1
00:00:06,006 --> 00:00:09,843
I'm planning on proposing
to my boyfriend, uh, shortly.
2
00:00:09,926 --> 00:00:13,722
The weeks leading up to that
are, like, the most stressful,
3
00:00:13,805 --> 00:00:14,848
nerve-wracking.
4
00:00:14,931 --> 00:00:17,517
You know when you get to the point
that you, like--
5
00:00:17,600 --> 00:00:20,228
all you can hear is, like,
badum, badum, badum.
6
00:00:20,311 --> 00:00:24,357
He got down on one knee,
and pulled this box out of his pocket,
7
00:00:24,441 --> 00:00:26,651
-which I had no idea was there.
-[both laugh]
8
00:00:26,735 --> 00:00:31,072
And he's like,
"Well, I wanna be with you forever."
9
00:00:31,156 --> 00:00:34,951
And everything went black and disappeared,
10
00:00:35,035 --> 00:00:38,788
and I was in this space with him,
and my knees were weak.
11
00:00:38,872 --> 00:00:41,541
[Cleo Abram] You probably know
what they bought.
12
00:00:41,624 --> 00:00:44,919
Diamonds are the world's
most popular gemstone.
13
00:00:45,003 --> 00:00:49,174
But if you compare them to other jewels,
it's not obvious why.
14
00:00:49,257 --> 00:00:51,718
These are just as sparkly as a diamond.
15
00:00:51,801 --> 00:00:54,471
These look indistinguishable
from diamonds.
16
00:00:54,554 --> 00:00:57,766
One of these is a man-made diamond.
17
00:00:57,849 --> 00:01:00,769
Scientists can now
create diamonds in a lab
18
00:01:00,852 --> 00:01:04,522
that are structurally identical
to diamonds mined from the earth.
19
00:01:04,606 --> 00:01:06,274
And yet, every year,
20
00:01:06,357 --> 00:01:09,486
people spend their savings
to buy the real thing.
21
00:01:09,569 --> 00:01:13,073
It is the single most expensive thing
that either one of us has purchased.
22
00:01:13,156 --> 00:01:17,786
It was the most beautiful
and most significant thing ever to me.
23
00:01:17,869 --> 00:01:22,248
Somebody that can afford to give you
nice diamond, no? It's nice.
24
00:01:22,332 --> 00:01:25,877
So what exactly
makes these rocks so special?
25
00:01:25,960 --> 00:01:28,171
What is the value of a diamond?
26
00:01:29,089 --> 00:01:32,592
[woman] Diamonds, forged by nature
and crafted by man.
27
00:01:32,675 --> 00:01:35,595
[man] It may be a cliché
to say that this is "rich soil,"
28
00:01:35,678 --> 00:01:37,680
but this time, it's literally true.
29
00:01:37,764 --> 00:01:39,766
It's beautiful. And he designed it.
30
00:01:40,016 --> 00:01:41,559
Make sure it stays on that finger.
31
00:01:41,684 --> 00:01:42,727
Of course.
32
00:01:42,811 --> 00:01:45,855
[man] It's not a purchase that's logical.
It's supposed to be illogical.
33
00:01:45,939 --> 00:01:46,773
It's not rational.
34
00:01:46,856 --> 00:01:49,901
[woman] They just seem representative
of these terrible things.
35
00:01:49,984 --> 00:01:51,694
It's like this waste of money,
36
00:01:51,778 --> 00:01:54,447
and we're only doing it
to show other people.
37
00:01:54,531 --> 00:01:58,076
[man] What do people want?
How much do they want it?
38
00:01:58,743 --> 00:02:00,578
What are they willing to pay for it?
39
00:02:05,875 --> 00:02:08,211
[Abram] We all live on a thin, solid crust
40
00:02:08,294 --> 00:02:11,005
above hot molten metal soup.
41
00:02:11,089 --> 00:02:14,467
That crust is typically less than
40 kilometers deep,
42
00:02:14,551 --> 00:02:16,553
just twice the length of Manhattan.
43
00:02:16,636 --> 00:02:20,473
Rubies, sapphires, emeralds--
these all form there.
44
00:02:20,557 --> 00:02:22,892
But a diamond's home is deeper.
45
00:02:22,976 --> 00:02:25,645
Scientists measure pressure in pascals,
46
00:02:25,728 --> 00:02:30,191
and where diamonds form,
pressures are five to six gigapascals.
47
00:02:30,275 --> 00:02:34,362
If you think of 80 elephants
standing on your big toe,
48
00:02:34,445 --> 00:02:37,907
that is the pressure that is equivalent
to five to six gigapascals.
49
00:02:37,991 --> 00:02:41,744
Every other precious gem
is made up of combinations of elements.
50
00:02:41,828 --> 00:02:45,165
A diamond? Only one. Carbon.
51
00:02:45,248 --> 00:02:46,875
From a scientific perspective,
52
00:02:46,958 --> 00:02:50,128
the most important part
of a diamond is this.
