Origin of the Diamond Trade

Jewelry stores today display a wide array of diamonds of different cuts, shapes and sizes. Being a favorite gift for special occasions such as engagements and anniversaries, diamonds are very much in demand today and even way back in the early years when it adorned Royalty’s crowns, or was proudly worn by the super wealthy people. But what was once owned only by the elite society is now available to ordinary people. Thanks to the successful diamond trade initiated by De Beers and to what some call the greatest marketing campaign ever created.

De Beers was created in 1888 and founded by a young man from South Africa named Cecil Rhodes. Before he built his empire, Rhodes started out by renting pumps to diamond traders. Since the mines and river beds were producing an abundant supply of rough diamonds, Rhodes invested his profit by buying properties for mining purposes as well as buying claims of small mining companies. Eventually, De Beers became the greatest producer of rough diamonds not only in South Africa, but also around the world. Rhodes then formed a partnership with the Diamond Syndicate based in London to market his diamonds. He believed that by controlling the supply of diamonds, its value and prices would be maintained. And as more competitors came in the industry, Rhodes either offered them to join his empire or just bought them out.

Rhodes sold his rough diamonds every month to a handful of selected or invited buyers called sightholders. To qualify as a sightholder, the company needed to commit to a set purchase in the amount of millions of dollars every month. The sightholders either manufacture the diamonds themselves or sell them to traders. Traders then sell them to diamond manufacturing companies who cut, shaped and polished them before they are sold directly or through brokers to diamond dealers all over the world who in turn sell these as loose diamonds to wholesalers. This time, the wholesalers either sell it directly as loose diamonds or mounted jewelry to retail jewelry stores.

Soon after, companies began streamlining their operations to cut costs. Jewelry manufacturers started buying diamonds in bulk from diamond manufactures and sold them directly to retail jewelry stores. Diamond dealers also started selling directly to retails stores or even directly to consumers through their own online stores thus eliminating all the costly middlemen and everything in between.


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