- Certification, quality and price are three key factors when selecting an investment diamond
- The shape has a huge impact on the price
- Price setting is done based on price lists like Rapaport and Idex
The three basic rules
Before we dig deeper into what the correct price for diamonds would be, we will start with the three basic rules for buying a diamond.
- Certification: If you invest in diamonds, a diamond with a certificate is a must. Buying a diamond with a certificate is the only way to be sure that the diamond you buy will effectively have be of the quality the seller claims it to have. The GIA, HRD and IGI certificates are the standard for the diamond sector.
- Quality: educate yourself about the 4C’s, so that you can understand what’s on the certificate.
- Price: the best way to determine correct value of a diamond, is by comparing. You can find a bunch of possible ways to compare the price of diamonds online.
Deep dive into the details
First of all, the price of diamond is determined per carat. Let us assume that a diamond of a certain quality costs 3.000 € per carat. This means that an 0,5 carat diamond of this specific quality would cost 1.500 €. Furthermore, the price per carat will increase when you go to the higher weight categories. Therefore, diamond prices increase exponentially relative to the weight seeing as the price will increase for both a higher weight and two and a higher price per carat. Understanding these categories is essential, because one might think the price increases linearly, but this is not the case. Because purchasing a diamond in retail is usually driven by emotion rather than rationality, a 0.99 carat diamond is only 1% more valuable than a similar diamond of 0.98 carat. But a 1 carat diamond is 20% more valuable than a similar 0.99 carat diamond.
With a 20 % price difference between an 0.99 carat and a 1 carat diamond, it is easily understandable that a diamond polisher will lose his job if he were to lose that 0.01ct in favour of polishing a nicer stone. By keeping certain weight categories through polishing techniques, prices can be manipulated.
Rapaport price list
There are two basic categories regarding price. On the one hand, there are gemstones that are valued based on the Rapaport diamond price list and on the other hand there are diamonds that are not valued based on the list. The “Rap List” is sent out weekly every Friday, which does not necessarily mean there are changes every week. The list is used as a baseline for setting the price of almost every loose diamond. However, finding the “Rap” price for a diamond is only just the start.
Discounts and premium prices
For most diamonds, there are upwards and downwards price negotiation. Colour, clarity and weight can only give you an insight to the baseline price. After this, the whole becomes more subjective. Factors that influence the base price further are cut, fluorescence, …
The methodology Rapaport uses is not always clear. The factors they use are not disclosed to the public. Idex is an alternative for the Rapaport list. In contrast to the Rapaport list, the price setting methodology here is more transparent.
BAUNAT DIAMONDS advises potential investors about a suitable investment diamond.
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