Are diamonds really a girl’s best friend?

This week I am featuring an article from Free to Pursue, a Canadian blogger who writes about personal finance and related lifestyle matters including great stuff on subjects as varied as Zombies, Flowers and House.

The article deals with the strange social convention of spending large amounts of money on diamond engagement rings.   This is one of those habits of humans that would be bizarre to a rational visitor from another planet.  F2P brings an independent female perspective that defies traditional stereotypes.

If you haven’t already done so, you should definitely check out her blog.

The Escape Artist

Diamonds: nothing but a brilliant illusion

f2p-ring-insertI love my engagement ring. My husband designed the set (engagement ring and wedding ring) and it means the world to me. It’s unique and beautiful in its simplicity…

…and the diamond is a fake.

When we discussed our rings, we decided that my ring’s design would include a pear-shaped diamond and we started shopping for it to ensure we could find it in plenty of time before the Big Day. One stop during our hunt for the right gem was a jewellery store at a local mall. There, we saw a stone that fit our shape and size requirements and the saleswoman started speaking to us about the characteristics of that particular stone—you may be familiar with the 1938-born classic 4Cs: cut, colour, clarity and carat.

Upon closer inspection, I noticed a major flaw in the stone that ran diagonally through it for nearly its entire length. The saleswoman said it was a feather (read: a crack inside the stone itself that affected its durability and clarity). She insisted that this feather was a feature unique to this stone, stressing that features such as this are characteristic of real mined diamonds and help differentiate them from man-made alternatives. I didn’t have to be a gemologist to understand that was a load of bunk. And the price of this one-carat pear-shaped gem in 2000? A cool $6,000!

This conversation, and similar exchanges with other salespeople, made us stop and think about what we were doing. We were buying a diamond because…well…that’s just what you DO! We gave our heads a shake and realized that we didn’t particular need or want a diamond per se, just a stone to complete the design we’d agreed on.

With a quick search online, we found we could get a flawless cubic zirconia, a stone nearly as hard as a diamond, for 1% of the cost of the real deal!

Well, we went for it! I mean, what did we have to lose?

We bought the cubic zirconia on the internet. It’s a beautiful stone. The jeweller who custom-made the setting was upset with our decision (sorry, we didn’t care what he thought) but once finished, the rings were, and still are, beautiful.

Are diamonds really a girl’s best friend?

At age 25, that $6,000 was a SIGNIFICANT sum of money* and we felt we could come up with many better uses for it than a gem that would do nothing useful for us, other than enable us to fulfil a social obligation.

goodwifeDon’t get me wrong. I grew up with the same thoughts and feelings about diamonds as the next girl. They’re beautiful, lasting and a powerful symbol of love, commitment, security and current or future social standing. In short, it’s a measure of how much you, the recipient, means to the one making the offering, your significant other. The gem communicates all these things without having to utter a single word—effectively portrayed in this poster for the popular TV show “The Good Wife”.

And that’s the problem. Because the relatively recent tradition has simply become an understood step in the courting process, a suitor doesn’t believe there’s a choice and bringing up the subject can have disastrous results. And, for women, there’s perceived value in seeing just how much you mean to your partner; how much is he willing to sacrifice to show he’s worthy of gaining your hand?

The strong social deterrents to opting out of the “diamond offering” as a necessary step in a couple’s courtship masks a number of larger issues due to its strong emotional undercurrents. Namely, we tend to disregard the following realities:

  • Diamond engagement rings, and subsequently gifts of diamonds to mark special occasions, is based on a fabricated and fairly recent social expectation based on savvy marketing by the De Beers diamond cartel.
  • Diamonds don’t retain their value. At best, they hold their wholesale value, but you can’t sell a diamond for the retail value consumers pay. Don’t believe me? This astounding 1982 article by J. Epstein will convince you of these facts**.
  • These precious stones serve no practical purpose day to day and are prone to breakage or damage, loss, and theft due to significant wear—likely causing households to pay insurance costs for holding such property.