53
00:02:50,211 --> 00:02:52,005
[Smit] These are small pieces
of the mantle
54
00:02:52,088 --> 00:02:54,507
that's been trapped during diamond growth,
55
00:02:54,591 --> 00:02:57,177
and so these inclusions
are actually the only direct samples
56
00:02:57,260 --> 00:02:59,721
that scientists have
to study the deep earth.
57
00:03:00,305 --> 00:03:02,765
[Abram] And those inclusions
can be dated.
58
00:03:02,849 --> 00:03:07,854
If this is all of human history,
and this is the time of the dinosaurs,
59
00:03:07,937 --> 00:03:12,650
this is the period when all the diamonds
we see today were born.
60
00:03:12,734 --> 00:03:16,196
The oldest diamonds that have been dated
actually predate life on Earth.
61
00:03:16,279 --> 00:03:18,823
Over 25 million years ago,
62
00:03:18,907 --> 00:03:23,286
diamonds blasted to the surface
in rare and violent explosions.
63
00:03:23,369 --> 00:03:26,998
In the most seismically active regions,
they just evaporated.
64
00:03:27,081 --> 00:03:29,918
In the more stable areas, they survived.
65
00:03:30,543 --> 00:03:32,879
This is a map of seismic waves
through the Earth.
66
00:03:32,962 --> 00:03:35,215
The most stable areas are the pink ones.
67
00:03:35,298 --> 00:03:38,635
And that's where diamonds lay unnoticed
for millions of years.
68
00:03:39,385 --> 00:03:41,846
The earliest piece
of surviving diamond jewelry
69
00:03:41,930 --> 00:03:44,432
is this ring made around 300 B.C.
70
00:03:44,515 --> 00:03:46,351
Over the next 2,000 years,
71
00:03:46,434 --> 00:03:49,395
diamonds popped up
in crowns, rings, and pins
72
00:03:49,479 --> 00:03:51,147
alongside other precious gems.
73
00:03:51,231 --> 00:03:52,941
And sometimes they were wedding gifts,
74
00:03:53,024 --> 00:03:55,360
like the diamond ring
exchanged in the betrothal
75
00:03:55,443 --> 00:03:58,863
of Archduke Maximilian of Austria
and Mary of Burgundy.
76
00:03:58,947 --> 00:04:02,158
But diamonds wouldn't become
the unrivaled gemstone of love
77
00:04:02,242 --> 00:04:05,662
until these diamond deposits
were discovered in South Africa
78
00:04:05,745 --> 00:04:07,080
400 years later.
79
00:04:07,664 --> 00:04:11,584
Enter Cecil Rhodes, a British 17-year-old
sent to South Africa,
80
00:04:11,668 --> 00:04:12,961
then Cape Colony.
81
00:04:13,044 --> 00:04:16,339
He would one day be remembered
as a colonizer of Rhodesia,
82
00:04:16,422 --> 00:04:19,926
now Zimbabwe and Zambia,
the namesake of Rhodes University,
83
00:04:20,009 --> 00:04:22,136
the creator of the Rhodes Scholarship,
84
00:04:22,220 --> 00:04:24,055
a zealous imperialist,
85
00:04:24,138 --> 00:04:27,725
and the founder of the company
that would dominate the diamond industry
86
00:04:27,809 --> 00:04:30,478
for more than a century--De Beers.
87
00:04:30,561 --> 00:04:34,524
Under its watch, diamonds transformed
from a gem like any other
88
00:04:34,607 --> 00:04:36,317
into a cultural touchstone.
89
00:04:41,781 --> 00:04:46,160
To understand how they pulled that off,
you have to learn the De Beers' playbook.
90
00:04:46,244 --> 00:04:48,496
The first play--control supply.
91
00:04:48,579 --> 00:04:51,958
In the 1870s, Rhodes
started buying up his competitors.
92
00:04:52,041 --> 00:04:53,876
I think it's important to understand
93
00:04:53,960 --> 00:04:56,587
De Beers didn't necessarily produce
all of the diamonds in the world.
94
00:04:56,671 --> 00:05:00,883
They produced a lot of the diamonds.
They bought supply from other producers,
95
00:05:00,967 --> 00:05:03,761
and this allowed them
to basically control supply.
96
00:05:03,845 --> 00:05:07,598
Around 90% of the world's supply
within two decades.
97
00:05:08,349 --> 00:05:09,684
Then came the second play.
98
00:05:10,810 --> 00:05:13,563
Rhodes made a deal
to sell his entire supply of diamonds
99
00:05:13,646 --> 00:05:16,065
to an exclusive diamond syndicate
in London.
100
00:05:16,566 --> 00:05:19,652
When De Beers had control of
global supply under the monopoly,
101
00:05:19,736 --> 00:05:21,571
they had a strategic stockpile.
102
00:05:21,654 --> 00:05:24,949
And in situations where,
um, you know, demand would decline,
103
00:05:25,033 --> 00:05:27,994
they would hold back supply to market
as they saw fit.
104
00:05:28,619 --> 00:05:31,497
De Beers never released information
about its stockpile
105
00:05:31,581 --> 00:05:33,207
and claims they no longer have one.
106
00:05:33,291 --> 00:05:37,378
But in 1999, The New York Times
pegged it at 5.2 billion.
