In the major towns and cities of WoM you will come across a dwarf with "Gold [buy diamond & sell to merchant]" highlighted above his head. This dwarf will sell you diamonds that you purchase with mithril. The diamonds have three categories of rarity and worth. The diamonds are to be sold to a merchant for gold. This can be really usefull if you have an alt character that you used a instant level up on. This could give the $$ to initially equip your alt with spells and such. Below is a small slideshow showing the dwarf and some of his diamonds.