Diamonds

A diamond barely fits the definition of a commodity, which is exactly what makes it interesting. There is no futures market and no single price, because diamonds are not fungible: every stone is graded on the four Cs (carat, cut, colour, clarity), so two one-carat diamonds can be worth wildly different sums. Polished stones are priced off the Rapaport price list (the dealer's reference), while rough is sold by the miners through tightly controlled channels rather than an open exchange. It is a commodity in the loose sense of a globally traded raw material, but it has none of the standardisation, transparency, or hedging that defines oil or copper.

For most of the twentieth century the market was a cartel. De Beers controlled the great bulk of world rough, hoarding or releasing supply to hold prices up and selling only to a chosen circle of buyers at take-it-or-leave-it "sights." On top of that supply control it ran the most successful demand-creation campaign in history, the 1947 "A Diamond is Forever" slogan, which fixed the diamond engagement ring as a near-universal expectation and, by stigmatising resale, prevented a second-hand market from exposing how abundant diamonds actually are. Scarcity and demand were both, to a large degree, manufactured. The cartel has since loosened: De Beers' share fell as Russia's Alrosa, Canada, Australia, and Angola came up, and Anglo American moved to spin De Beers off entirely in the mid-2020s.

The defining shock now is lab-grown diamonds. Stones made by chemical vapour deposition or high-pressure synthesis are physically and optically identical to mined ones, indistinguishable without specialist equipment, and they have collapsed natural-stone prices since around 2020: lab-grown now accounts for a large share of US engagement rings and sells at a fraction of the mined price, with De Beers even shutting its own lab-grown jewellery line to defend the natural stone. The other live issue is provenance: the Kimberley Process was built to keep "blood diamonds" out of the trade, and G7 sanctions on Russian (Alrosa) stones from 2024 forced the industry toward traceability. Industrial-grade diamond, used for cutting and abrasives, is a separate and almost entirely synthetic market. The whole story is a lesson in how much of "value" can be built on control and marketing rather than scarcity itself.

The cutting itself tells its own story of where value migrates. The historic cutting centres were Amsterdam and then Antwerp, but from the 1960s onward the work moved to Surat, in the Indian state of Gujarat, which now cuts and polishes roughly 90 percent of the world's diamonds by piece. It went there on labour cost and community networks: high-wage Antwerp could not profitably cut the tiny, low-value "melee" stones, so cutters organised largely through the Palanpuri Jain trading community made it economic to polish the small goods, then moved steadily up to larger and better stones as skill and technology (laser sawing, computer planning) matured. Training is an apprenticeship, a few months to basic competence, a couple of years to skilled faceting, longer for high-value rough, and the pay is modest and piece-rate, which left Surat badly exposed in the 2023-2025 slump, when lab-grown competition and sanctions on Russian rough brought wage cuts and layoffs. The city adapted by pivoting into cutting lab-grown stones, which India also now produces at scale, so the same hands increasingly polish both kinds.