So why do we care so much? Blame it on a powerful marketing machine.

It’s been a mere 75 years since De Beers convinced North Americans that diamonds are a necessity thanks to a successful marketing campaign started in 1938. The campaign made heavy use of new marketing vehicles, such as TV and motion pictures. Everybody who was a somebody in Hollywood was sporting some “bling”. We still quote their 1947 campaign slogan today:  “Diamonds are forever.” and celebrities still show off these pricey gems on the red carpet and the big screen.

To this day, despite the commoditization of diamonds,—current supply far exceeds demand due to continued discoveries of significant deposits throughout the world—De Beers contends that diamonds are not a commodity because each one is unique in its own right***. That argument could be made for many other commodity products, none of which warrant the exorbitant price.

And it gets better…

Have you heard of “chocolate diamonds”? This is yet another fabrication from the diamond industry. Brown diamonds are now marketed as the newest craze, but what are they? An over-supply of industrial-grade diamonds (see this article on Jezebel.com for more on brown diamond marketing).

Bottom line for the diamond industry: If you can’t sell diamonds, spin the message and the market will eat it up. They’ve been successful so far in regulating supply and spin, so why stop now?

Am I cold-hearted? I think its just the opposite.

It’s never about the “stuff”. It’s about how it makes us feel. At their core, all purchases are emotional. Show me one that isn’t, whether personal or business and I’ll prove otherwise. There’s irrationality in nearly everything we do and the marketing machine knows it all too well.

How else can you explain that a nearly-clear stone of rather modest size compared to most objects we value in our day-to-day life carries such psychological weight and meaning? And what about the box in which it’s setting is presented? Tiffany’s anyone?

When stripped of the marketing hype, it’s nothing more than a clear mineral that, once cut and polished, has come to be understood as a necessary component of a person’s expected life steps in western society.

Every society has such symbols. It’s a natural aspect of cultural evolution. What makes this type of cultural evolution different is that its development was anything but natural and progressive. The more we understand that fact, the more we communicate with our significant other, the more we can invest in what brings the most lasting value to our lives and our relationships, regardless of social expectations or marketing dogma. I only wish those conversations weren’t so taboo.

If my husband and I had not had the touchy “rock” conversation, I’d probably have a pretty naturally-sourced stone on my finger that looks exactly like the one I have, minus an absolutely amazing honeymoon in Jamaica. Now that was a $6,000 we feel was well spent on a truly unique and memorable experience.

*The average cost of a diamond engagement ring is $4,000. If a 25-year-old couple were to invest that sum in the stock market instead, based on an illustrative assumed equity market return of 9% they would have over $125,000 at age 65. That sounds more like a “happily ever after” than does a tiny gem that’s not likely to appreciate in value.

**Written over 30 years ago, I find it shocking that Epsteins article, and related book, The Rise and Fall of Diamonds, has had little to no effect on the diamond industry.

***For an overview of the De Beers group of companies and its diamond production and distribution, see Inside De Beers, Bloomberg’s Unprecedented Access.

This article originally appeared at Frugal Fringe.com

11 comments

  1. Richard Welton · · Reply

    PriceScope.com for Diamond prices since 2007 show a 20-30% increase (and no dip over the financial collapse during 2008/9) for D-1 Colour 1-2 Carat Diamonds compared to a 30% uplift for the Dow Index, which of course had that big stock market correction.
    To my knowledge, although there have been legal restrictions in both the USA and the UK on their citizens owning physical gold, but never for diamonds.
    The trick is to buy from a wholesaler, with advice and certification, and then have the ring made up separately, never pay the retailers 600-800% mark up, and buy not less than .5 carat and not more than 2 carat.
    These along with gold and silver are part of our ultimate hedge against future bad times. They are less negotiable than gold but easier to transport and store (and insure) than gold.

