perhaps someday that might be enough?

As someone who's married and somehow managed to avoid ever having to buy an engagement ring, to any fellow cheapskates I highly recommend the use of some more diplomatic version of the expression "what are you, some kind of prostitute?".

If somebody's love is conditional on the amount of money you spend on them then I'd argue that's not the kind of love that leads to a long, satisfying relationship.

Cheap answer to the "deep" philosophical question: a perfect copy is an original. This comes from Quantum Mechanics.

So, if we can make perfect copies of physical works of art, they will be come as abundant as digital works of art. This could have interesting effects on the very notion of property.

This reasoning is flawed. A digital copy resources requirement tends towards zero, an analog copy requires a certain amount of resources making it virtually impossible to copy at scale.

Also I can have thousands and thousands digital works of art without requiring more and more display and storage space, when you have a hundred paintings, you need a hundred walls to hang them.

Wait 'till we upload ourselves in a simulation.

https://en.m.wikipedia.org/wiki/Tragedy_of_the_commons

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