IamA programmer who writes code for calculating diamond prices. AMA about De Beers, the diamond industry, synthetic diamonds, engagement rings, etc.

I worked at GIA in the early 2000s and we were tought that for every hand full of high quality barrle (ruby and emerald) one could pave a mile of highway with diamond. The only reason the diamond cost more is due to market manipulation. Does this sound right to you?

We sell something like 95% GIA stones, and they're certainly the best grading lab we work with, but that information is pretty misleading. Sure, there's a lot of diamond in the world, but most diamond crystals are microscopic. Diamonds get exponentially rarer the larger the crystals are. As I'm sure you're aware, two 0.5 carat diamonds are going to cost a lot less than a single 1 carat diamond, assuming all else is equal. And when we buy side stones for diamond rings, which are 0.05 carats or so, they're often only like $5-$10 each.

So to answer that question, maybe for tiny, low-quality diamonds, but not if you limit it to diamonds larger than 0.1 carat or so. In any case, rubies, sapphires, and emeralds are all alumina crystals, which are also really common in their small forms.

edit: This article does a good job of explaining the current state of the diamond market:

http://www.kitco.com/ind/Zimnisky/2013-06-06-A-Diamond-Market-No-Longer-Controlled-By-De-Beers.html

Is this generally true, or only true as far as what's available to be bought? The idea is that great amounts of diamond just aren't actively mined/exported, because by doing less work/exporting, they can mark prices up absurdly.

Further, if Da Beers dropped from having near total control to 30-40%, shouldn't we have seen diamond prices drop all around? Instead, it seems like everyone else just jumped into the "shitty supply for unwarranted profit" game.

Actually, the reason the price of diamonds didn't plummet had more to do with increased demand from Asia, especially India. In India, a family tends to store their wealth in the form of gold and jewels, since they don't really trust the banks, and as India has become wealthier, they've purchased a lot more diamonds.

Resale value for diamonds is terrible. Artificial scarcity by debeers keeps prices high.

If you have a diamond, you can sell it to a jeweler the same way you can sell a used car to a car dealership. The problem is that a lot of jewelers sell overpriced crap, although the rise of online jewelry sellers is making this less the case.

The problem is that a lot of jewelers sell overpriced crap

That is not the problem. The problem is that your purchase loses a shit load of it's value as soon as you buy it. A car loses a fair amount once you drive it off the lot - but it still have reasonable value compared to the purchase price.

I'm sure you'll be able to correct my assumptions:

Say a shop has a mark up of 50% on a gem. If you try to sell it back, straight away the gem is worth 1/3 of what you paid for it. But why would the store buy it back it from? It has unknown provenance, they have to grade and value it themselves. Much easier to just buy another one from their supplier. So even if they are willing to buy it back they you get less than 50% of what you just paid for it.

That's how I've always understood it.

Well, yeah, I guess. Anyone who sells anything sells at a markup. However, the jewelers I'm talking about are the ones that actually make diamond rings or whatever. So if you went to a jeweler that made engagement rings, and he normally bought diamonds wholesale, and you went in there with a nice-looking diamond that he knew he could make into a ring and sell, he might give you a price similar to what a wholesaler would get.

Some people buy diamonds as investments too, and obviously they don't go to Kay's or Jared to buy them. They go to wholesalers. It's the difference between retail and wholesale, really.

A used car is different from a new one, it has wear and tear on it. A used diamond and a new diamond are identical, why would a used diamond be worth less?

It's not worth less, it's just that anyone who buys and sells stuff sells at a markup. So the only way you can get around this markup is by doing buyer-to-buyer transactions, but then you have to make sure you don't get ripped off.

So those "chocolate diamonds" that they are hawking now are just industrial drill bits right?

There's not much you can do with a brown diamond. Few people want them, but they turn up as part of diamond mining operations, so they don't just toss them. Sometimes they can treat them with lasers or HPHT in order to make them look nicer though.

If you can come up with a way to sell brown diamonds for as much as white diamonds, you could probably make quite a bit of money. So lots of people are trying to do this.

If you can come up with a way to sell brown diamonds for as much as white diamonds, you could probably make quite a bit of money.

Calling the yellow ones "champagne", and the brown ones "cognac".

Yep, I've heard that too.

What's your technology stack for the application?

It's not just a single application, but we do use Ruby along with Nokogiri and OpenURI for collecting data from other web sites. Lots of SQL tables. A few custom-made C++ tools for analyzing certain types of data. But obviously there's an NDA in place so I can't say too much.

Have you had any friend show you their diamond rings but you thought they looked fake?

It's actually pretty hard to tell a simulated diamond from a real one unless you have special tools or a microscope. The saying is "the best way to tell if a diamond is real or fake is by who's wearing it". So if some woman who is clearly not very wealthy is going around with what looks like a 4-carat perfect clarity stone, it's probably a cubic zirconia.

Why wouldn't a perfect clarity CZ be as good as a diamond?

That's sort of like asking why silver isn't as valuable as platinum, or why ordinary paper isn't worth as much as money. Supply and demand, mostly, and CZ is really cheap to make.

Moissanite (silicon carbide) is another diamond simulant that's taken off recently, but some of the people who sell it can be really shady. If you buy a $5000 diamond ring, it's probably worth at least $3000-$4000, unless you really got ripped off. But some jewelers have been selling silicon carbide stones for a few hundred dollars when they're only worth a fraction of that, then trying to convince the guy who buys it that he's "too smart" to fall for the diamond dealers' racket, and that silicon carbide clearly must be worth as much as diamond because most people can't tell the difference.

I love my moissanite stones. My engagement ring gets a lot of attention for being fairly modest sized (juuuust shy of 1.5 cw total iirc, 8 small and the center stone, great ccc). The setting compliments it extremely well, simple and clean. Only a few believe me when I tell them what it is, which I get scolded for feom my family. I love what it is so much, I'm not going to pretend its something its not, that's just not how I work. Not to mention the other diamond like perks - my stones are damn near indestructible and I'm not easy on my hands.