107
00:05:39,255 --> 00:05:43,634
In the 1940s, the U.S. government
tried to build its own diamond stockpile,
108
00:05:43,718 --> 00:05:45,595
because diamonds aren't just for jewelry.
109
00:05:45,678 --> 00:05:49,432
They're also the hardest-known
natural material on Earth,
110
00:05:49,515 --> 00:05:50,641
which makes them crucial
111
00:05:50,725 --> 00:05:52,935
for manufacturing weapons,
tanks, and airplanes.
112
00:05:53,811 --> 00:05:55,897
And while ultimately,
the War Production Board
113
00:05:55,980 --> 00:05:58,066
said no piece of equipment was delayed,
114
00:05:58,149 --> 00:06:00,860
a government official
claimed the De Beers-led syndicate
115
00:06:00,943 --> 00:06:03,529
was making getting diamonds so difficult
116
00:06:03,613 --> 00:06:06,532
that the U.S. had to threaten
to "not give planes to England
117
00:06:06,616 --> 00:06:09,911
if the syndicate did not sell us
the diamonds to make them."
118
00:06:09,994 --> 00:06:13,664
The reason? "The diamond syndicate
will not sell us a stockpile
119
00:06:13,748 --> 00:06:17,960
because it will not tolerate large stocks
outside its monopoly control."
120
00:06:18,044 --> 00:06:21,422
But maintaining the price of something
isn't just about supply.
121
00:06:21,506 --> 00:06:22,924
It's also about demand.
122
00:06:24,133 --> 00:06:26,928
The decade before World War II,
De Beers was in crisis.
123
00:06:27,011 --> 00:06:28,471
It was the Great Depression,
124
00:06:28,554 --> 00:06:31,349
and there weren't many people
shopping for diamonds.
125
00:06:31,432 --> 00:06:34,185
Worse, people might sell
the diamonds they had bought,
126
00:06:34,268 --> 00:06:37,480
increasing the supply
and further driving down the price.
127
00:06:37,563 --> 00:06:41,109
So De Beers has hired an advertising firm
which came up with a brilliant idea.
128
00:06:41,192 --> 00:06:43,861
What if people kept diamonds... forever?
129
00:06:43,945 --> 00:06:47,156
Certainly the famous slogan
"A diamond is forever."
130
00:06:47,240 --> 00:06:50,368
It's probably one of the most successful
advertising campaigns
131
00:06:50,451 --> 00:06:52,036
in advertising history.
132
00:06:52,120 --> 00:06:55,498
Rings had been a common engagement gift
since the early Middle Ages,
133
00:06:55,581 --> 00:06:58,459
but the idea that a diamond
should be on that ring? That was new.
134
00:06:59,127 --> 00:07:00,837
The first campaign ran in the U.S.
135
00:07:00,920 --> 00:07:03,714
with paintings
by some of the world's biggest artists.
136
00:07:03,798 --> 00:07:06,300
On the right, that's by Salvador Dali.
137
00:07:06,384 --> 00:07:08,678
On the left, Pablo Picasso.
138
00:07:08,761 --> 00:07:12,056
The message was,
"Diamonds are works of art."
139
00:07:12,890 --> 00:07:16,102
Many campaigns followed,
all with that same slogan.
140
00:07:17,562 --> 00:07:19,480
[man] A diamond anniversary band.
141
00:07:19,564 --> 00:07:22,817
On your tenth,
show her you'd marry her all over again.
142
00:07:23,526 --> 00:07:24,819
[Abram] It worked.
143
00:07:25,570 --> 00:07:28,614
In the 1939 classic, Gone With The Wind,
144
00:07:28,698 --> 00:07:31,075
Scarlett O'Hara
pleads for this precious gem.
145
00:07:31,159 --> 00:07:33,119
What kind of ring
would you like, my darling?
146
00:07:33,202 --> 00:07:36,497
Oh, a diamond ring.
And do buy a great big one, Rhett.
147
00:07:36,581 --> 00:07:39,083
But she'd have been one of only
10% of American brides
148
00:07:39,167 --> 00:07:41,377
who received a diamond ring that year.
149
00:07:41,461 --> 00:07:42,795
By the 1950s...
150
00:07:42,920 --> 00:07:45,798
♪ But square-cut or pear-shaped ♪
151
00:07:45,882 --> 00:07:48,050
♪ These rocks don't lose their shape ♪
152
00:07:49,093 --> 00:07:51,179
...diamonds were a girl's best friend.
153
00:07:51,262 --> 00:07:55,141
And by 1990,
80% of American brides got one.
154
00:07:55,224 --> 00:07:58,478
And if a diamond is forever,
most people don't want a used one.
155
00:07:58,561 --> 00:08:01,314
There's no official price scale
for second-hand diamonds, but...
156
00:08:01,397 --> 00:08:04,734
I think you would be stunned
157
00:08:04,817 --> 00:08:06,861
by how little you would get
158
00:08:06,944 --> 00:08:09,447
as-as a percent of what you paid.
159
00:08:09,530 --> 00:08:14,577
You might get 25%
of your purchase price, 30%.
160
00:08:15,828 --> 00:08:19,290
The campaign was such a hit,
De Beers ran it again.
