First you need a partner in coop throw the item that you want duplicated down.you will also need another machine gun/assult rifle pretty much anything when you hold the trigger down it fires bullets rapidly...next while shooting the weapon have your friend pick it up! It's harder to do diamonds because there soo small but if you have god guns duplicate them with friends!:D
To perform this exploit which involves farming canned foods and painkillers you must first activate the 'Heavenly Gift' and 'Kill the Pain' side missions. When these side missions have been activated proceed through the game to the point where you meet Dr. Kessler. Check out the video below to see what you must do next.
To duplicate a weapon in your inventory just do the following. Equip the weapon, hold the right trigger and then press the left trigger to throw the weapon. When the weapon is in mid air press the 'Back' button to go to your inventory and unequip the weapon you threw. If you now leave the inventory and pick up the weapon that you threw and once again return to your inventory you will notice that the weapon has duplicated.