What Determines the Value of a Diamond?

Wednesday, December 4th

What Determines the Value of a Diamond?

Diamonds are among the most valuable materials on the planet, and it's not uncommon for people to spend over $100,000 to obtain them. The exact value of a given diamond depends on four distinct factors including its weight, cut and clarity. Additionally, the color of a given specimen will have an impact on how much it is worth on the open market. Let's take a closer look at what you need to know so that you can buy or sell a diamond with confidence.

Heavier Diamonds Are Generally Worth More on the Open Market

The term carat is used to express how much a diamond weighs, and a carat is equal to about one-fifth of a gram. Traditionally, a wedding ring will feature a diamond that is exactly one carat. However, you could have up to five carats or more in a single ring depending on your tastes and budget. The number of carats in a given specimen depends mostly on how it is cut and its overall purity.

How Your Diamond Is Cut Will Influence Its Price

Traditionally, consumers have preferred to purchase diamonds that are roughly spherical in shape. However, ovals and triangles are also popular among consumers, which means that diamonds with these shapes may also fetch a relatively high price if you attempt to sell them.

According to the Gemological Institute of America (GIA) the brilliant cut is the most popular style. The term brilliant refers to the fact that the diamond allows a lot of light to shine through the top of it.

In addition to brilliance, a diamond's cut quality is also determined by its level of fire and scintillation. These terms refer to the specimen's ability to diffuse light into various colors and the way that it sparkles when it's moved.

A diamond's cut quality is also judged based on the way it looks when it is casually observed. Specimens that have an excellent cut quality will have a polished appearance that is free from obvious cuts, scrapes or other aesthetic flaws.

A round brilliant diamond should have at least 57 facets that create an even pattern of dark and light areas on its surface. Ideally, these facets will be relatively symmetrical. However, it is possible to ask for a custom cut without necessarily diminishing the value of the finished product.

Color Is Important When Calculating a Diamond's Price

As a general rule, a clear diamond is worth more than one that has a clear tinge of yellow or brown to it. Often, a diamond that lacks any color will be referred to as white to describe its absence of any true hue.

The GIA gives a diamond a grade of D to Z when rating its overall color. Those that have a grade of D are almost translucent while those that are given a Z grade have a dirty or stained appearance to them.

It's important to point out that diamonds that have exotic hues such as pink, red or blue are often just as valuable as those that are white or clear. Therefore, you shouldn't expect to take much of a loss if you are trying to sell such a specimen, and you shouldn't expect to get a discount when attempting to buy a blue or pink diamond.

A Diamond's Clarity Is the Final Important Variable

When evaluating a diamond, an appraiser will pay attention to its overall clarity. Clarity refers to the way a diamond looks when you observe it, pick it up or move it. Ideally, it will be free from scratches, scuffs or other external abrasions that may minimize its appearance.

Furthermore, it should be free of any internal growths or granule clusters that might give the specimen a jarring appearance. It's worth noting that an appraiser will often put a diamond under a microscope in an effort to find anything wrong with it. Therefore, you should never assume that a diamond is in excellent condition in terms of clarity just because it doesn't have any apparent flaws when seen by the naked eye.

Almost every diamond will have some sort of flaw when it is literally put under the microscope during the evaluation process. Ultimately, you shouldn't feel bad when an appraiser says that there are imperfections that might minimize your diamond's market value despite your best efforts to keep it in pristine condition.

General Market Conditions Can Influence a Diamond's Price

As with any other product, diamond prices will rise and fall based on current levels of supply and demand. It's not uncommon for major diamond producers to artificially restrict the level of supply to create a sense of scarcity. When supplies of a product are perceived to be scarce, the price of that item generally increases.

During times of economic recessions, diamond prices may fall as fewer people can afford to pay the prices that suppliers are asking. Furthermore, you may expect to receive less from a dealer or other buyer for your diamonds during times of poor economic conditions.

Finally, older diamonds that have not been properly cared for may be worth less than they were when you first bought them. In some cases, you may see a diamond lose its brilliance, fire or clarity even if you have taken steps to properly maintain them.

How Can You Keep a Diamond Looking Its Best?

Aside from your home or car, a diamond may be the most expensive asset that you own. Therefore, it's important that you understand how to protect this asset even if you don't plan on selling it in the near future. Ideally, you will clean it on a regular basis to get rid of grease, dust or anything else that may accumulate on its surface.

Cleaning a diamond is typically as easy as dipping it into a solution containing a mixture of water and a few drops of a degreasing agent. A soft cloth or brush can then be used to remove any dirt or other debris that may remain after it has been dipped into the solution.

It's important that you refrain from using brushes with firm bristles, the rough side of a sponge or any other object that may cause abrasions. It's also important to only use brushes or other objects that are brand new so that they can't transfer dirt, dust or other debris onto the diamond.

One of the easiest ways to keep your diamond clean is to touch it as little as possible. This will prevent grease or other types of oil from being transferred from your skin to the diamond itself.

You can also keep your diamond in good condition by storing it someplace that is free from excessive heat or light. For example, keeping it in an opaque box can prevent it from being exposed to the sun on a consistent basis. It's also important to store it someplace far away from a heating vent or any other location that may experience sudden or drastic temperature changes throughout the day or as the seasons change.

Make it Easy

If you are in the market for a diamond, it's critical to understand the various factors that determine their prices. This can make it easier to determine if the specific product that you want to buy is worth the price that a seller is asking for. It can also make it easier to price any diamonds that you want to sell to a pawn shop, broker or private buyer. If you have any questions about the quality of a diamond, it may be worthwhile to get it graded or to see a recent grading report.