161
00:08:19,373 --> 00:08:20,583
This time in Japan.
162
00:08:20,666 --> 00:08:23,753
-[man speaks Japanese]
-[speaks Japanese]
163
00:08:23,836 --> 00:08:26,923
[man speaks Japanese]
164
00:08:27,590 --> 00:08:29,800
In 1967, when that campaign began,
165
00:08:29,884 --> 00:08:32,303
almost no Japanese brides
received a diamond.
166
00:08:32,386 --> 00:08:35,056
Twenty years later, over 70% of them did.
167
00:08:36,933 --> 00:08:40,394
In the 1990s, De Beers turned to China.
Same slogan...
168
00:08:40,478 --> 00:08:42,563
[man speaking Chinese]
169
00:08:43,648 --> 00:08:45,441
-[Abram] Same result.
-[man] De Beers.
170
00:08:45,525 --> 00:08:49,695
These ads are trying to create demand,
and that's not some dirty trick.
171
00:08:49,779 --> 00:08:51,239
That's capitalism.
172
00:08:51,322 --> 00:08:54,408
I can convince you
that you actually want to buy a pet rock,
173
00:08:54,492 --> 00:08:57,328
which, to me, was, like,
the dumbest idea in the world,
174
00:08:57,411 --> 00:09:01,749
but people were able to be convinced
you should value this pet rock.
175
00:09:01,832 --> 00:09:05,127
That's why ad companies
get paid what they get paid.
176
00:09:05,753 --> 00:09:07,838
De Beers was just remarkably good at this.
177
00:09:07,922 --> 00:09:10,716
But not all De Beers' efforts
have been successful.
178
00:09:10,800 --> 00:09:14,178
In the 1980s, De Beers tried to get women
to buy diamonds for men.
179
00:09:14,262 --> 00:09:17,640
That one didn't stick. De Beers
tried again to get women to buy diamonds
180
00:09:17,723 --> 00:09:21,227
in a 2003 campaign called,
"Raise Your Right Hand,"
181
00:09:21,310 --> 00:09:23,437
with the idea being
that an empowered woman
182
00:09:23,521 --> 00:09:25,690
would have an engagement ring
on her left hand
183
00:09:25,773 --> 00:09:28,734
and a diamond ring she bought herself
on her right.
184
00:09:28,818 --> 00:09:30,486
That one didn't take off, either.
185
00:09:30,570 --> 00:09:32,113
Diamonds may be worn by women,
186
00:09:32,196 --> 00:09:35,324
but the primary consumers of diamonds
are men.
187
00:09:35,408 --> 00:09:38,244
For a few years,
De Beers commissioned surveys.
188
00:09:38,327 --> 00:09:40,621
One question asked
if you'd want a diamond ring
189
00:09:40,705 --> 00:09:42,873
if it meant forgoing other things.
190
00:09:42,957 --> 00:09:46,627
In 1990, only 22% of women said yes,
191
00:09:46,711 --> 00:09:49,338
but for men, it was 59%.
192
00:09:49,422 --> 00:09:51,966
Many men reported that
buying a diamond engagement ring
193
00:09:52,049 --> 00:09:53,634
was a mark of adulthood.
194
00:09:53,718 --> 00:09:57,847
I think it is, in some ways,
a symbol that I've arrived,
195
00:09:57,930 --> 00:10:01,183
and I'm able to make
such a significant purchase
196
00:10:01,267 --> 00:10:03,269
and kind of take this step.
197
00:10:03,853 --> 00:10:06,147
This set the stage
for De Beers' next play--
198
00:10:06,230 --> 00:10:08,482
linking the amount
a man spent on a diamond
199
00:10:08,566 --> 00:10:10,776
to his professional success.
200
00:10:10,860 --> 00:10:13,321
It's become a cultural norm
in the United States.
201
00:10:13,404 --> 00:10:15,865
The rule of thumb--diamonds
should be about two months' salary.
202
00:10:15,990 --> 00:10:18,034
-Two months' salary.
-Two months' salary.
203
00:10:18,117 --> 00:10:22,455
De Beers came up with that.
In Japan, they came up with three months.
204
00:10:22,538 --> 00:10:25,666
That link between diamonds
and a man's professional success
205
00:10:25,750 --> 00:10:28,502
grew in a way that De Beers
may not have anticipated.
206
00:10:29,545 --> 00:10:32,131
And rappers started name-dropping
their favorite jeweler.
207
00:10:32,214 --> 00:10:33,174
♪ You are the Jacob ♪
208
00:10:33,257 --> 00:10:34,133
-♪ Jacob ♪
-♪ Jacob ♪
209
00:10:34,216 --> 00:10:35,593
♪ Jacob the Jeweler ♪
210
00:10:35,676 --> 00:10:37,637
My nickname is Jacob the Jeweler.
211
00:10:37,720 --> 00:10:40,139
♪ All these diamonds on my wrists ♪
212
00:10:41,682 --> 00:10:43,267
♪ All these diamonds on my wrists ♪
213
00:10:43,351 --> 00:10:46,395
How much value we have here?
I would say, um...
214
00:10:47,438 --> 00:10:48,689
about 35 million.
