What is a Diamond Worth?
A Brief History of the Diamond Market
Like most marketable goods, scarcity has a direct impact on the perceived value. To imbue diamonds with a higher value, it was important to manage the supply of diamonds, that, in the late 1800s, were being mined in India, Brazil and later, South Africa. To do this, diamond mine investors banded together under the De Beers umbrella but using various name in different countries to ensure control of all aspects of diamond production, distribution and marketing.
The cartel managed diamond supply in such a way that prices remained stable since the Depression era even as other commodities including silver, rubber and grains fluctuated widely. More significantly, De Beers and its partners strategized to sell diamonds to niche markets through creative image marketing. A well-orchestrated media campaign by De Beers turned diamonds into a symbol for love, romance and commitment. This iconic campaign entrenched the diamond as something of value with mass appeal.
Diamond trading is a well-organized market. As such, standards are in place to efficiently determine diamond value based on specific characteristics of the stone. Grading a diamond is a specialized skill required of jewelers and marketers.
The color of a diamond ranges from clear and colorless to various levels of tint. The value decreases as the tint increases. The Gemological Institute of America assigns letter values to differentiate the color grades. The best value is D representing the clearest type of diamond followed by G for nearly colorless stones. J stones indicate a faint yellow tint, M stones exhibit a very light to light yellow tint while Z stones show a light yellow to brown tint that is visible to the naked eye. Diamond value beyond Z color are classified as fancy stones with pink, blue or red tint with values increasing the deeper the tint.
Color grading is done with the diamond face down on a white tray illuminated with an ultraviolet-free fluorescent light.
Clarity of the diamond is an assessment of flaws such as inclusions of different minerals formed during the crystallization process. GIA standards assign an FL/IF clarity rating to flawless stones with an l1-ld-lr clarity grade for stones that have flaws and inclusions that can be observed with the naked eye. Often, the size, color, position and the quantity of flaws and inclusions will determine the clarity grade.
The cut of the stone is not the same as the shape. Cut refers to the diamond’s proportions, angles and facets and how the stone reflects light and sparkles. Beautifully cut diamonds refract the light correctly to enhance the sparkle. Cut grades range from ideal to poor with depth contributing to the intensity of the sparkle.
Carat is a measure of weight not size: One carat is equal to 200 milligrams. Heavier diamonds are rarer and should have higher values.
A GIA certificate attesting to these qualities will enhance diamond value as will proof of provenance for stones with a unique and interesting history.