Inherent Value of Natural Diamonds

Inherent value. That's a phrase that's been swirling about my mind in recent weeks as I've tried to resolve a nagging diamond-related doubt. Thankfully I am now cured, so I shall unburden myself and explain the doubt. And the resolution.
David Kellie, CEO of the Natural Diamond Council, and former SVP of marketing and advertising at Ralph Lauren, spoke of "inherent value" when he drew a parallel between natural diamonds and a branded polo shirt at Israel Diamond Week last month.
"I'm sure these two shirts look pretty much the same," he told the audience. "The difference in those is that the one on the left here is $22. The one on the right there is $110. And the reason why there are two such different price points.
"One is five times the price of the others because of the value the consumer puts on the brand of Ralph Lauren, over US Polo Association.
"And Polo Ralph Lauren is able to sell almost the same product, slightly better, but for almost five times the price because of the values that are inherent in that brand."

I disagreed, immediately and vehemently, at least on a superficial level. Call me awkward, contrary or just a cheapskate, but I would always opt for the US Polo Association shirt over Ralph Lauren.
I'm with Naomi Klein on this (author of the 1999 book No Logo, about brand vs product) and I'm not splashing out almost $100 more for a badge of a chap on a horse.
If push came to shove, I'd actually spend the $100 NOT to have the badge. But I'm being churlish.

I now realize that I actually disagree on a more fundamental level. The difference between the Ralph Lauren shirt and the US Polo Association shirt is not inherent.
It's the polar opposite. It is (I had to search for the right word here) extrinsic. By Kellie's own admission the two shirts are virtually identical. The Ralph Lauren product may be of a slightly better quality, but that's not the reason for the price differential.
The reason, as Kellie went to explain, is "what Ralph has built over 50 years, communicating with consumers, building stores, and positioning the brand".
And that's what made me jump and down shouting: "That's not inherent. It's extrinsic."
The Ralph Lauren shirt is not fundamentally much better than the US Polo Association shirt.
It's just that the customer is shelling out an extra $88 to cover the costs of building a brand. What makes the Ralph Lauren shirt special is not in the fibers, the stitching or the molecules. It's in the badge.
And that is exactly the OPPOSITE of natural diamonds. In a weird way that brings me to the same conclusion - that they are rare and special - but by a very different route.

Natural diamonds really are inherently different from their lab-grown counterparts. But not because of some added spin.  For sure there's been some brilliant and aggressive marketing, starting with "A diamond is forever" (De Beers, 1947).
But I draw a sharp distinction here between telling a story of inherent value - all that amazing stuff going on deep below the Earth's surface millions of years ago - and the bolt-on or extrinsic value of a premium garment brand.
The NDC published a super-detailed report this week, addressing myths and misconceptions about the diamond industry.
All the one-carat diamonds mined in a year would fit inside an exercise ball, it says, and all the five-carats would fit inside a basketball.
Geologists have examined almost 7,000 kimberlite pipes in the last 140 years in search of diamonds. Only 60 have been deemed economically viable for large-scale diamond mining companies.
The report is full of such gems. And it helped crystallize my thoughts on inherent value. Natural diamonds have it. Ralph Lauren shirts don't. (Sorry David).

Have a fabulous weekend.