Get her something that shows her you think she's out of this world (without killing your savings)!

Yeah, by all means, pay for a custom-designed ring by a jeweler that will work with you and who knows what he's doing instead of spending a ton on the center stone. I'm certainly not opposed to anyone going the route you're describing, but the people who want to drop thousands of dollars on diamonds are the reason I have a job. ;)

Moissanite is also expensive because its use in jewelry is still under patent. That patent expires in 2015 though, WOO!

I'm sure the Chinese sellers on eBay take that patent very seriously.

I dont see how your comparison between silver and platinum to diamonds and cz is valid. You can easily tell the difference between platinum and silver but as you yourself said, you need special tools to tell diamonds and cz apart.

You don't need special tools to tell a diamond from a CZ. And I bet if you saw a silver ring next to a platinum ring, you'd be hard-pressed to tell the difference.

The silver would weight half that of the platinum?

And CZ weighs about double what diamond does. It's actually a really appropriate comparison the more I think about it.

CZ oxidizes, and is not as hard aka as resistant against scratching.

CZ oxidizes, and is not as hard aka as resistant against scratching.

Nice try, but I refuse to believe that people will pay extra money for a product that is more durable.

I watched Dell switch all their PSUs from PC Power&Cooling that easily last 5 years to Chinese imported PSUs that last ~1 year at best. Saved everybody no more than $50 on the price of a PC, and people bought that sh*t up like candy.

Same thing happened with PC Chips motherboards and their exploding caps from China to save $10 on the price of the motherboard. Again, people bought that sh*t up like candy.

I refuse to believe that the overwhelming majority of people would pay more money for more durability.. Not happenin'. Paying less money for less durability ALWAYS wins.

The only reason people pay more for diamonds now is because they're brainwashed into think that diamonds = love, CZ = fake diamonds, and fake diamonds = fake love. This is what De Beers and other diamond companies has been drilling into the minds of the population for nearly 100 years.

It's successful brainwashing by De Beers and other diamond companies, it's a shame that so many people still buy into it. Probably the best example of mass brainwashing by corporations in the history of civilization.

Combine that with their successful ability to create artificial "low demand" by owning all the diamond mines and cutting back supply... All just to inflate price and make truck loads of money off of slave labor is just disgusting.

I will never buy a diamond. EVER.

De Beers isn't the monopoly that they used to be:

http://www.kitco.com/ind/Zimnisky/2013-06-06-A-Diamond-Market-No-Longer-Controlled-By-De-Beers.html

I get it. You think it's stupid to pay for a shiny chunk of carbon. But there's no need to hate on the people who disagree.

CZ is already oxidized. In fact, it's made of zirconium oxide, also referred to as zirconia. It's way more durable than glass, and even if it does break, getting a replacement costs about 50 cents. I carry around a few CZs with me sometimes, and give them away to people. Durability has literally nothing to do with it.

I usually use the term 'synthetic diamond' to indicate lab-grown diamond, as opposed to mined diamond. Lab-grown diamond is indeed real carbon atoms in a real diamond lattice -- i.e. real diamond.

Cubic zirconia and synthetic diamond are completely different materials.

Source: Physics Ph.D. based on studying color centers in diamond.

Yeah, that was actually a typo on my part. Meant to say "simulated diamond".

I recently purchased an engagement ring and was a bit shocked to realize that out of the 4 C's (cut, carat, clarity, and color), that cut is at the top.

Why do you think clarity is so overrated when a VS2 or even an SI1 can be completely eye clean? Color also seems to be very overrated too but has a huge affect on price, yet you notice the color the most in an unrealistic setting (table side down).

Cut is most important because it determines the light return for a diamond, which is a fancy way of quantifying how much it sparkles. I've actually written an algorithm, in cooperation with gemologists and jewelers, that tries to do a better job of quantifying cut score, which determines how good a diamond will look as the center stone of a ring. Obviously, a single number won't tell you everything, but it's been helpful for our customers to compare similar diamonds.

Why do you think clarity is so overrated when a VS2 or even an SI1 can be completely eye clean?

A lot of the reason is because when people look at a diamond under a microscope or a loupe, they'll see the inclusions and decide that they don't want it after all, even if those inclusions are totally invisible to the naked eye. Some people are just perfectionists, I guess.

I can't notice any color in a diamond that's an H or better, unless like you said, it's in an unrealistic setting. And if the diamond is set in yellow gold, then most people would have trouble seeing the color in a K or an L. Again, I think it's just people being perfectionists, or not being very pragmatic.

How often do you see trilliant cut center stones? I had a designer refuse to send a band with a trilliant mount for me because they said it would be ugly (according to my jeweler). My jeweler laughed his ass off at that, ordered it anyways and did a custom job on the mount for the trilliant diamond instead. The finished ring is absolutely amazing.

Not very often. They're just uncommon, so jewelers and designers don't like to work with them, because they're not used to it. We don't have any CAD designs with trilliant center stones, so if someone wanted one from us, we'd have to build it from scratch, so we might charge more.

The most bizarre shape I've ever seen was a Horse Head diamond:

http://www.diamondsbylauren.com/images/09/03/r2878k.jpg

We can find and sell them, but I have know idea who would buy one.

Ummm I've never seen this before. Where can they be purchased.

I guess you'd have to call around a bunch to diamond dealers. A lot of diamond dealers haven't even heard of them though.

I've actually written an algorithm, in cooperation with gemologists and jewelers, that tries to do a better job of quantifying cut score

Is there a 'standard' method these days for quantifying that? Beyond what Marcel Tolkowsky did with "Diamond Design" in 1919?

Yeah, actually. The standard algorithm is the Holloway Cut Advisor:

http://www.pricescope.com/tools/hca

However, this algorithm was designed to be calculated with pencil and paper, and only works on round diamonds. If you have a computer doing the math, you can do much more accurate calculations.

I had a question about black diamonds, since your company appears to sell them.

Some black diamonds are from a fucking meteor that came from a supernova how fucking cool is that, but I've also found "black diamonds" online that appear to be fake: either not diamonds or something else. Is there any way to make sure you're buying the real extraterrestrial thing?

