At an auction in Geneva last night, a pink* diamond set a new record for the world’s most expensive gemstone.
*its official colour is “fancy vivid pink”, the highest grade, apparently.

Here’s a picture of “The Pink Star”:

Here’s a picture of someone awkwardly attempting to wear it nonchalantly:

And here it is at its first public appearance, where it’s being completely overshadowed by Helena Christensen’s make-up:

The 59.60 carat diamond sold for $83 million.

So here’s my question: why?

A Variety of Bad Reasons

So I googled it. And here are the reasons offered:

“Diamonds are extremely rare. And anything extremely rare is precious”

Completely false.

If I paint a picture today, and it’s the only one I’ve ever painted, then it too is “extremely rare”. But it’s not valuable.

Rarity is not the creator of value. It’s a factor that impacts the supply of a product.

What drives the demand?

“Diamonds take millions of years to form”

I have also taken millions of years to form. I am a complexity of evolutionary advance, genetic selection and chance encounters between every single ancestor.

But we don’t even need to go that far. I can just go hiking. And every rock that I step on will have been millions of years in the making.

“They take a lot of labour to get”*
*I found this one on a Yahoo answers page, in my grammatical defence.

This is actually a very Marxist way of looking at the world, where the only determinant of value is the amount of human labour that went into the creation of a product. So:

value of diamond = labour time in excavation + labour time in extraction + labour time in producing extraction equipment + labour time in transportation + labour time in cleaning + labour time in cutting + labour time in selling you said diamond

But this view struggles to reconcile itself with the real world. Do Apple iPhones and Samsung Galaxies really represent such drastic differences in labour time? Probably not drastic enough for the price difference…

“Diamonds are the hardest substance”*
*also a Yahoo answer.

?

I seriously doubt that the Pink Star is prized for its hardness.

Anyway – mankind has managed to create its own materials that are harder than diamonds. So that can’t be it.

The Only Reasonable Reason

“Diamonds as status symbols”

At some point in history, some mover-and-shaker ruler found a shiny stone and attached it to a hat. The trend caught on. And suddenly, the world of royalty was swept by the desire for molecular trinkets.

Over time, rival kings and queens started aiming for bigger, better, brighter and rarer – in order to be more awesome than their less-decorated royal counterparts.

And the world is yet to recover.

For How Much Longer Though?

We’re now able to produce diamonds in a laboratory. And I’m not talking about cubic zirconiums – I’m talking about pure carbon subjected to similar pressures as those found at the earth’s core (here’s the article on How Stuff Works?).

To the point where jewellers struggle to tell the two apart.

My question: how much status will a pink diamond have when the rising middle classes of Africa, China and India are awash in a sea of laboratory-grown gems? True – status is unpredictable, so maybe it will be able to hang its hat on provenance.

But I’m pretty sure that’s not enough. After all, if diamonds are seen everywhere, then how can you display your status with it? What will Jay-Z do?

Some Historical Examples

• The Washington Monument is capped with aluminium, because it was once considered a precious metal. And then someone revolutionised the refining process (or something). Today, pass me that coke can.
• Amethyst used to be considered one of the cardinal gemstones (alongside diamonds, emeralds, rubies and sapphires). Until around the 18th Century, when large supplies of it were discovered in South African mines…

In all honestly, Mr $83 million is probably safe. The Pink Star is has its own name, after all.

But for those of us that are busily buying diamond rings for our fiancées…