Diamonds and gold are known for being popular components for most jewelry pieces. However, there is a significant price difference between diamonds and gold.
Diamond is significantly more expensive than gold. Diamonds are more expensive than gold because of a limited supply and a high demand for diamonds. Additionally, diamonds are more expensive due to the remote locations of mines, the expensive equipment used to mine, and the diamond’s societal value.
Although diamonds and gold are both expensive, various contributing factors make diamonds more expensive than gold. Let’s explore the various reasons why diamonds are more expensive than gold.
Reasons Why Diamond Is More Expensive Than Gold
Diamonds and gold are likely to be the first thing that comes to mind when it comes to jewelry. However, they are distinctly different, which is why they are in different price ranges. Here are a few reasons why diamond is more expensive than gold.
Diamonds Have A Limited Supply And High Demand
Although lab-grown diamonds have become increasingly popular, there is currently a limited supply of rough diamonds. Naturally, low supply results in diamond sellers increasing their prices as they know there is a demand for their products.
Consequently, diamond sellers have inflated their prices due to the high demand in the market.
Diamonds Are Wealth Indicators That Have Societal Value
Diamonds are a symbol of wealth, particularly when it comes to wedding rings. Over the years, diamonds have become an indicator of prosperity, with many wearing diamonds as fashion pieces. Most brides want a diamond ring that is at least 1 carat.
Similarly, gold is also considered a sign of prosperity even though it is less expensive than diamonds. However, it is more common for individuals in lower income brackets to own gold jewelry.
In this regard, diamonds are regarded as a superior element of jewelry compared to gold. The superiority status of diamonds encourages the notion that diamonds should be more expensive as they are reserved for the elite, causing jewelry stores to maintain high prices.
Diamonds Come In Different Colors
Unlike gold which is only available in one color, diamonds are available in various colors, including white, black, pink, red, blue, yellow, green, and gray.
However, diamonds with less color are considered near perfect and have a higher value. In this regard, diamonds that are colored are considered to be worth less because color indicates imperfections.
In the same breath, diamonds that are colored may be more expensive because they are rare. The world’s rarest diamonds are red diamonds, which is why they are rather expensive.
Importantly, gold also comes in various colors, including yellow, white, rose, grey, and green. Naturally, the prices of gold differ based on color. Nonetheless, irrespective of the color of the gold, diamonds tend to be still more expensive than diamonds.
Every Diamond Is Different
Diamonds are unique, with no diamonds being exactly alike. The unique features of each diamond are appealing as consumers want something no one else can have. Consequently, diamonds are expensive because the rarity of the gem makes them worth a lot of money.
Diamond Mine Workers Create Expenses For The Company
Given the intense labor that goes into diamond mining, mines have to have numerous employees working to find diamonds. Based on the nature of the work, companies have to spend a lot of money on safety equipment for the workers.
Additionally, mine workers have high life insurance premiums due to the dangerous nature of their work, which the mining company typically pays. Furthermore, diamonds often allow the mine workers’ families to live on site. Companies provide accommodation for the mine workers’ families to ensure mine workers live close to work, which is often crucial given that mines can be located in random places.
In this regard, the mining companies need to pay to build houses and various other forms of infrastructure to facilitate some form of housing for the mine workers. For this reason, diamonds are expensive because the prices include the money that goes into paying the employees and providing for their needs.
Diamonds Are Hard To Find In Mines
Finding a diamond mine does not mean a guaranteed surplus of diamonds. Sometimes miner workers search through approximately 250 tons of rock to find a single carat. The worst part is that many diamonds mined may not even be good enough to meet the diamond standard used in jewelry.
In this regard, diamonds are expensive because their price takes into account the expenses the company incurred in their search for diamonds.
Rough Diamond Yield Is Low
In addition, a diamond’s rough yield is particularly low. Once a diamond is mined, it still needs to be polished into a stone. Unfortunately, the polishing process often leads to most of the gem’s carats turning into dust. In this regard, mining is an expensive process that does not guarantee a high yield.
Diamond Mining Is Expensive
Diamond mines are located in remote places, including places like under a lake, on the ocean floor, or in the middle of the desert. This means that an entire camp needs to be set up in the location where the mine is situated. Employees will need to be flown in, housing will need to be built near the mine, and equipment will need to be shipped to the mine.
However, before this can be done, various specialists like land surveyors and mining engineers need to inspect the mine. Subsequently, they will assess the safety of the mine and report on their findings which will instruct the mining company on how to proceed safely. In this regard, the company may also have to pay to implement additional safety measures to ensure the mine is safe for mining operations.
The equipment needed to operate the mine will depend on the location of the mine. The location of the mine will also determine the type of safety equipment required to operate the mine. A mine in a cave will need different equipment than a mine on the ocean floor. Consequently, the mining equipment and the miners’ safety equipment will be different too.
Factors That Make Gold Expensive
Diamonds being more expensive than gold does not discount the fact that gold is expensive. Interestingly, similar factors cause gold and diamonds to be expensive. Here are a few reasons why gold is expensive.
Gold Is Difficult To Extract
Gold is a rare metal found in the earth’s crust and has become particularly difficult to extract because most of the “easy-to-get” ore has already been mined. Consequently, it has become harder to find gold deposits and, therefore, more expensive to extract because of the additional effort to find and extract the metal.
In this regard, mining companies have had to spend more time searching through remote terrains in search of untapped gold deposits. This search for gold requires time and expensive equipment to conduct the search for gold. These expenses are incurred by the gold mining companies, who recoup their investment by charging high prices when they sell the gold.
Gold Is A Malleable Metal
Gold is expensive because it is a malleable metal that can be molded to different shapes and sizes while maintaining its original composition. Gold’s malleability makes it valuable because it is ideal for coins and jewelry but also suitable to be used as an electrical component in various technical devices.
Gold’s physical properties are particularly useful as it is portable, non-toxic, non-reactive, and fairly rare. These unique properties make gold a metal that cannot be counterfeited or manufactured, making it metal in a league of its own, which is why it is rather expensive.
The Cost Of Labor For Mine Workers Is High
Typically, mine workers are underpaid and tend to be forced to work in harsh conditions. However, over the past few years, labor unions have protested for an increase in the income for mine workers, specifically for the wages of mine workers to be above the inflation rate.
However, mining companies’ expenses regarding mine workers do not end with wages. Most mines in remote areas also have to provide accommodation for the mine workers and their families.
Furthermore, the mining company has to provide safety equipment for the mine workers. Given the labor-intensive nature of mining and the dangers associated with mining, the safety equipment for mine workers is often very expensive.
Evidently, mining companies incur many expenses regarding labor. These labor expenses result in high gold prices to ensure a profit that covers the labor expenses.
Conclusion
Diamonds and gold are mined in similar ways. However, diamond is more expensive than gold. While gold is a malleable metal that is ideal for coins and jewelry, diamonds are more in demand because there is a high societal value attached to diamonds.
Diamonds and gold are expensive because the mines are in remote locations, the equipment used is expensive, there is a high demand and a low supply, and the mine workers need to be remunerated and accommodated near the mine.
References
- https://www.quora.com/Why-is-a-diamond-more-expensive-than-gold-but-is-less-valuable-than-it
- https://www.truefacet.com/guide/makes-diamonds-valuable/
- https://www.quora.com/Why-are-diamonds-valuable-Why-are-diamonds-so-expensive
- https://www.businessinsider.com/heres-why-diamonds-are-so-expensive-2015-9
- https://www.ig.com/en/news-and-trade-ideas/commodities-news/why-is-gold-valuable–190123
- https://www.businessinsider.com/why-gold-is-so-expensive-2019-10