Make sure you get a GIA certificate, or get it from a reputable source. Any jeweler should be able to test if a stone is really a diamond. Personally it seems a bit odd to buy a black diamond, since in the jewelry industry, everyone is always concerned about the light performance, and there isn't really any light performance in a black diamond. Since, you know, it's black. But you can get a real legit black diamond for way less than you'd pay for a similarly sized colorless one, so more power to you.

Do De Beers really have a big stockpile of diamonds to limit the supply?

What did you study and why did you choose to enter the diamond industry?

Do De Beers really have a big stockpile of diamonds to limit the supply?

This used to be the case, since De Beers controlled the diamond mining in Africa for about a century, and Africa is still the largest producer of diamonds. However, around 1980, Canada, Australia, and later Russia all started mining diamonds too, and those mines weren't under the control of De Beers. Initially they tried to buy up all the diamonds on the market so they could keep their control of it, but they ended up losing a ton of money on that business model. Now, they've had to settle with only controlling 30-40% of the diamond market. Here's an article that explains it really well:

http://www.kitco.com/ind/Zimnisky/2013-06-06-A-Diamond-Market-No-Longer-Controlled-By-De-Beers.html

What did you study and why did you choose to enter the diamond industry?

Biomedical engineering, of all things. I wrote a lot of software as part of my master's program, and got pretty good at it. At first, I was writing software for use with robotic surgery, but the company I worked for was really poorly managed, and I decided I needed to work for a company that was actually well-run. Ultimately, my extensive experience with programming and high-tech equipment carried over more than you'd think it would. Both industries use CAD and 3D printing a lot, for example.

What CAD programs do they/you use?

Rhino, which seems to be the standard among jewelers and industrial designers. It's kind of a pain in the ass to work with, to be honest.

What is the most expensive item of jewellery you have ever handled? And who was it for?

I guess it would be this massive diamond-studded platinum men's ring. It was actually pretty ugly. I can't remember how much it was worth though. We handle diamonds in the $20,000 - $50,000 range pretty regularly though, although in those scenarios the diamonds tend to be constantly escorted by armed guards, and I never really get to see them.

Do you remember which famous rapper or child to a middle eastern oil company owner that ring was for?

I can't say I do. We do custom-made jewelry a lot, but stopped advertising that fact as much when people started asking for Batman-themed or Green Lantern-themed engagement rings. Now, that's not to say that we wouldn't make something like that if someone was willing to pay for it, but it would be a pain in the ass for our CAD people, so we'd charge a lot more than usual, and our customers would get mad and assume that we were trying to rip them off.

We still do custom work, and we can make pretty much anything a customer would want, but now we try to establish a relationship with them before we explicitly say that we can custom design their ring, especially if our CAD people are really busy.

I shudder at the thought of someone walking around with a Batman engagement ring. Nothing else screams "I've been infected by consumer culture" like giving your one true love something that's been heavily advertised.

Nothing else screams "I've been infected by consumer culture" like giving your one true love something that's been heavily advertised.

So consumer culture on extends to engagement rings when they are customized to reference pop culture? You have seen jewlery adverts right?

Pretty sure that post was a bit of not-so-subtle satire.

To be fair, there's something kind of appealing about a Green Lantern engagement ring. Kind of like something being so stupid it's funny.

Are you just saying that because your cad designers have already made one and want to sell more?

Kidding, but I could see some people actually wanting one.

Our CAD guys are professionals who take a lot of pride in their work, and would be really pissed to have to do something like that. Thinking about it, I'm not even sure they would.

Is it possible to see a difference between a synthetic diamond and a real diamond?

Yes, if you're a trained gemologist. Large natural diamonds have formed over the course of millions of years, whereas synthetic ones form over the course of a week or so. This causes significant changes in their internal structure that someone who knows what they're doing can pretty easily detect.

Could you expand, or link me something, on what changes internally? I've got some background in crystallography, and I'm curious what really different in the microstructure.

Nitrogen shows in both lab-grown and natural diamonds. However, interestingly, nitrogen forms in clumps within the natural diamond matrix, whereas it is dispersed atomically in lab-grown conditions, especially in the pressure-anvil types (Gemesis, etc...). By shining a UV source, the luminescence from natural vs. lab grown is apparent (I think that this is technically photoluminescene spectroscopy, by the way). Also, there were microcrystals of metals in the early synthetics, and was due to contamination of the metal which was used in the pressure chamber... My memory is fuzzy here, but by flowing graphite through a liquefied metal chuck, carbon is deposited onto cold-walled, low-quality substrates. However, some of the metal was unintentionally introduced, and is indicative of synthetics. The newer, CVD-prepared diamonds are very high quality, though. It's impressive from what I can gather. I do not claim to be an expert on diamonds; just knowledgeable about solid-state and crystal growth.

I am of the opinion that synthetics are going to become more valuable. While the mined diamond industry touts the idea that there is some kind of sentimental value that goes along with naturals, I look at the mining practices and Blood Diamond history, and then a high-quality, low-energy intensive synthetic, and it's kind of a no-brainer, except for the stigma that goes along with "lab-grown" crystals.

But, I spent five years in grad school studying semiconductors and growth, and luckily, my wife-to-be is on board with the idea that higher quality diamonds, albeit synthetic, are better for the bling, the buck, and for the blood.

I love that girl, and I clearly love lab-grown crystals. DeBeers and the like can go and try to fool some other chump. I'll take the beatuiful, clear, CVD, diamond any day of the week.

OP, what say you on the synthetic vs. natural stigma? Do you think that the tide is turning at all, or will the "synthetic" inferiority will remain culturally?

The trouble with that theory is that what happens if some new technology suddenly makes it much cheaper to make synthetic diamonds? You know how when they made the Washington Monument, they gave it a tip made out of aluminum, because aluminum was super rare and valuable? That seems ridiculous now, because aluminum is much easier for us to make than it was 150 years ago.

