Encyclopedic coverage of diamond price and diamond resale value
Posted by Hari Krishna
July 22, 2020
The diamond price volatility is an everlasting debate amongst the people like
• Why are diamonds very expensive?
• Why does each diamond have a distinct yet discrepant price?
• How is the diamond price calculated?
• What are the factors that affect the diamond price?
• How is the diamond resale value decided?
• How to safeguard yourself from any fraudulent activities when purchasing the diamond?
Well, then you have come to the right place. Keep calm and carry on reading. We are presenting you with our comprehensive analysis of diamond pricing which will solve all your queries.
The world luxury itself is regarded as the synonym of expensive. Well to some extent it is true, but even in luxury goods, the rare earth metals tend to be more expensive.
But the diamond has something more to it. Apart from being a rare earth element, its higher prices are due to many other reasons such as diamond mining needs both capital resources and human resources in overabundance, large (and costly) supply chain, higher demand and limited supply, etc.
But we are here to discuss the quality and brilliance of a diamond that affects its prices apart from the other market factors.
But before going further, let’s clear one thing: the diamonds are always valued and traded on per carat basis. For example $3000 0.5-carat diamond costs $6000 per carat. However, the retailers generally state the total diamond price (Price per Carat x Carat Weight), not per-carat price.
There are many companies that release periodic reports on per carat diamond prices such as International Diamond Exchange (IDEX), World Federation Diamond Trading Platform (WFDB), Israel Diamond Institute (IDI), Rapaport, etc.
The diamond price is primarily decided based on its 7 elementary characteristics including 4Cs, Certification, shape, and fluorescence. Let’s understand each of them in detail:
As we all know that the price of a diamond increases with increased carat weight but not in proportion; meaning that a 2-carat diamond will undoubtedly be more expensive than a 1-carat diamond, but not necessarily be twice the price of a 1-carat diamond.
The total diamond price hike abruptly at popular carat weights such as 0.50ct, 0.70ct, 1.00ct, 1.50ct, 2ct, 3ct, 5ct, and so on; due to their greater demand.
(Source: Whiteflash)
These numbers of carat-weights are often referred to as the ‘Magic Marks’. The 1.00ct mark is the best-known example of this, as putting all the characteristics the same; a 1.00ct diamond might be significantly more expensive than the 0.98ct, but there will be a minor price difference between 0.96ct diamond and 0.98ct diamond.
The diamond price increases proportionally with the near colorlessness of the diamond, assuming all the other characteristics being the same. Colorlessness here refers to the absence of yellow (be it visible or not) tint in the stone.
The clarity of a diamond refers to the absence of inclusions (foreign particles) in the stone. The diamonds with no or fewer inclusions are always of premium prices.
But the interesting thing about clarity is that diamonds with the same clarity grade can significantly vary in price, depending upon how visible their inclusions are through the naked eye (eye clean diamonds).
The well-cut diamonds with ideal proportions of facet and their symmetrical positions with respect to each other are usually rarest of the rare and more expensive. For example, diamonds with too thick or too thin girdles are often sold at a discounted price.
The culet is also an important factor in diamond pricing. Cutlet is nothing but the bottom facet of the diamond. The ideal diamond should have no or small cutlet and those diamonds sold at premium prices.
The cut of the diamond closer to its ideal proportions makes it more expensive.
The cut and shape of the diamond are often confused with each other as the diamond shape name also has a word cut in it such as round cut, princess cut radiant cut, etc.
But there is a subtle difference between the two, and the difference is:
The shape of the diamond referred to as its physical appearance like round, oval, heart, square, etc. While the cut refers to the proportions of its facet for any said shape.
The famous round cut and the princess cut are more expensive than the pear cut or the trilliant cut as the former requires larger rough diamond compared to later.
The fluorescence of a diamond is a measure of its luster under UV light; the higher the level of fluorescence the diamond appears hazier. Usually depending upon the type of fluorescence lowers the price of a diamond.
However, there are some exceptions where the diamond price is not compromised due to the presence of fluorescence.
For example, in diamonds of H to I color grade; the presence of Medium fluorescence (blueish) could make the stone look whiter and brighter.
The diamond price also changes when the gemological laboratory that issued the certificate for the diamond changes. For example, the GIA certified diamonds are usually more expensive than any other lab-certified diamonds.
Now you might be wondering why do diamonds having all the above-stated characteristics be equal and still differ in price? So let’s understand the additional factors that affect the diamond price.
Usually, the diamond price is calculated on a reasonable combination of both primary and secondary factors. But here we have included separately for your convenience.
The traditional diamond retail market is often slightly more expensive for consumers than virtual retail due to the additional costs for operations and maintenance in the former.
But at HK, we have eliminated this discrepancy, and to protect the consumer rights, we are practicing Fair and Fixed Policy for diamond pricing globally.
Similar to any other goods or services in the market, the diamond prices are also hugely driven by demand and supply which depend on consumer behavior, economic growth, local interest rates of taxes, production, seasonality, etc.
Sometimes the additional benefits including diamond insurance, guarantee/warranty, upgraded service, etc., offered by the particular retailer also indirectly affect the diamond price.
You can even see the diamond pricing online by signing up on hk.co or downloading the hk.co iOS or Android app because we have included all the stated criteria with pictures and videos. You can also filter the diamonds according to your personal preferences and compare the results.
You might be wondering that the resale value of diamonds is estimated in the same way or there is a different method? – well, let’s see:
Re-selling your diamond is might be an overwhelming process but understanding how diamonds are priced for resale becomes essential to keep yourself away from any loss or fraud.
Normally any product is out for resale it always expected to worth less than the original market price, the same goes for the diamond resale value.
The diamond resale price then depends on where it is being resold: whether in the trade or directly to the end consumer.
The diamond price often depreciates over time due to many reasons including the already way much high initial retail prices, also sometimes a Resale Appraisal (fair market value of the diamond) is done on the purpose of valuing the diamond with the intention of it being resold in advance.
If we take an example of let’s say any diamond at $5000 retail price. And if we disclude all the taxes and duties it costs $4500. Then, considering the trade contract, retail appraisers, overhead costs, and extra associated costs and after excluding them; the resale price of the same diamond would be somewhere between $1,500 to $2,500.
Explore our priceless, rare, inventory of GIA certified natural diamonds by signing in to hk.co or by downloading our leading-edge mobile app hk.co; available for both Android and iOS platforms.
