Is gold rarer than diamond?

When it comes to rarity in their natural elemental forms, gold is significantly rarer than diamonds. The average abundance of gold in the Earth‘s crust is estimated to be just 0.004 parts per million. In contrast, diamonds are composed of the relatively plentiful element carbon. So geologically speaking, gold‘s formation requires much more specific conditions, and deposits are spread across far fewer mines.

However, the diamond market is far more concentrated than the commoditized gold market, with over 90% of the global rough diamond supply passing through just a few major players like DeBeers. This allows the perceived rarity of diamonds to be carefully managed through tightly constrained supply.

So while gold is undeniably rarer in terms of natural occurrence, diamonds‘ distribution reaching consumers is artificially restricted compared to widely dispersed gold reserves. This enables the diamond industry to somewhat dictate rarity and prices.

Quantifying rarity: occurrence and production

To quantify just how rare gold is compared to diamonds, let‘s look at some key statistics:

  • The total gold reserves in the top mining countries is estimated to be just 57,000 metric tons that could feasibly be mined. And the entire cumulative world production through history is around 190,000 metric tons.

  • For diamonds, reserves in the top producing nations exceed 1 billion carats. And projected world production is over 130 million carats annually over the next decade according to Bain & Company, a leading consulting firm.

  • Annual gold mining adds just ~3,300 tons to the overall supply. Diamond mining produces over 15x more carats each year.

  • While full natural gold reserves are uncertain, the USGS estimates the total amount in the Earth‘s crust at around 51 billion tons. Clearly only a tiny fraction will ever be accessible to humans.

  • But for diamonds, potentially mineable reserves are projected to exceed 1.6 trillion carats. And the Earth‘s crust likely contains trillions more inaccessible carats of microdiamonds.

These statistics make it evident that in naturally occurring elemental forms, gold is extraordinarily rare relative to the frequency of carbon deposits that create diamonds through geologic processes.

However, investors need to think beyond basic rarity. The diamond industry‘s control over supply and distribution dramatically impacts availability and pricing.

Does controlled diamond supply inflate prices?

The diamond industry pipeline begins with over 30 major mining companies worldwide that account for 80% of production. But just two dominant conglomerates control the mining and distribution of gem-quality diamonds:

  • De Beers – founded in 1888 in South Africa, De Beers mines and distributes around 35% of the world‘s rough diamonds. They once had complete monopsony control of the diamond trade.

  • Alrosa – the Russian partially state-owned company produces 25% of global output. In 2021 they mined over 32 million carats.

De Beers and Alrosa supply rough diamonds to diamond manufacturers, predominantly in India, for cutting and polishing. The resulting gems are graded by labs and sold via diamond brokers to jewelry brands. At each stage, large players dominate the scene.

This consolidated model allows market forces of supply and demand to be overridden, with companies like De Beers able to regulate diamond prices by managing supply. When facing oversupply, they stockpile diamonds in vaults to limit availability.

For example, De Beers stockpiled over 3 billion carats in the late 20th century to prop up prices when new large deposits were discovered. The rarity of diamonds reaching the retail market is thus due more to controlled distribution rather than natural scarcity.

Do rarity and value always correlate?

While rarity plays a key role, the value of gold, diamonds and other commodities depends on several other factors:

Industrial utility

  • Gold has value beyond jewelry and investments due to use in electronics, medicine, aerospace, glassmaking and more leveraging qualities like conductivity and corrosion resistance.

  • Diamonds have some industrial purposes as drill bits and abrasives. But these small, imperfect diamonds are far cheaper than the rare gem-quality stones that hold value.

Financial attributes

  • Gold functions as a stable store of value and inflation hedge. Roughly 179,000 metric tons of gold have been mined throughout human history and gold markets are highly liquid.

  • Diamond values are more subjective, relying on maintained perceptions of rarity. And their opaque, concentrated markets inhibit price discovery and liquidity.

Prestige and desirability

  • Large, flawless diamonds carry associations as the highest symbols of commitment and luxury, commanding huge premiums.

  • Gold‘s warm luster is desirable but considered less prestigious. Platinum and silver rival gold jewelry in popularity.