    1. Thanks Richard but I suspect you may be an exception here. Lets face it, most guys are not buying their 600 – 800% retail mark up diamond rings as a cunning play on commodity prices nor as a way of whisking money out of the country when democracy breaks down and the revolutionaries / commies / martians start shooting people with their laser guns.

      It seems more likely to me that most guys are demonstrating material proof (often referred to in the literature as “showing off”) to their prospective spouse. And enabling their spouse’s own fronting and maxxing. Which is fine if they can afford it and are already FI. But maybe a tad illogical if they are still in debt…?

  2. A very interesting read. It helps that both parties agreed to not go down the expensive route but if it were just down to one party seeking to cut costs, things may not have turned out so rosy. My friend who got married recently, I know her engagement ring cost a lot more than their two week honeymoon to Bali (all expenses paid) – such is what is expected of many Millenials.

  3. B Shnady · · Reply

    Not knowing anyone who’s bought one of these for 10 years, I assumed they were no longer “a thing”. But perhaps that’s a cultural difference, and for Septics they remain very much so? They, being essentially Puritans crossed with The Hun, are often about as conservative as they come, and thus find themselves more tightly bound by social mores – even when those mores were cooked up by spivvy compliance (ie. sales & marketing) “professionals” looking to trouser a few large for themselves…

    Here’s a tip, fellas: if you know it to be baloney, but your prospective thinks otherwise, then take that as novel (actionable!) information regarding likely long-term compatibility…

    1. Fantastically obscure comment….other than the last sentence which makes perfect sense!

  4. Thank you so much for posting this – when I got engaged, I specified that I didn’t want a diamond ring because of the whole DeBeers thing. I have to admit that I did end up with a traditional-looking ring, but the main stone is an aquamarine, which is my birthstone amongst other sentimental reasons. Cheaper, prettier and far more meaningful in my opinion.

    It’s funny how I’ve explained this to so many people since then and yet they still want the big diamond rock themselves. I guess it’s the status thing, but then again if you can’t tell the difference between a £1000 ring and an £8000 ring just by looking, I don’t really see the point.

    1. Nice! Thanks for the kudos (and to T.E.A for posting it here).

      Sounds like you did two things right: saved a significant amount of money AND managed to get a ring that has a great deal of sentimental value. I have to wonder when many insist on a traditional “rock” when no one can tell the difference. It’s amazing what fear of the repercussions of not doing what we’re “supposed” to do will drive us to do as individuals, especially when one considers that a stone is easily replaced if they feel they made a mistake. *sigh* At least you can look at your ring and know, with confidence, that you and your significant other made a decision that was right for you. Well played.

  5. I got lucky: due to Mrs LCIL’s career choice she actively wanted an engagement ring with a very small (recessed) diamond so she could wear her surgical gloves (frequently required in her field) over the top. Ironically she then lost said engagement ring (most likely at the gym) after we’d been married about 6 years. She lost her wedding band a couple of years ago too. Now she wears an old silver ring of mine than got when travelling as a young ‘un in Asia.

    both wedding band & engagement ring were inexpensive enough that we didn’t even claim on our home insurance as it would have put our premiums up!

    1. LCIL – thanks, sounds like a good set up you have there!

  6. Nearlytoolate · · Reply

    I’ve never been one for either jewellery or social convention. After living together for a few years, Mr NTL and I finally got around to deciding that marriage was the way we wanted to cement our commitment to a lifelong partnership. ‘Engagement’ seemed like a rather quaint and pointless exercise in the circumstances, so we just cut to the chase and each chose a simple plain band as a wedding ring (no, they don’t match). Another convention I wasn’t even aware of until I became a mother was the idea that your husband buys you another pricey rock at the birth of each of your children – to me, this is far too close to being treated like some kind of brood mare, so no thank you very much!

    1. “…treated like some kind of brood mare, so no thank you very much!” I almost spit out my coffee when I read that one. Too funny.

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