> Surely lowering the price of precious material will make everyone better off, they'll just stay the same relative to each other?
They won't stay the same relative to each other if anyone's current wealth is more related to the scarcity of the precious material in question than anyone else, which is guaranteed to be the case for any precious material.
That only really applies to prestige uses; to go with the De Beer analogy a 500 carat "jewel" diamond goes for $50 million, yet some researcher needing an artificial diamond optic lens the size of a dinner plate can get one made for just a couple million.
That's a special effect of the diamond marketplace where diamonds aren't really “precious materials” but authenticatable natural diamonds are precious collectibles. (That is, it is the provenance and not the material that is precious.).
But the dynamics are the same so long as the supply glut is in things interchangeable with what is precious (e.g., diamonds that, down to the De Beers microetching, are indistinguishable from the ones that people place value on.)
They won't stay the same relative to each other if anyone's current wealth is more related to the scarcity of the precious material in question than anyone else, which is guaranteed to be the case for any precious material.