It's sort of the same thing with natural diamonds. We know their scarcity, and their scarcity is a huge part of what makes them valuable. It's the reason people prefer platinum to silver, even though most people would be hard pressed to tell silver jewelry and platinum jewelry apart.

That'd be more of a question for someone who works for GIA, not me. I've heard they use x-ray crystallography to confirm the structure, but it's not something I have any experience with myself.

Yes, if you're a trained gemologist. Large natural diamonds have formed over the course of millions of years, whereas synthetic ones form over the course of a week or so. This causes significant changes in their internal structure that someone who knows what they're doing can pretty easily detect.

Oh cut the bull crap.. The only reason you can tell the difference is because synthetic diamonds are 99.9% perfect diamonds while ALL mined diamonds have got significant imperfections in them that can be easily seen with instruments.

Synethic diamonds ARE real diamonds, if you don't think so then you've been successfully brainwashed by De Beers.

The difference is synthetic vs. mined and it is always the case that mined diamonds have more imperfections. Synethic diamonds are always closer to the ideal perfect diamond and that's a fact.

The only reason people don't buy perfect synthetic diamonds for their perfect love is because of De Beers brain washing people into thinking that mined diamonds are "real". De Beers even tries to play off the imperfections in their mined diamonds as a good thing, which is pretty desperate. Don't you think?

Do you have imperfections in your love for your significant other? NO? Then why would you buy a mined diamond with imperfections (they all have 'em) in it from De Beers or any other diamond mine company?

Talk to an HONEST person who works in diamonds. How do they tell the difference between a synthetic and a mined diamond? They look for the imperfections in the stone and if there are any, that's a dead giveaway that it's a mined diamond. Synthetic diamonds have got 99.9%+ perfect crystal structure.

Do some research beyond Reddit circlejerks once in a while, okay? You clearly know fuck all about diamonds. Gemologists are trained to look for certain inclusions and strain patterns that are characteristic of the different diamond manufacturing processes. And in any case, manufacturing diamonds larger than about 1 carat is prohibitively expensive, so if you want anything larger, you pretty much have to go with a natural diamond or an HPHT enhanced one. This article describes how they ACTUALLY tell the difference between natural and lab-created diamonds, if you care at all about the truth:

http://www.jckonline.com/article/284220-Identifying_CVD_Synthetic_Diamond.php

How can I haggle prices? I went engagement ring shopping with a friend and the prices seem to be largely inflated. The jeweler said they don't make much at all on the diamond, it's usually the financing. Is this true? Is there a certain profit margin that jewelers usually try to work on that I could work with them on?

I'm not sure about other retailers, but at my company, our sales staff haggles with customers all the time. Our profit margins aren't very high though, so customers often act like we have a lot of room to negotiate, when we don't at all.

The best way to haggle is to inform yourself ahead of time by looking at prices from online retailers. Besides us (http://www.enchanteddiamonds.com) there's also other online retailers like James Allen and Blue Nile. They're our main competitors though, so obviously we'd prefer you go to us. ;)

In such an industry of that size, what is the profit range that is made off of diamonds?

Less than it used to be. Most retail jewelers like Jared or Kay have profit margins near 50%. Of course, they spend a lot on advertising and renting storefronts, so their expenses are a lot higher. Up until the 1980s, diamond sellers were making money hand over fist, since people had no idea how to determine how much a diamond was worth, and jewelers would sell them for as much as they could get. Now that all that information is available on the internet, customers are able to get a lot more for their money if they do some research.

Online retailers have much lower profit margins than jewelry stores, plus we usually don't have to charge sales tax when shipping to other states.

If I were to buy an engagement ring, what steps should I take to buy the best quality stone at the lowest price?

And then, assuming I did so, would anyone notice what I did or care (aside from the hypothetical blushing bride)?

If I were to buy an engagement ring, what steps should I take to buy the best quality stone at the lowest price?

That's actually exactly what our business model is. It used to be that jewelers would just push whatever they have in stock on their customers, but we're trying to turn that around and actually help people get the best deal for their money. We have a guided search function on our web site that tries to help people through that process. You can see it here:

https://enchanteddiamonds.com/diamonds/search?guided_search=true

It's designed to walk people through the process of where they can save money and how to get the best deals. It's a pretty neat tool, and explains the process quite well.

And then, assuming I did so, would anyone notice what I did or care (aside from the hypothetical blushing bride)?

Well, brides love to show off their engagement rings, so probably all of her friends and coworkers and family would be looking at it and admiring it too. Odds are pretty good that some of them would know enough about jewelry to gauge its quality. We actually encourage our customers to go to jewelry appraisers so they can tell them what a good deal they got.

(sorry about turning that into somewhat of a sales pitch... it's sort of automatic now)

Will this technology shift have an effect on diamond prices? Help keep them higher, or make them cheaper?

In general, the middle men make less money, and it's better for the consumer. It used to be that jewelry sellers would just convince people to buy whatever they happened to have in inventory and make like 100% markup or so. But the internet and competition have made it so that people can get diamond jewelry for much closer to cost. However, demand for diamonds is shooting up in countries like India and China, so the prices might not change much for customers. Right now, Mumbai is the center of diamond polishing and selling for the world, for example.

So, do you use ruby?

Actually, yes. It's kind of annoying because in Chrome, half my tabs will be programming-related, and half will be the websites of diamond suppliers. And they all have little gemstones for the favicon.ico icon, so I never know which is which.

When I got engaged, I told my husband not to bother with an actual diamond. I have a CZ in my ring so I could get the setting I wanted without the $10k diamond that supposedly fit in it. I get a new CZ anytime it gets cloudy for free. No one but a pro can tell the difference.

Does this make me strange for a girl? Is the diamond really worth it? I don't think it is, can you tell me why I'm wrong?

No, honestly I'd probably be terrified of losing it or having it get stolen if I was carrying around something that valuable.

Jesus, didn't see any programming questions at all yet.

1. What is your stack where you are at?

2. I saw you mention new development that can be used across sectors. Are there a lot if greenfield applications you guys get to create?

