Diamonds Are Forever, De Beers Not Necessarily

Hi everyone, welcome to Cold-Knowledge Blind Box.

Today we're talking about a topic that fits wedding season very well: diamonds.

If you went back five years, when a couple was getting ready to marry and buying rings, they would very likely have run into a soul-searching question.

Should we bite the bullet and get a diamond ring?

If you say no, it feels like you're missing the sense of ceremony.

If you say yes, your wallet quietly sounds the alarm.

But today, this question suddenly doesn't feel so agonizing. Many people now think: a gold ring is good too. It holds its value, you can see it and touch it, and it won't leave you wondering whether marketing got the better of you the moment you bought it.

What's more interesting is that just as gold prices keep climbing and people start to trust gold again, diamond prices are falling steadily in the other direction.

Who is the most embarrassed by this?

It isn't the jewelry stores.

It isn't the wedding companies.

It's the supergiant that once almost defined the modern diamond industry: De Beers.

You may not know the name, but you've certainly heard its most successful line.

A diamond is forever.

Friends, that line is not an ordinary ad slogan.

It works more like a spell.

It turned a piece of transparent stone into proof of love. It turned a mining product into a ticket to marriage. It turned something that could be traded into an emotional keepsake you'd better never try to resell.

De Beers has used this magic for nearly a century.

But now, the magic is starting to fail.

In recent years, De Beers' revenue and profits have both been falling, and it is still holding more than US$2 billion of rough diamond inventory. At some auctions in 2025, buyers even refused to take their goods.

What does that mean?

It means that where people used to line up to grab goods, now you put them on display, and people take one look and say: sorry, I don't want them.

For a company that lives by controlling supply, this isn't an ordinary slowdown.

It's a crack in the faith.

So how did De Beers end up here?

The story starts more than a century ago, in South Africa.

In the second half of the nineteenth century, diamond mines were discovered in the Kimberley region of South Africa.

At first, everyone was of course excited.

Diamonds sound like wealth, rarity, a lottery ticket of destiny that suddenly pops up from deep underground.

But the problem soon came.

There were too many mines.

Capital poured in, miners poured in, and machines poured in too. Diamond mining turned from small-scale digging into industrial production. Output surged in a short time, and prices began to plunge.

Pay attention here, because there is something very counterintuitive.

The real enemy of diamonds has never been poverty.

The real enemy of diamonds is abundance.

As soon as people realize this thing isn't as scarce as they imagined, its sense of sacredness drops away at once.

It was at this moment that a British businessman appeared.

His name was Cecil Rhodes.

His name is a bit long, so we'll just call him "Old Rhodes" from here on.

Old Rhodes understood one thing: if you want to make big money from diamonds, you can't do it by digging harder.

Because if everyone digs more, prices will collapse.

The real way to make money is to get hold of all the taps.

So when other small mine owners were being beaten down by low prices to the brink of bankruptcy, Old Rhodes didn't panic with the market. He began buying up these mines at low prices.

One today.

Another one tomorrow.

Finally, in 1888, he pulled his assets together and founded the De Beers Consolidated Mines company.

From the day it was born, De Beers was never an ordinary mining company.

It was more like the central bank of the diamond world.

An ordinary company asks: how do I sell my product?

De Beers asks: how do I decide how many diamonds the whole world gets to see?

To do this, it built a very domineering central selling system.

Simply put, the rough diamonds produced by mines around the world could not be sold to whoever you liked, nor at whatever price you liked. They had to enter De Beers' system, where they were graded, priced and allocated centrally.

The core logic of this system is very simple.

Diamond prices cannot be left to the free market.

Because the free market is too honest.

Once supply grows, it lowers prices.

Once consumers stop buying, it lowers prices too.

De Beers' goal was to separate diamonds from the free market.

It was like building a dam between the mines and the consumers.

Upstream, it knew how much water there was.

Downstream, it decided how much water to release.

If a mine owner refused to cooperate and tried to bypass the system to sell cheaply, De Beers could use its own stockpile to launch a price war and bring you to heel.

That wasn't all.

De Beers also invented a system of sightholders.

What is a sightholder?

You can think of it as a diamond wholesale customer certified by De Beers.

But this certification was not meant to make you a god.

Quite the opposite. It was meant to make you obedient.

At fixed times and fixed places, De Beers put a packet of diamonds in front of you and told you: these goods cost this much, and this is the quantity.

You could look.

But you basically couldn't bargain.

You also couldn't say, "I only want the good ones, not the bad ones."

Even less could you refuse them when the market was weak.

If you didn't cooperate, the next time you might not be on the list. And getting high-quality diamond supply would become very hard.

Friends, this isn't an ordinary business.

It's more like a club.

And De Beers was the person at the door holding the guest list.

If you want to get in, you have to follow the rules.

If you don't follow the rules, don't play.

Through this system, De Beers at one point controlled more than 80% of the world's diamond distribution.

What does that mean?

It doesn't simply sell diamonds.

It defines diamonds.

It defines which diamonds are valuable.

It defines when goods are released.

It defines who is qualified to buy.

It even defines how consumers should understand diamonds.

But controlling supply alone was not enough.

Because diamonds have a built-in problem.

They are not like food, which you starve without eating today.

They are not like a house, which people have to live in.

Nor are they like gold, which for thousands of years people have accepted as a symbol of wealth.

For diamonds to sell at high prices, they must answer one question: why do you absolutely have to buy one?

De Beers' answer was: because of love.

In 1947, that famous slogan appeared.

A diamond is forever.

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