It's common knowledge that diamonds are extremely rare – hence their price, but there is much more to it.
Not many people know that approximately one million diamonds must be mined in order to get 1 carat of gem quality diamond. As if that's not enough, it takes about 5 million diamonds mined in order to get one 2 carats gem quality diamond. This is also why the prices of diamonds go up exponentially according to their size (2 diamonds of 1 carat cost significly less than one 2 carats diamond).
Over 80% of the diamonds that are mined are good only for industrial purposes. And within the top 20% of "good" diamonds, most of them are not "eye clean".
There is another reason why diamonds are very highly priced (besides for the fact that diamonds are extremely rare). The mining process is extremely expensive. Over 200 tons of ore needed to be removed in order to find a small sized diamond.
However, putting aside all that was said, "diamonds are forever" is not just a phrase, it's a fact. Diamonds are amongst the few substances that are unaffected by time, their color doesn't shade and they do not lose their shine. Most diamonds that we see today are over 3 billion years old. It's the oldest substance known.