215
00:10:50,733 --> 00:10:53,903
I have put diamonds on almost everything.
216
00:10:53,986 --> 00:10:56,864
I think I once made a toothbrush
in diamonds and gold.
217
00:10:56,947 --> 00:11:01,661
It's a sign of success.
Like you would say, "Honey, I love you.
218
00:11:01,744 --> 00:11:05,247
And this is how much I love you.
This is how big I love you."
219
00:11:05,915 --> 00:11:09,669
This is a 75-carat, uh... vivid yellow.
220
00:11:10,378 --> 00:11:14,507
Carat, color.
What he's talking about was another play.
221
00:11:14,590 --> 00:11:17,093
Number five--define value.
222
00:11:18,135 --> 00:11:22,765
If you walk into any diamond store today,
they'll probably tell you about the 4Cs.
223
00:11:22,848 --> 00:11:26,477
The 4Cs are the four most important
characteristics of a diamond.
224
00:11:26,560 --> 00:11:29,897
They represent
cut, color, clarity and carat weight,
225
00:11:29,980 --> 00:11:32,024
which is the size of your diamond.
226
00:11:32,108 --> 00:11:34,860
A diamond should be cut
not too flat, not too deep.
227
00:11:34,944 --> 00:11:38,489
It should be either colorless
or a bright color, but not in between.
228
00:11:38,572 --> 00:11:42,076
It should be clear, free of the inclusions
that scientists love.
229
00:11:42,159 --> 00:11:43,327
And it should be big.
230
00:11:44,245 --> 00:11:46,956
That system for grading diamonds
was invented in the 1940s
231
00:11:47,039 --> 00:11:48,666
by a gem research institute.
232
00:11:48,749 --> 00:11:50,501
They started selling certificates.
233
00:11:50,584 --> 00:11:55,631
I think that everybody feels very assured
when they get some kind of certificate
234
00:11:55,715 --> 00:12:01,053
and some kind of, um, understanding
of-of where their diamond lands,
235
00:12:01,137 --> 00:12:02,722
in terms of the grading system.
236
00:12:02,805 --> 00:12:06,142
De Beers promoted the 4C system,
helping it take off.
237
00:12:06,225 --> 00:12:09,270
Conveniently, a lot of their diamonds
were big and clear.
238
00:12:09,895 --> 00:12:11,981
And demand for them kept going up.
239
00:12:12,064 --> 00:12:14,483
But in countries where diamonds are mined,
240
00:12:14,567 --> 00:12:17,528
that demand sometimes meant
funding for conflict.
241
00:12:22,366 --> 00:12:25,202
Between 1992 and 1998,
242
00:12:25,286 --> 00:12:26,829
a rebel group in Angola
243
00:12:26,912 --> 00:12:30,916
raised more than $3.7 billion
from diamond sales,
244
00:12:31,000 --> 00:12:34,170
fueling a war that killed
at least half a million Angolans.
245
00:12:35,421 --> 00:12:39,550
Diamond sales also helped fund conflicts
in Sierra Leone,
246
00:12:39,633 --> 00:12:42,887
the Ivory Coast, and Liberia.
247
00:12:42,970 --> 00:12:46,766
Eventually, this drew
international attention and backlash.
248
00:12:46,849 --> 00:12:48,225
-Blood diamonds.
-Blood diamonds.
249
00:12:48,309 --> 00:12:51,103
-Blood diamonds.
-So-called "blood diamonds."
250
00:12:51,187 --> 00:12:55,733
But in the U.S., the demand for diamonds
remained pretty much the same.
251
00:12:56,525 --> 00:12:58,694
And while there is now
a certification system
252
00:12:58,778 --> 00:13:02,198
to try to stop the sale of diamonds
smuggled from conflict zones,
253
00:13:02,281 --> 00:13:04,825
no one knows for sure
how well it's worked,
254
00:13:04,909 --> 00:13:08,120
because the diamond supply chain
is incredibly opaque.
255
00:13:08,204 --> 00:13:12,166
I think it's difficult if you don't have
any paperwork with the diamond
256
00:13:12,249 --> 00:13:15,127
to really fully understand
where it came from.
257
00:13:15,211 --> 00:13:18,422
But around the same time
that blood diamonds were making headlines,
258
00:13:18,506 --> 00:13:22,259
De Beers and its playbook faced
its biggest threat yet--real competition.
259
00:13:23,093 --> 00:13:25,930
I think most people think
that all diamonds come from Africa,
260
00:13:26,013 --> 00:13:27,681
but it's actually important to understand
261
00:13:27,765 --> 00:13:30,059
Russia's the largest supplier
of diamonds in the world.
262
00:13:30,142 --> 00:13:32,520
For decades,
De Beers had an exclusive deal
263
00:13:32,603 --> 00:13:35,064
to buy most of
the Soviet Union's diamonds.
264
00:13:35,147 --> 00:13:38,609
But when the Soviet Union collapsed,
so did the deal.
265
00:13:38,692 --> 00:13:41,362
Then, in 2005,
De Beers settled an antitrust lawsuit
266
00:13:41,445 --> 00:13:44,490
that had accused them of a conspiracy
to fix the price of diamonds.