3. Is the diamond industry like a lot if others, inundated with legacy code that you can't get rid of?

4. Coolest part about the tech the goes into play in the industry?

5. Do you have a beard?

6. Can you call these questions like an array and modify the value with your answer?

Thanks!

What is your stack where you are at?

Ruby, Rails, Postgres, and a few C++ utilities and bash scripts, running on a Linux system. Mostly data scraping and database management, as far as our day-to-day stuff. And of course, all the frontend stuff for our website, but I'm not as involved in that.

I saw you mention new development that can be used across sectors. Are there a lot if greenfield applications you guys get to create?

Yes, although obviously, an NDA prevents me from elaborating on this too much. We've developed some internal sales tools that are better than anything currently on the market in some ways.

Is the diamond industry like a lot if others, inundated with legacy code that you can't get rid of?

Sort of. We have to get all of our data in CSV format, and our suppliers aren't always that great about accuracy. We're always excommunicating suppliers for doing shitty data entry.

Coolest part about the tech the goes into play in the industry?

We've had 3D printing technology since before it was cool. Jewelers and dentists were the first ones to get it, like 15 years ago. Also, diamonds are laser-cut now, which reduces waste and makes them really precisely cut.

Do you have a beard?

Sideburns and usually stubble.

Can you call these questions like an array and modify the value with your answer?

questions.each {|q| "<p><strong>#{q}</strong><br>Go to hell.</p>"}

I have a gold krugerand (bear with me) and I wanted to sell it a few years ago when I was like 18 as prices were really ridiculously high, my parents advised me against it, then prices dropped something like 50% a few months later.

What's your best advice for non-professionals when it comes to predicting whether prices in diamonds or other precious stones (or metals) are going to keep going up or not?

Was that in the 2008 crash? I actually invested about $10,000 during that crash in gold and platinum, (all I had at the time) because I figured that fears of the government collapsing would drive up prices over the next year or two. I actually doubled my money, which didn't make me rich or anything, but did help pay for grad school. If I was investing in precious metals now, I'd keep an eye on palladium and rhodium. Any disruption in supply could cause the price to skyrocket.

As far as diamond prices going up, a lot of the fancy colored stones are becoming really popular right now, especially the vivid colors like pink and blue. They're rarer than clear diamonds, and a lot more expensive if the color is bright, as opposed to the more common muddy brown-colored diamonds.

The recent promotion of "chocolate" brown diamonds ... is it basically a scheme to make a huge profit by popularizing what were once considered useless/undesirable diamonds?

Yes. They used to use these brown diamonds industrially, but it's gotten a lot cheaper to make diamond grit in the last few decades, and no one knows what to do with these brown ones.

Are synthetic diamond worth less then real diamonds ?

Depends what you're using them for. A lot of people assume that it's really easy to make synthetic diamonds, but the process is actually very slow, and there isn't really any good way to speed it up without getting an ugly-looking diamond with lots of little cracks in it. In fact, for diamonds that are over 1 carat, synthetic diamonds can actually be more expensive than natural ones. So for that size of diamond, they'd only ever synthesize them for research purposes.

In any case, in order to sell a diamond, you have to have it graded by a grading lab, and they can easily tell synthetic diamonds from real ones. Diamond simulants like CZ and moissanite are also really easy to tell what they are by a trained gemologist.

Speaking of synthetic gems, has there been research done on hybrid gems? For example, having a ruby as the core inside a diamond.

There is something called enhanced or HPHT diamonds, which start as brown diamonds. They're treated by lasers and various other processes to change the brown color to a much more appealing color, like blue or pink. I guess that would be a sort of hybrid between a synthetic and natural stone.

What kind of nickname does the industry have for chocolate diamonds?

Shit diamonds. Although maybe that's just us.

What percent of diamonds sold today are blood diamonds? I've heard that if someone wants a piece of jewelery that is conflict free, they should avoid diamonds all together because there is no way of knowing for certain which diamonds are blood diamonds.

Actually, if you want to get a guaranteed conflict-free diamond, get one with a pink hue. Those are found in Australia only. They're also really expensive right now, perhaps for that reason. Canada also has a program to certify their diamonds are conflict-free. Still, most diamonds mined in Africa are above-board with regard to the law, and there's mainly just one area in Zimbabwe where it's really a problem right now. Diamonds from that region have a certain green tinge to them, and a lot of people avoid buying all greenish diamonds for that reason.

I beg to differ here. I don't suppose you've spent much time in the Northeastern reaches of Angola as I have. Not much is 'above-board' there. Hopefully this can change, but Angola in particular is 'closed' to much of everything.

Well, what I meant is that in areas where there are lots of diamonds, they tend to develop those areas a lot more, and they can actually pay for police and guards and such, with the money they make from diamond mining. Of course, there are definitely parts of Africa that have smaller deposits of diamonds, where people basically just dig in the dirt and try and find diamonds. You'd be pretty hard-pressed to find any industry in Africa that isn't corrupt, but that doesn't mean everyone should stop buying stuff that comes from Africa.

Since the price is dictated mostly by supply & demand, have you had any thoughts on bringing diamonds to the crypto-currency market?

There are cryptos being created now that are backed by other commodities, like gold: http://www.nofiatcoin.com/

Not sure the legalities around it, or if it would be profitable, but it sounds like it could be an interesting idea.

Any other crazy out-there diamond related tech you're working on?

Well, we do have a Coinbase seller account, so we'd be willing to sell diamonds for bitcoins, if someone wanted to do that. We don't have that functionality on our site yet though, so someone would have to ask us about that directly. And ever since the Mt. Gox fiasco, bitcoin people have been a bit paranoid, so I'm not sure how many people would be up for doing this. We'd also have to worry more about people trying to hack us, and laws that have to do with money laundering, among other things.

The trouble with backing a currency by diamonds, is that there are so many different sizes and shapes and colors of diamonds, and they all fluctuate differently. It's more like trying to value real estate than it is gold, for instance.

if i was on the run from the law should a bag of uncut diamonds be in my escape kit ?

