Why Are Diamonds Valuable?

I just read some disturbing information about the diamond industry and thought I'd share.  I have not seen the movie Blood Diamond, nor know its plot, so forgive me if this is all old news...

Diamond jewelry has come to symbolize love. We also think of diamonds as valuable investments, valuable because they are so rare. But we think both of those things -- because we've been conned. 

Diamonds only mean love, and cost more than gold, because one brilliant company convinced people that diamonds were special. 

The marketing strategy was born 100 years ago in the mines of South Africa, when huge deposits of diamonds were found... Before that the discovery of a diamond was so rare that diamonds had become status symbols among royalty. But with the South African discovery, diamonds were suddenly ordinary. Prices plunged. 

Then a smart Englishman, Cecil Rhodes, bought lots of the suddenly cheap diamond minds, and established a monopoly [through the company De Beers] on the diamond supply... [His dealings with diamond-producing countries] brought De Beers an astonishing... 80% of the market... 

To keep prices high, De Beers hoards diamonds. That makes diamonds seem more rare than they actually are. 

But that's only half of their strategy... De Beers played the market brilliantly. It launched an advertising and public relations campaign to manipulate the world into believing that diamonds were the proper way to express love.

At the beginning of the 20th Century, there was not a clear American marriage "tradition" since the country was made of so many different cultures. De Beers jumped on that opportunity and offered their solution: if you want to marry a woman, you put a diamond ring on her finger.  Movie studios jumped on the diamond bandwagon, and sales exploded.

De Beers seems to be able to set the diamond standards based on what's in their warehouses.  When they had an overflow of large diamonds, they advertised "The bigger the diamond, the more you love her." When they acquired many small diamonds from Russia, De Beers encouraged men to buy their wives "Eternity Rings" for their anniversaries, which happened to contain lots of smaller stones.

So now we're left with a conundrum -- De Beers may have started the diamond trend based purely on economic strategy that leaves diamonds chronically overpriced, but it now IS culturally "American" for diamonds (instead of other precious stones) to symbolize eternal love. How can we resolve this?

You are so pretty and so sparkly... but are you worth it?

[source: Myths, Lies, & Downright Stupidity by John Stossel]