267
00:13:44,573 --> 00:13:49,119
De Beers agreed to pay $295 million
back to American consumers.
268
00:13:49,787 --> 00:13:51,956
And in a separate case
with the U.S. government,
269
00:13:52,039 --> 00:13:54,500
De Beers plead guilty to price-fixing.
270
00:13:55,209 --> 00:13:57,044
De Beers' market share began to go down.
271
00:13:57,670 --> 00:14:01,215
But something strange happened.
The price of diamonds didn't.
272
00:14:03,133 --> 00:14:05,219
De Beers is no longer the biggest player,
273
00:14:05,302 --> 00:14:07,847
but diamond companies
still look to their playbook.
274
00:14:07,930 --> 00:14:12,893
Alrosa is, uh, the largest producer
of diamonds worldwide.
275
00:14:12,977 --> 00:14:15,604
We have about a 27% market share,
276
00:14:15,688 --> 00:14:18,566
which means that
one out of every four diamonds
277
00:14:18,649 --> 00:14:20,192
is an Alrosa diamond.
278
00:14:20,276 --> 00:14:24,905
The top three producers--De Beers,
um, Russia's Alrosa, and Rio Tinto--
279
00:14:24,989 --> 00:14:27,408
none of them actually manage
a strategic stockpile
280
00:14:27,491 --> 00:14:29,785
the way that De Beers did
during the monopoly era,
281
00:14:29,869 --> 00:14:32,538
um, but they will, you know,
withhold goods, uh, from the market
282
00:14:32,621 --> 00:14:34,623
if they feel
there isn't substantial demand.
283
00:14:34,707 --> 00:14:37,251
[woman] How do you think
about stockpiling diamonds,
284
00:14:37,334 --> 00:14:40,254
and how does the industry make sure
285
00:14:40,337 --> 00:14:42,756
that there aren't too many diamonds
on the market
286
00:14:42,840 --> 00:14:46,218
in such a way
that would cause the price to go down?
287
00:14:46,302 --> 00:14:48,429
Yeah. There's a-there's a party line
288
00:14:48,512 --> 00:14:50,931
that I'm supposed to say about that,
which, uh...
289
00:14:51,015 --> 00:14:53,017
[both laugh]
290
00:14:53,100 --> 00:14:56,520
Sometimes, of course,
there's more supply than demand,
291
00:14:56,604 --> 00:14:59,690
um, and, uh, certainly when that happens,
292
00:14:59,773 --> 00:15:01,609
we don't look to reduce pricing
293
00:15:01,692 --> 00:15:06,614
because we don't want to jeopardize
the inherent value of the diamond
294
00:15:06,697 --> 00:15:09,575
or what ultimately the consumer
is going to be purchasing.
295
00:15:10,367 --> 00:15:13,370
At this point, I can't really imagine
296
00:15:13,454 --> 00:15:15,998
who is incentivized
to have the price fall.
297
00:15:16,749 --> 00:15:18,542
And that even includes consumers.
298
00:15:18,626 --> 00:15:21,921
[Spriggs] If I offer you
a bottle of red wine,
299
00:15:22,004 --> 00:15:27,468
and I say one of them cost $75
and one of them cost $20,
300
00:15:27,551 --> 00:15:29,011
if you know a lot about wine,
301
00:15:29,094 --> 00:15:31,555
you may look at the labels,
you may taste them,
302
00:15:31,639 --> 00:15:34,224
and if you're really good,
you may be able to tell me
303
00:15:34,308 --> 00:15:37,561
this $25 bottle of wine
is really the better wine.
304
00:15:37,645 --> 00:15:41,482
Most people don't have that ability.
They're gonna give me the $75.
305
00:15:42,107 --> 00:15:46,528
That creates this perverse setting
306
00:15:46,612 --> 00:15:51,867
in which if I raise the price,
instead of the quantity demand falling,
307
00:15:51,951 --> 00:15:54,745
I can actually see the quantity go up.
308
00:15:54,828 --> 00:15:56,789
They're called Veblen goods,
309
00:15:56,872 --> 00:15:58,457
and they're a unique good
310
00:15:58,540 --> 00:16:04,755
in which the price itself
is interpreted by people as a signal.
311
00:16:04,838 --> 00:16:07,841
Other famous Veblen goods
include Birkin bags,
312
00:16:07,925 --> 00:16:10,135
Cristal champagne and lawyers.
313
00:16:11,929 --> 00:16:15,516
I do think that there is
an aspirational quality to diamonds,
314
00:16:15,599 --> 00:16:19,728
where the price, the fact that
it is expensive, adds desire.
315
00:16:19,812 --> 00:16:23,899
Because it's-it's a sense of arriving,
it's a sense of aspiration.
316
00:16:23,983 --> 00:16:26,652
And it means that people
will pay top dollar for them,
317
00:16:26,735 --> 00:16:30,322
even if an option exists
that's structurally identical.
318
00:16:30,406 --> 00:16:32,282
The structure of a diamond is simple.
319
00:16:32,366 --> 00:16:36,078
All carbon atoms, each one
forming four bonds with its neighbors.
