The question of whether diamonds are truly rare rests on the distinction between geological abundance and economic scarcity. While the high price suggests a product of nature’s limitations, the cost structure is far more influenced by human design and controlled distribution. The supply of diamonds has been intentionally managed for over a century, creating a perception of rarity that does not fully align with the Earth’s total diamond content.
Geological Abundance Versus Accessibility
Diamonds form deep within the Earth, approximately 90 to 125 miles below the surface, under immense pressure and temperatures exceeding 2,000 degrees Fahrenheit. They are a stable crystalline form of carbon, common within the Earth’s mantle, forming within the roots of ancient continental plates called cratons.
The journey to the surface is the true geological bottleneck. Diamonds are delivered by rare, volatile eruptions of a magma called kimberlite, which moves rapidly from the mantle. This magma transports the diamonds in carrot-shaped volcanic structures called kimberlite pipes. If the ascent were slow, the diamonds would revert to graphite, the stable form of carbon at lower pressures.
Only a small fraction of kimberlite pipes contain diamonds, and fewer still contain economically recoverable quantities. The majority of diamonds extracted (70 to 80 percent) are of industrial quality, unsuitable for jewelry. The rarity is not in the existence of diamonds, but in the improbable geological process required to deliver a gem-quality stone that can be mined profitably.
The History of Artificial Market Scarcity
The modern perception of diamond scarcity was established not by geology, but by a deliberate corporate strategy beginning in the late 19th century. Large-scale discoveries in South Africa during the 1870s threatened to flood the global market, which would have caused prices to collapse. This threat led to the consolidation of mining interests under Cecil Rhodes, who founded the company that became the dominant force in the industry.
This company created a centralized distribution system, known as the Central Selling Organisation (CSO) or the Syndicate. At its peak, the CSO controlled more than 90 percent of the world’s rough diamond supply. This control allowed the company to stockpile diamonds and release them slowly, severing the link between the volume mined and the volume sold. By limiting the supply available to cutters and polishers, they created an artificial scarcity that sustained high prices.
Alongside supply control, an aggressive marketing campaign was launched in the late 1930s to create demand, particularly for engagement rings in the United States. The 1947 slogan, “A Diamond is Forever,” linked the stone to concepts of enduring love and permanence. This campaign discouraged the resale of diamonds, preventing a secondary market that would have challenged the company’s price structure. The high price was based on a manufactured perception of scarcity and emotional value rather than geological reality.
Modern Supply Volume and Sources
The monopoly structure that controlled the market for decades began to decentralize in the late 20th century with the discovery of large mines in Russia, Australia, and Canada. These new producers often operated outside the centralized selling system, leading to a more diversified global supply. Despite this shift, the industry has maintained the perception of scarcity and value established by the historical control model.
The most significant modern disruptor to diamond scarcity is the rise of lab-grown diamonds (LGDs). These stones are produced using high-pressure, high-temperature (HPHT) or chemical vapor deposition (CVD) methods that mimic the Earth’s natural formation process. LGDs are chemically, physically, and optically identical to mined diamonds, composed of the same pure crystallized carbon structure.
The introduction of LGDs means the supply of diamonds is no longer solely dependent on finite geological sources. Production of lab-grown stones has increased significantly, and their market share in the jewelry sector is expanding rapidly. The price of LGDs is substantially lower than mined counterparts, often costing 60 to 80 percent less for comparable quality. This technological advancement fundamentally challenges the economic model of scarcity.
Contextualizing Gemstone Rarity
To understand diamond rarity, it is useful to compare it to gemstones that are genuinely scarce from a geological perspective. Stones like Painite, Alexandrite, or Tanzanite are found in extremely limited geographic locations, often with just one or two viable sources globally. Tanzanite, for example, is sourced from a single small area near Mount Kilimanjaro in Tanzania.
By contrast, gem-quality diamonds are extracted from numerous mines across multiple continents, and the overall volume mined annually is substantial. While a large, flawless natural diamond remains a rare find, the sheer number of diamonds in circulation makes the term “rare” misleading. This is especially true when industrial stones and the growing volume of lab-grown alternatives are included. The scarcity in the consumer market is primarily an economic construct—a scarcity of available supply—rather than a reflection of geological limitation.