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Preface | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8

Step 5: Understand why Diamonds are an Artificial Commodity

Each year millions of consumers walk into jewelry stores and purchase diamonds for a loved one. Little do they know that the 1 carat diamond they just purchased cost the diamond miner only $15 per carat to extract, whereas they just paid $12,500 for this same stone. In addition, for every diamond that is showcased in a jewelry store, there are a plethora of equivalent diamonds held in storage by the same diamond miners who are responsible for bringing these same diamonds to market.

In other words, there is a great surplus of fine quality diamonds in the marketplace. As such, the value of a diamond is truly a created market as its supply and price is carefully controlled and regulated by one secret organization; De Bears. De Bears, euphemistically known as a syndicate controls 60% of the supply and demand of diamonds in the world from their headquarters in South Africa. Once they mine and sort their diamonds, they are packaged into lots where they are sold off to a select group of no more than 150 site holders worldwide. A site holder is a company that has been granted permission, by De Bears, to purchase their rough uncut diamonds and resell.

These site holders blindly purchase the rough diamonds they are offered and carefully cut them into beautiful polished gem stones available for market. The most profitable site holders are the ones that can yield the most diamonds demanded by the marketplace from the limited irregular rough diamonds they get. Of course, as you can imagine, this is no easy balancing act. Consumers shopping for diamonds should not be disenchanted with the information they have learned here any less than they would be with other products. After all, many products from gas to even real estate are controlled in one way or another. The most important thing here is to fully understand how a diamond gets from a diamond mine to a jewelry store and who determines this process. In the business of diamonds, knowledge is power. And it is our mission to make you as knowledgeable as possible

How are diamonds graded, priced and traded? Answering these questions will unlock the secret to understanding how to value diamonds. Once one can determine how to value a diamond, one has a better chance of purchasing this diamond at the proper price.

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