320
00:16:36,161 --> 00:16:39,873
In graphite, also all carbon,
atoms form three bonds.
321
00:16:39,957 --> 00:16:43,794
And that tiny difference is why graphite
is soft enough to be a pencil,
322
00:16:43,877 --> 00:16:47,339
and why diamonds are so hard,
they can only be cut by another diamond.
323
00:16:48,674 --> 00:16:52,678
We actually first figured out how to
make diamonds in a lab back in the 1950s.
324
00:16:52,761 --> 00:16:56,640
I twiddled around a little bit
and saw the sparkles.
325
00:16:57,599 --> 00:17:01,061
My knees weakened. I had to sit down.
326
00:17:01,145 --> 00:17:04,314
That's scientist Tracy Hall
in an interview with the BBC
327
00:17:04,398 --> 00:17:06,150
describing the moment he and his team
328
00:17:06,233 --> 00:17:11,030
became the first to consistently
and publicly create a diamond in 1954.
329
00:17:11,113 --> 00:17:14,700
And at that instant, I knew that man
330
00:17:14,783 --> 00:17:18,245
had finally turned graphite into diamond.
331
00:17:19,455 --> 00:17:23,250
And today, we can pump
gem-quality stones out of machines.
332
00:17:23,333 --> 00:17:26,253
There are two completely separate ways
to grow a diamond.
333
00:17:26,336 --> 00:17:29,256
High-pressure, high-temperature
diamond growth
334
00:17:29,339 --> 00:17:32,301
is recreating the conditions in nature
335
00:17:32,384 --> 00:17:36,138
with which carbon
crystallizes into diamond.
336
00:17:36,221 --> 00:17:40,309
Chemical vapor deposition
is a methodology to grow diamonds
337
00:17:40,392 --> 00:17:44,938
where hydrocarbon gases
are injected into a growth chamber,
338
00:17:45,022 --> 00:17:47,399
and microwave plasma energy
339
00:17:47,483 --> 00:17:52,154
is used to break apart the bonds
of that hydrocarbon,
340
00:17:52,237 --> 00:17:57,117
allowing free carbon atoms
to rain down on a plate of diamond,
341
00:17:57,201 --> 00:18:00,996
and atom by atom,
grow that diamond vertically,
342
00:18:01,080 --> 00:18:05,626
resulting in extraordinarily high-purity,
high-quality diamonds.
343
00:18:05,709 --> 00:18:08,212
A diamond is a diamond, regardless
of whether it's made in a lab
344
00:18:08,295 --> 00:18:09,922
or whether it comes from the earth.
345
00:18:10,839 --> 00:18:13,342
Take a guess.
Which of these is lab-grown?
346
00:18:13,926 --> 00:18:15,552
You definitely couldn't tell.
347
00:18:16,261 --> 00:18:20,057
It takes very specialized
laboratory equipment
348
00:18:20,140 --> 00:18:24,686
to detect the minute differences,
uh, between the two products.
349
00:18:24,812 --> 00:18:27,147
And as lab-grown diamonds
have gotten better,
350
00:18:27,231 --> 00:18:28,565
they've also gotten cheaper,
351
00:18:28,649 --> 00:18:31,318
which brings us to number seven
in the playbook--
352
00:18:31,401 --> 00:18:33,403
if you can't beat 'em, join 'em.
353
00:18:34,113 --> 00:18:37,908
In 2016, De Beers and its peers
in the natural-diamond industries
354
00:18:37,991 --> 00:18:40,035
slapped back against lab-grown diamonds
355
00:18:40,119 --> 00:18:42,663
with an ad campaign called "Real Is Rare."
356
00:18:42,746 --> 00:18:45,833
[woman] It will be kind,
and it will be real.
357
00:18:47,835 --> 00:18:49,586
[Abram] But then in 2018,
358
00:18:49,670 --> 00:18:52,798
De Beers actually launched their own
lab-grown diamond line
359
00:18:52,881 --> 00:18:54,883
at the lowest prices on the market.
360
00:18:55,509 --> 00:18:58,554
They claim that's how much they're worth
since they're mass-produced.
361
00:18:58,637 --> 00:19:02,516
But some say this is a strategy
to make lab-grown diamonds seem worse.
362
00:19:02,599 --> 00:19:04,017
The efforts of De Beers
363
00:19:04,101 --> 00:19:07,646
to price light-box diamonds
at such a low price point
364
00:19:07,729 --> 00:19:10,941
are a very clear effort
to denigrate the product.
365
00:19:11,024 --> 00:19:15,279
Laboratory-grown diamonds
are superior to dirt diamonds
366
00:19:15,362 --> 00:19:18,073
or mined diamonds
that have come out of the earth.
367
00:19:18,157 --> 00:19:21,410
But lab-grown diamond companies
are capitalizing on the lasting connection
368
00:19:21,493 --> 00:19:23,036
between diamonds and love.
369
00:19:23,120 --> 00:19:25,122
As someone who's in the business
of selling diamonds,
370
00:19:25,205 --> 00:19:26,123
I like the connection.
371
00:19:26,206 --> 00:19:28,709
A connection they owe to De Beers.
