In 1938, an ad agency was hired by the De Beers Group- a diamond company looking for help solving a problem of supply and demand.
Before the 19th century, diamonds were legitimately rare. They were beautiful and scarce. Owning a diamond was a privilege afforded to only the very wealthy. However, the discovery of numerous South African mines in the mid 1800’s shook the diamond industry. Suddenly, supply flooded the market, and companies like De Beers found themselves in trouble.
A cartel formed to control the supply and pricing of diamonds, but this wasn’t enough. De Beers knew they had a marketing dilemma.
In the development of arguably the best marketing strategy in history, De Beers and the N.W. Ayer agency in New York set out to create a new social norm, in which love, commitment, and eternity were symbolized by a diamond. The slogan, “A Diamond is Forever,” wasn’t just representative of the durable nature of a diamond. The De Beers Group set out to make diamonds an emotional asset. Because diamonds were plentiful, their value needed to supercede rarity; additionally, it was essential diamonds weren’t in danger of being resold.
By linking diamonds to something intended to be forever, (marriage), the De Beers Group created the idea that if a man loves a woman, he buys her a diamond to represent their eternal commitment. Before De Beers hired N. W. Ayer, diamonds were housed in less than 10% of engagement rings. By 1942, just four years after the campaign began, that number jumped by 55%.
When I think of diamonds, I think of a largely worthless commodity. You can’t rightfully call diamonds an investment because they don’t appreciate. When you walk out of a jewelry store with a diamond ring, your purchase immediately drops 50% in value. Most experts will tell you to expect 10-15% return on your ring if you choose to sell.
Okay, great. How does this relate to precious metals? Well, my question is why are diamonds so expensive while an ounce of highly industrial silver is so affordable?
I think we have a marketing problem.
What would happen if we found an agency who could effectively communicate the beauty and utility of silver to the masses? Silver is used in medicine, manufacturing, electronics, jewelry, and so much more. It’s a chic metal, able to affordably accentuate the beauty of varying socioeconomic classes.
If silver were to undergo the same marketing redesign as diamonds, I think we silver stackers would see our investments accurately priced according to their true value. In the case of silver, I don’t believe the current market value fairly represents what silver is worth. To disseminate an understanding of the utility of silver to the public would radically change the market, in my opinion.
I’d really like to hear your thoughts on a few things this week. What do you think of the De Beers Group and their diamond marketing scheme? How do you think they were able to make a piece of jewelry so desirable and expensive amidst a flooded market? What do you think about the current price of silver versus its aesthetic and industrial value; do you believe it’s undervalued? How do we create an understanding of its worth?
If you’re like me, the silver lining (sorry, I couldn’t resist) is that, while silver is still undervalued, we can stack our piles more affordably. One great option is the 10 oz Sunshine Silver Bar, on sale now.