On 2 January 1825 she struck a notorious reef, Sarn Badrig (St Patrick's Causeway) in Cardigan Bay, and sank in 14 metres (46 ft) of water.
In 2000, two local divers and amateur archaeological historians, Tony Iles and his daughter Helen, located a wreck through magnetometer survey.
As a result of various erroneous claims and uncorroborated information from a third party to Cadw stating that the Diamond was an early composite-hulled vessel (subsequently shown to be false) the site was evaluated for designation under the Protection of Wrecks Act 1973.
Ian Cundy of the Malvern Archaeological Diving Unit was granted a licence to investigate the wreck site in July 2002.
The wreck appears to be 160 ft long (49 m), and there are discrepancies between samples of the materials (timber and hull sheathing) recovered from the site and those listed as used for the Diamond.
Dendrochronological samples (2006) taken from the main ribs and professionally analysed show that the wood was still growing in 1825 at the date of the wreck of the Diamond, and was not felled until around 1840.
Cardigan Bay has been the graveyard of so many ships that identifying possible other candidates for the designated wreck site, and excluding the rest, may take some time.