Ethical considerations

  • Consumers increasingly demand ethically sourced gold and diamonds, which restricts supply. However, most mines still have issues ranging from environmental damage to exploitative labor practices.

  • Diamonds especially face longstanding concerns over conflict diamonds funding African wars. The Kimberley Process attempts to control this.

So while fundamental rarity plays a key role, the nuances around distribution, psychological associations, and ethical considerations also significantly impact the ultimate worth and availability of gold and diamonds.

How do gold and diamonds compare as investments?

For investors, gold generally compares favorably to diamonds:

  • Transaction costs for buying and selling gold like bullion or ETF shares are far lower than for diamonds, which must be individually evaluated by gemologists before sale.

  • Gold prices closely track macroeconomic trends. Diamonds lack price transparency and benchmarks.

  • Large diamond investments carry the risk of irrecoverable loss or theft, unlike secured gold in vaults.

  • The recycling rate for gold is over 25%. Much of diamond supply enters jewelry and becomes unavailable for resale.

However, diamonds do enable exceptional gains in certain cases:

  • The 59.60 carat Pink Star diamond sold in 2017 for $71.2 million in 2017, the highest price ever for any gemstone.

  • The 14.62 carat Oppenheimer Blue diamond fetched $57.5 million in 2016. Well-cut, extraordinarily rare diamonds can appreciate tremendously.

  • Natural blue and pink diamonds averaging over 3 carats have delivered 11% – 15% annualized returns over the past 60 years, according to diamond investment firm AKORA.

So while diamonds lack the liquidity, transparency and security of gold, they offer the possibility of extreme appreciation for investors able to access the top echelon of stones.

Shifting supply dynamics

Changes on the supply side also stand to alter the comparative rarity and availability of gold and diamonds:

  • Improving gold recovery from electronic waste and possibilities of seawater extraction could bolster gold supplies. But mines face declining ore quality.

  • Lab grown diamonds now account for 1-2% of the gem market. Production doubled in 2018 alone to over 6 million carats according to Bain & Co, posing possible disruption.

  • New diamond deposit discoveries do occur. In 2021, Russia mined over 35 tons of diamonds worth over $3.8 billion. These massive hauls can temporarily depress prices.

  • Mines also unearth increasingly enormous diamonds like the 1,174 carat stone found in Botswana in 2021. These giant gems introduce new supply.

Investors must stay abreast of these supply developments and how key players like De Beers respond via inventory management. Meanwhile, technology is opening up new production methods for both commodities.

The case for investing in gold

As an impartial observer, my overall recommendation for investors would be to favor gold over diamonds, for the following reasons:

  • The gold market is far more liquid, enabling faster transactions. Reselling diamonds typically requires months-long brokering.

  • Gold has a clear, historically stable pricing structure. Diamond prices lack transparency.

  • Rising supply of synthetic diamonds could place pressure on natural diamond prices over the next decade.

  • Geopolitical shifts like Russia‘s isolation may alter diamond output and availability. Gold is mined more broadly.

  • Central banks remain net buyers of gold. And demand from India and China looks robust according to the World Gold Council.

However, diamonds have potential for substantial capital appreciation in the right circumstances. Investors focused exclusively on maximizing returns may find the most elite, museum-quality diamonds highly compelling, despite higher risks.

But for most individual and institutional investors, owning gold across bullion, mining stocks, and funds provides desirable diversification, inflation hedging, and liquidity. The gold market‘s structure and transparency ultimately make it a superior store of value over the long-term compared to diamonds.


Natural elemental gold is clearly rarer than diamonds based on known reserves and concentrations in the Earth‘s crust. But the diamond supply chain involves major intermediaries that closely control distribution and pricing.

These structural factors mean diamond availability does not directly correlate with fundamental rarity. And diamonds‘ financial attributes differ greatly from commoditized, liquid gold trading.

Still, investors should not dismiss diamonds, as the rarest gems can appreciate tremendously.

Ultimately gold prevails over diamonds for most investment purposes. But diamonds retain unique status as prestigious heirlooms and symbols of commitment. For sheer admiration, diamonds and gold stand unmatched. Their enduring appeal reflects their exotic origins and the allure of scarcity.

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