Cut diamonds would be better. Uncut diamonds look really suspicious.

Are you married? If so, what was the engagement ring like?

Nope, still single. I'll probably get married at some point in life, and I suppose I'm quite well-prepared for when that happens.

If I were buying an engagement ring now though, I'd get one custom made. With 3D printing technology, we can just send a CAD file to a manufacturer, and they'll print the mold right out for us. The cost to have your own ring specially designed are only maybe $100-$200 more than getting a mass-produced one (we have to pay for the CAD work and the mold), so if you're going to drop a few thousand on a ring, you may as well get it looking exactly like you want.

We able to do that, since we're located near the diamond district in NYC, but the logistics would be difficult in most cities.

Hello and thanks for doing this AMA. I also work in the diamond district (you buying, selling?) for a large diamond and platinum jewelry manufacture. We may even buy our melee from you but I would need to ask my boss. I currently manage the platinum casting but have done everything from running the shop to taking care of laser engraving and the solidscape prototyping machines. There is so much misinformation about diamonds out there. This clears a lot of it up, even for me. I hope we cross paths one day.

Haha, awesome! We're on 35th street, and are incorporated as ODIC (Online Diamonds International Corporation). You probably wouldn't ever see me, but if you talk to Josh or Meredith, tell them you read my Reddit AMA. Josh would think that was hilarious.

Are diamond prices going to continue growing relatively exponentially or will it cap off? And if so what is that expected price?

Unless we find some enormous untapped mine, diamond prices will probably continue to grow for a while, especially as India and China start to buy more diamond jewelry. The trouble is that the high-quality diamonds are the ones in demand, and they're a lot rarer than the yellow and brown ones. So marketers have been trying to sell them as "champagne diamonds" or "chocolate diamonds". I'm not sure if that'll ever catch on, but it's kind of a joke in a lot of circles.

It will go down as manufacturing of synthetic diamonds improves and people are educated in the fact that synthetic diamonds have less imperfections in them than mined diamonds. To be honest, I'm surprised people even buy mined diamonds anymore. Why buy an imperfect diamond for your perfect love?

Synthetic diamonds aren't "perfect". They have flaws and strains in them just like natural diamonds. You're probably thinking of CVD synthetics, which are good, but still show characteristic patterns in them that natural diamonds don't have. You're probably thinking of how certain flaws only appear in natural diamonds, so if a jeweler sees that flaw, he can immediately rule that diamond out as being synthetic. But that doesn't mean that's the only way to detect a synthetic. There's a lengthy explanation of the process and technologies here:

http://www.gia.edu/gia-news-research-improved-quality-identification-challenges

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Yeah. But glass is pretty hard, so you'd have to scratch away at it for a while. Sort of like a hacksaw can cut through steel, but it's still pretty hard. They sell diamond-grit tipped cutting tools for pretty cheap if you ever want to try yourself.

Do you enjoy your work?

For the most part. We're developing a lot of new technology that could be used in other sectors as well. It's a mix of traditional retail, combined with a lot of the culture of a tech startup.

what is the cost difference from the mine, to the consumer? and how many times has it been stepped on? please give examples for the different qualities/ sizes as i know this greatly affects the cost, i.e. industrial grade diamonds vs less than 1 caret consumer vs over 5 caret consumer, etc...

This is extremely complicated. I don't think I would be able to answer this question in less than an hour. But if you're still interested, PM me in a few days, and I can probably help you more then. You can go to our web site (enchanteddiamonds.com) and look up different combinations of cut, color, clarity, or whatever. Oh, and if you find a major bug on our website, let me know so I can tell our frontend guys. :)

I'm writing a book which contains a scandal about blood diamonds...

how prevalent are blood diamonds in the industry... and do any of these companies try to cut corners by sneaking them into their supply?

The only way they can really check the origin of a diamond is by looking for features that are characteristic of diamonds from a particular area. Right now, most of the mines in Africa are above-board with the law, but there is a part of Zimbabwe where this is a problem. The diamonds from there have a particular greenish tint (not all green diamonds are from this part of Zimbabwe, and only a skilled gemologist could really recognize the traits in question) so a lot of polishers and suppliers are a lot more careful when dealing with those diamonds. Like, if some farmer in Sierra Leone claimed he found a diamond on his property that has characteristics of a Zimbabwe diamond, there's probably something criminal going on.

There's also the Kimberley process, which helps make sure that diamonds are properly sourced. Ultimately, the work I do is quite a bit downstream of that side of things though.

Are there any tricks or tips to buying a diamond as a consumer? Ways to not get ripped off, etc. A while back I was starting to look at rings for a girl I had been dating and I looked at two identical rings with diamonds that shared identical stats/ratings and the price difference was $3000.

Online retailers can actually give you a huge cost savings, although for some reason, people are reluctant to go that route. It could also be that the diamonds you were looking at actually were different enough to warrant a price difference, but that difference wasn't immediately visible. I've seen 1-carat diamonds that ranged from $3,000 to $20,000, where I couldn't tell them apart.

I've heard there are so many diamonds that there are enough for each person to have a handful. Are there really that many or is that an exaggeration/misinformation?

There are a lot of tiny diamonds out there, and those ones are pretty cheap, but diamonds get exponentially more rare as the size increases. So I guess that might be true, but virtually all the diamonds would be less than a few millimeters across.

What is the hardest part about calculating diamond prices? What ends up taking most of your time as a software engineer for De Beers?

I don't work for De Beers, I work for a retailer. De Beers controls mining operations, mostly in Africa.

My bad, what takes up most of your time in calculating diamond prices as a software engineer then?

Oh, ok. Hmm... I guess the hardest part is trying to quantify a diamond's quality. Like, we have all these numbers and classes that tell us all these different things about the diamond, which means that any equation I write has to have like ten different variables. And those variables can be all over the place. Also, diamonds often come in that my code can't account for, which crashes it. Or different combinations of characteristics might be good in some cases but not in others.

