What’s the “Deal’ with Diamonds??

So if you’ve tried to sell a diamond recently, you are probably thinking you’d have an easier time selling help wanted signs. It is no easy task. The offers you probably received left you running for the door of it’s shop keeper. You keep looking back at your appraisal and it definitely says it would cost $10,000 to replace so why are you only getting offers below $2000?

The first thing you need to understand is that the diamond market is similar to all other markets in that supply and demand regulate prices. At times, supply and demand are way out of balance and now is one of those times. You see it in markets across the boars from cars and trucks to real estate and travel. I would guess that with the lack of available credit and good paying  jobs that the recovery is going to be calculated over a decade, not years and definitely not next year. I’m no analyst but it is pretty easy to read the loss of jobs and big government tabs have lead us into a grim economic period. Maybe it is just a natural cycle of expanding and contracting but I would also guess that the loss of jobs to foreign competitors is taking it’s toll.

Will there ever be another time in your life when your willing to spend $10,000 on a rock? Maybe or Maybe not, but there are other factors besides the lack of demand that have brought the diamond market way down. Mining has increased in productivity as new technology and new approaches to mining have unearthed far more and far better diamond rough than ever before. Diamond mining and manufacturing in the past was mostly controlled by DeBeers and when sales were slow, they simply stopped manufacturing diamonds to stabilize prices.

Now, we have so many competing diamond mines that there is almost too much supply even for an ideal market.

So how does all of this come into play when you are simply trying to sell your diamond? For one, wholesale prices have more than halved in the past couple years. While retail prices have not come down, jewelers simply make more on the sales they are able to make and it helps offset the decrease in sales volume.

With the markup from wholesale to retail being 300 to 600%, it starts to paint the picture that you are not buying a diamond as an investment. Those days are long gone. Investments are merely risks and I would guess that most “Investments” ultimately become certain losses. If everything made money, we’d all be rich, but that is not the case.

To put is simply, once you buy your diamond and sign the receipt, you instanly lose half to two thirds of your investment, maybe more.

The next thing you need to know is that in the past 5 years, the diamond market has changed vastly. First, there is the technology of treating diamonds. Diamonds are now commonly laser treated to remove visible inclusions, then filled with a liquid that has a refractivity similar to a natural diamond you it appears to look as that. Next, there is High Pressure Heat Treatment which can enhance a diamonds color and increase it’s clarity slightly. Beyond that, there are treatments such as bleaching, radiation, and more.

The single most important change in the diamond market has been cutting or manufacturing technology. There is a science applied to cut quality and proportions now. In the past, is was not as relevant as there were not many standards and alot of diamond dealers did not focus on this factor. Now, it is a very important characteristic. A diamond will not perform properly if it is cut wrong and that is a big value factor. Many older diamonds were cut without this in mind and thus do not appear as brilliant as they should because they do not reflect light the way they should. In fact, you may have a diamond that is cut to make a certain weight but all together does not face up to appear to be that size. For example, I see many 1 Carat diamonds that are less than 6.5mm in diameter. A 1 carat, as a standard, must be at least 6.5 mm from girdle to girdle or it will appear as a 5/8 carat diamond. Your diamond has to look the part so if in the past you bought a 2 carat that looks like a 1.5 carat, expect to get paid far less than you would had you bought a diamond with excellent proportions and symetry.

Another common yet unknown value factor is flourescense. About 1/3 of all diamonds have the presence of the mineral boron in their structure. This causes a diamond to appear oily or possibly cloudy. Expect a deduction of 10 percent up to 30 percent depending on the range of flourescense. Very heavy blue flourescense diamonds are typically far more yellow or brown than they appear, as blue naturally blocks yellow from the human eye.

I know this is all very technical and tricky, but that is how the diamond market is. I hear all too often people say “my jeweler told me my diamond was flawless or perfect” and I am troubled by this. There are standards for all factors in the diamond industry and if you are not aware of these, your jeweler or broker should responsibly relay that information to you so you can make the right choice when buying or selling a diamond. I always suggest you have a diamond certified by GIA when buying or selling, that way you have the facts about that diamonds characteristics. With a GIA certification, you can easily and accurately value a diamond.

Be wary of certifications by other companies, GIA is very accurate and reliable. Other certifications are often less strict. Additionally, never accept a jewelers appraisal as a certification when buying or selling a diamond. Jewelers often are not qualified to properly grade a diamond and are not an unbiased examiner. Especially where a diamonds market value is concerned. Jewelers will tell you a diamond is worth 10,000 dollars, yet you will not be able to get 1500 dollars for the diamond. Appraisals are simply BS and are for insurance purposes only, which, as many of you know, insurance is BS too.

So, welcome to the diamond market, It is 70% fraud. Try and stay in the other 30% and you might just be ok.

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About CT Gold Buyer
Owner of CT Gold Buyers in Wallingford, CT. and USA Gold Refiners.....

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