372
00:19:28,917 --> 00:19:31,378
The lab-created producers
want to market their product
373
00:19:31,461 --> 00:19:32,796
as a more innovative
374
00:19:32,880 --> 00:19:35,757
and environmentally friendly,
um, you know, product
375
00:19:35,841 --> 00:19:38,260
that's superior to natural diamonds
in those ways.
376
00:19:38,343 --> 00:19:41,722
But at the same time, they still want
the value associated with diamonds
377
00:19:41,805 --> 00:19:44,558
that, you know, that
De Beers created over a hundred years.
378
00:19:44,641 --> 00:19:48,187
The narrative is what a lot of purchasers
379
00:19:48,270 --> 00:19:51,023
might feel on some level
is like the bullshit, right?
380
00:19:51,106 --> 00:19:55,319
Like, "They-They told us this story
that, you know, you got to do this,
381
00:19:55,402 --> 00:19:57,821
and this is, like, how you prove love."
382
00:19:57,905 --> 00:19:59,781
I think the thing is, though,
383
00:19:59,865 --> 00:20:05,537
that, uh, there's something
really, really deeply touching
384
00:20:05,621 --> 00:20:07,831
about doing this for somebody,
385
00:20:07,915 --> 00:20:13,170
about wanting to be very public
about how you feel about somebody.
386
00:20:13,253 --> 00:20:16,882
And in a way, uh, burning a pile of money
387
00:20:16,965 --> 00:20:20,260
is a pretty compelling argument
388
00:20:20,344 --> 00:20:23,513
that you feel what you say you feel.
389
00:20:23,597 --> 00:20:25,807
Just because the connection
between diamonds and love
390
00:20:25,891 --> 00:20:29,853
was manufactured by marketing,
that doesn't make it less real.
391
00:20:29,937 --> 00:20:34,233
It was the most beautiful
and most significant thing ever to me,
392
00:20:34,316 --> 00:20:38,820
not because it's a diamond,
but because he's my best friend.
393
00:20:38,904 --> 00:20:41,490
He was like, "This was my mom's diamond."
394
00:20:41,573 --> 00:20:43,492
That's when I really started crying.
395
00:20:43,575 --> 00:20:46,995
When you put it into perspective
that an ad campaign drove,
396
00:20:47,079 --> 00:20:49,748
you know, what we now consider,
like, the step to getting married,
397
00:20:49,831 --> 00:20:53,877
you have to buy a diamond,
it's kind of infuriating to think about,
398
00:20:53,961 --> 00:20:56,046
but at the same time,
it makes-it makes sense.
399
00:20:56,129 --> 00:20:59,508
Like, I didn't come up with this.
This is just the-the world's standard.
400
00:21:00,550 --> 00:21:02,678
A diamond is a product of heat,
401
00:21:02,761 --> 00:21:06,056
time, capitalism, and us.
402
00:21:06,974 --> 00:21:08,725
It isn't bullshit,
403
00:21:08,809 --> 00:21:11,645
because the volume of people
404
00:21:11,728 --> 00:21:15,107
who kind of are convinced by it
405
00:21:15,190 --> 00:21:17,276
tells us that their story
406
00:21:17,359 --> 00:21:22,823
is tapping into this complexity
of who we are.
407
00:21:23,699 --> 00:21:26,827
And when you think about it,
so much of what we do,
408
00:21:26,910 --> 00:21:29,413
so much of what we wear,
you know, what we carry.
409
00:21:29,496 --> 00:21:33,792
So-So much of it
is about communicating who we are.
410
00:21:35,127 --> 00:21:39,339
Here's my diamond.
It's absolutely stunning, in my opinion.
411
00:21:40,007 --> 00:21:41,466
What do people want?
412
00:21:42,175 --> 00:21:43,927
Uh, how much do they want it?
413
00:21:44,678 --> 00:21:46,513
What are they willing to pay for it?
414
00:21:46,596 --> 00:21:50,183
The question becomes more,
"How do you value different things?"
415
00:21:50,267 --> 00:21:55,022
And I think diamonds are a little bit of,
uh--they're kind of like an ink-blot test,
416
00:21:55,105 --> 00:21:58,859
and you can kind of see what you want
and make your own criteria
417
00:21:58,942 --> 00:22:01,778
in terms of what's
the most important to you.
418
00:22:01,862 --> 00:22:03,822
He's my everything, and...
419
00:22:05,032 --> 00:22:06,199
through thick and thin,
420
00:22:06,283 --> 00:22:09,995
and that just meant the world to me
when he gave me this ring.
421
00:22:11,538 --> 00:22:15,042
-I love seeing it on your hand.
-I know. I love seeing it on my hand, too.
422
00:22:15,125 --> 00:22:15,959
[laughs]
423
00:22:17,961 --> 00:22:18,962
Thank you.
424
00:22:20,047 --> 00:22:24,384
I think the value of a diamond is zero.
425
00:22:24,468 --> 00:22:27,846
It's entirely the value you have,
426
00:22:27,929 --> 00:22:30,932
uh, in regards to the person
who gave it to you.
427
00:22:33,352 --> 00:22:35,354
[closing music playing]