The most maddening part of my job is when our suppliers send us bad data. It happens all the time, and then some ridiculously cheap diamond will show up for sale on our site, and it turns out that some guy mistyped a number somewhere. Then our customers accuse us of baiting and switching, and accuse us of scamming them and stuff. That always sucks, although I've been able to write code that automatically accounts for a lot of common mistakes in our data.

Why does my very modest diamond engagement ring sparkle so much more than my friend's very large and expensive engagement ring? Mine is white gold hers is platinum. My diamond is 1/3 of hers. We both have wedding bands that we wear but are not soldered to the diamond ring. It's very obvious hers is bigger and pricier, but shouldn't it be a lot more sparkly and eye catching than mine? What the hell?

Yeah, that's why cut quality is the most important characteristic of diamonds, because that's what determines light return. That's part of my job, to calculate which diamonds have better light return so I can price them appropriately, and our sales team has an easier time knowing which diamonds to recommend them to customers.

What probably happened with your friend's ring is that whoever polished the gem focused more on size than cut quality, so they could sell it for more. Like, they'd make the diamond a little misshapen so that they could get it a little bigger. And if a diamond's shape is off, that screws up its light return.

I once heard that "used" diamonds, ones that have already been set once and are then reclaimed and resold, are actually much less expensive than ones that have just come out of the ground. Is this true? And if so is it because there is a noticeable difference or is it in the same vein as new cars losing lots of value as soon as they are driven off of the lot?

No difference, really, other than with a "used" diamond, you're buying buyer-to-buyer. If you buy from a retailer, that retailer needs the markup to support himself, whereas if you buy from just a random person, he doesn't need to mark it up in order to walk away satisfied. You do run the risk of getting scammed and being sold a CZ or something though.

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To be honest, prices are controlled mainly by supply and demand, like most commodities. The difference is that with diamonds, there are about ten different factors that all come into play when determining the quality of a diamond. It's more like trying to price a car than it is pricing gold or platinum. For example, usually clear diamonds are the most valuable, but if you find a vivid pink diamond, that's actually going to be worth a lot more than a clear one of the same size.

As far as what those factors are, that would include carat, color, clarity, cut quality, shape, polish, symmetry, fluorescence intensity, fluorescence color, depth percent, table percent, the location of inclusions, girdle thickness, whether the diamond has a certain green tinge (that means the diamond probably came from a part of Zimbabwe where blood diamonds are still a thing).

If a diamond does have a green tinge, indicating it could possibly be a blood diamond, how does that affect the value? Do people still buy them, but they just don't want to pay as much?

Yeah, but it wouldn't affect the price too much. It's mostly the developed world that is concerned with that, and most diamonds these days are sold in India and China.

If De Beers didn't have their monopoly, what do you think the actual market price would be for diamonds?

I hear they are far more common than their price suggests.

De Beers hasn't had a monopoly since the 1980s or so. Right now, there actually is real competition among diamond miners, polishers, and sellers, especially since Canadian and Australian diamond mines came on the scene.

De Beers still controls a lot of diamonds, and they do hold inventory for the same reason Bill Gates won't ever dump all his Microsoft stock on the market over the course of one day, but they only control 30-40% of the diamond market right now. They actually lost a lot of money in the 1990s, trying to keep their monopoly:

http://www.kitco.com/ind/Zimnisky/2013-06-06-A-Diamond-Market-No-Longer-Controlled-By-De-Beers.html

Thanks. That's good information. Oddly, I don't recall any huge dip in diamond prizes when De Beers lost their hold. Then again, I wasn't buying a lot of diamonds!

Yeah, a lot of that was because of the increase in demand from China and India and other countries that are rapidly becoming consumers of diamond jewelry. So the prices have actually stayed pretty stable, while the middlemen have been getting a smaller chunk of the money.

So are you saying that a rise in diamond prices is being dampened from a vestigial stockpile left over from a previous strategy... What about when the stockpiles dry up?

The size of the stockpiles is a closely-guarded industry secret, so no one really knows how big they are. There has been an increase in diamonds from Canada, Russia, and Australia, but it might not be able to keep up with demand. A lot of people are actually buying diamonds as investments. Personally I wouldn't, but only because my understanding is primarily in technology, so if I had money to invest, I'd probably invest it in the tech sector.

How big, do you figure, is the strategic reserve of DeBeers diamonds?

That's a closely-guarded secret. No one really knows. They're sort of like the Federal Reserve of diamonds though. They keep the prices pretty consistent over time by buying during a surplus and selling when the prices get high.

What's the difference between a diamond that 10 kids die for and a shiny rock?

If you're talking about blood diamonds, the problem isn't anywhere near what it used to be. There is an area of Zimbabwe where it's still a problem, and those diamonds can often be identified by a certain green tinge. Canada, Australia, and Russia are also big players in diamond mining these days.

I'd just like to apologize in advance, since there's no better way to get a reddit circlehatejerk going than to bring up diamonds, since a bunch of people watch videos like these and think they're factual.

Yeah, I figured I'd be walking into a minefield, but on the same level, I was hoping I'd be able to dispel some of the misinformation that I see on a regular basis.

Edit: I watched the video. Parts of it are true. For example, diamonds used to be something that only wealthy people could afford, but then when a whole shitload of them were discovered in Africa, there weren't enough wealthy people to buy them all, so De Beers started marketing them to middle-class people.

Back in the 1930s, a couple would start having sex as soon as they got engaged, because it was kind of important to a guy that his wife was only ever with him, but there was no harm in starting early. So a lot of couples would be in sort of lengthy engagements until they were ready for the logistics of being a married couple. However, some guys would ask a girl to marry them, then start having sex, then eventually call off the engagement. This really sucked for the girl, since that'd be a huge scandal for her and her family. So De Beers got the idea to market diamond engagement rings as a sort of insurance against the guy taking off, and it worked really well.

However, De Beers no longer controls the diamond industry to anywhere near the extent that they used to. They only control about 30-40% of the market at any given time. So diamonds are still quite rare, and not nearly as common as that video would lead people to believe.

I really don't get what someone means whenever they say something is "intrinsically worthless" though. Diamonds have value for the same reason that gold or bitcoins have value, because they can be traded for other things that have value. If you have a diamond and want to sell it, there are plenty of ways to go about it. Sure, pawn shops will rip you off, but a private jeweler would probably give you a pretty good deal, especially if you knew him or you were a regular customer.

I choose to believe this as factual overall. No offense, but fuck diamonds. Shiny rocks that are used for anything other than practical applications can fuck off. Good job convincing shallow women they are necessary. (Not directing this hostility at OP, I hope the tech aspects of his business phase out the superficial ones.)

If that's the case, you can always buy a cubic zirconia and have it set in a fancy setting. Most people won't be able to tell the difference, as long as the stone isn't so big that people will assume it's fake. A lot of people do this anyway, like if they don't know if they'll like the ring, they'll have it set with a CZ stone first, then buy a matching diamond later. You can always just skip the step where you buy a matching diamond if you don't want to pay for it.

Do you think it's okay to wear jewellery that is not even a synthetic diamond but is just glass (like Coco Chanel style)?

I'm a programmer, so I think it's okay to wear jeans and t-shirts to work every day and shave once a week. I guess I'm not the one to ask on that subject.

so a year or two ago, reportedly, there was newly announced cache of diamonds from a russian meteorite strike, something crazy like a trillion carrots. why would a flood of new diamonds not make the global price drop?

Those diamonds were all pretty crappy for jewelry. They were brown and nobody wanted them. They're trying to sell brown diamonds now as "chocolate diamonds", but they haven't been very successful.

thanks! i am a fan of gemesis and apollo diamond. I read this wired article about lab grown diamonds and this de beers examiner from antwerp just about shitting himself when the journalist showed him two identical high end diamonds. it is an interesting field.

Well, they can tell the difference between synthetic and natural diamonds. But it isn't easy, although it is a part of standard diamond certification. And CVD (the technology for creating gem-quality diamonds) is actually a lot more expensive than people think it is. Creating diamond grit for industrial purposes has become really easy, but creating diamonds over 1 carat or so via CVD is so expensive that it's not really worth it. They can make gemstone quality diamonds in the 0.25 - 0.75 range for a significant discount over natural diamonds though.

I have a very expensive diamond engagement ring and my husband and I have discussed selling the diamind and replacing it with another stone because, really, who needs a diamond? One of the reasons I haven't is because I want some sort of heirloom to pass on to my daughter. Do you think diamonds will still actually be worth something in 20/30/50 years? Not ghat I expect her to sell it, but there's no point in keeping it if it won't be worth anything.

If you're going to sell it, definitely get it GIA certified first, if you don't already have a certificate. It'd probably cost $100 or so, but it makes it so that a jeweler knows exactly what he's getting.

I'm not sure where Reddit gets the idea that someday diamonds will be worthless, but it's pretty far off the mark. The price of diamonds fluctuates, like any commodity, but it's hard to imagine a situation where it'd change too drastically.

Do you think the rings on etsy are 1. real diamond and 2. a good price for $1500? I feel as tho diamonds are only expensive because the markets can make the prices and they all agree on skyrocket prices and little companies out there such as companies on etsy can sell for less because they're just trying to get bye.. thoughts?

It really depends on the diamond and the metal that the ring is made out of. If there is a diamond, does it have a certificate? Diamonds cost a lot because they're rare and it costs a lot to mine them and polish them. They can't be mass-produced as easily as most commodities. But if you just want something that looks nice, you don't necessarily need a GIA certified diamond.

Any guidance on importing loose or set diamonds into the US? Do duties vary state-by-state?

Buy online. Our company is good (see the intro) and our competitors are also pretty good. (James Allen and Blue Nile) Buying online means you don't have to pay sales tax in many cases, and that knocks a LOT off the price.

edit: err.. importing? I'm not sure. The main country we import from is India, but a lot of our diamonds are in NYC too.

Do you'll ship internationally, say India for instance? Your website doesn't go into too much detail about it aside from the $200 international shipping option and the 'More details' section that seems to suggest that you'll do.

My question is how do you'll deal with customs (duties et al.) if at all? Or do you'll leave it to the 'recipient' to deal with it?

To give some context - a "friend", cough, cough, would like to propose to a girl in India and since he is in the US there doesn't seem to be an easy option to do this. Sending her a 'box' and then having to deal with Customs duties and such isn't exactly ideal.

Fellow C++-phile, btw. Warmed the cockles of my heart to see this:

A few custom-made C++ tools for analyzing certain types of data.

There still be some love for me olde hearty.

It'd be a lot cheaper to buy an engagement ring in India than in the US, no? We pay import duties on diamonds from India all the time. We also deal with a lot of Indian suppliers, so if you really wanted to, we could probably work out some deal where an Indian supplier that we trust makes the ring and sends it within India.

I'm not really sure about this though, and I'm just kind of spitballing. That would be more of a question for sales. And of course, it being Saturday, we won't be open until Monday.

Fellow C++-phile, btw. Warmed the cockles of my heart to see this:

I wish I could explain this more, but the C++ parts of our software, are the parts that I'd get in the deepest shit for publicizing. But yeah, if you need software that does something quickly, and there's nothing else out there, you can always use C++. :)

Asking about an engagement ring,

can I buy you one? <3

Uh... you can buy one from me. I'm a straight dude.

There have been a few instances where I've given a girl my business card and said "so if you're ever looking for a diamond, let me know!" It hasn't worked yet.

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Diamonds are a commodity, like gold or silver or platinum or oil or anything else, and lots of people work in those industries. You may as well accuse a gas station attendant of being responsible for the war in Iraq.

What's it like to make money off of slaves?

A lot of diamonds come from mines in Canada and Australia, you know. I'm pretty sure slavery is illegal there. Plus, most African countries are a lot more stable now than they were back when blood diamonds were a big problem, so the mines there are no worse than other types of mines. In any case, there isn't a single industry in the world that doesn't take advantage of cheap labor in developing countries, and you have to be part of the global economy in order to have a job these days, if you hadn't noticed.