Diamonds are a well-known luxury. These expensive stones are even a part of pop culture. Songs are written about them, and they are the plot of many movies and books. Besides being a status symbol, diamonds are often given as a valuable gift and adorn most engagement rings.
However, if you’ve been searching for a diamond yourself, you’ve probably noticed that the prices range from very expensive to surprisingly cheap. All of that made us wonder – why are some diamonds so cheap?
Well, in this article we’re covering the basics of how diamonds are valued and what makes one diamond get valued lower than another. You may think you know your diamonds but trust us, there are a lot of factors involved. Let’s get this started.
Why Are Some Diamonds So Cheap?
The answer to this question isn’t straightforward. The value of diamonds depends on a lot of factors, as we mentioned. You can see two diamonds that apparently look the same (or at least similar) but with a drastic difference in the price. Well, here’s the thing, they may not be as similar as it seems at first sight.
For starters, the price and value of a diamond depend mostly on the four C’s (We’re going to cover that later). Besides that, there are even more factors. Although the 4C’s are crucial in determining the price, what if you’re offered two diamonds with very similar 4C ratings, but different prices?
Well, let’s put it this way: You’re picking a hotel to stay at during your vacation. Both hotels have four stars. However, one is barely a four, and the other one is almost a five. Both of them apparently have the same rating, however – the experience is going to be much different. The same goes with diamonds!
Aside from that, even though the characteristics are important on paper, some differences can only be seen in person. At the end of the day, beauty is in the eye of the beholder.
How Are Diamonds Valued?
Before digging deeper into the question of why some diamonds are cheap, we need to explain the basics of how diamonds are valued. It’s quite simple: the value of diamonds depends on the: color, clarity, cut, and carat weight.
When you see two diamonds with the same carat weight, but one is a lot cheaper than the other – remember that carat isn’t the only thing that’s valued. It’s all of the C factors combined that determine the price of the stone. Let’s cover all of the C’s!
Although when one of the main factors that determine the price is color, you probably expect that the more color – the pricier the diamond. However, this factor is all about the absence of color. The general rule is: the less color, the higher the value of the diamond.
In short: yellowish diamonds are cheaper than completely colorless ones. GIA has a special scale that determines the color of diamonds. The scale starts with the letter D which represents a completely colorless diamond. With the letters increasing, color is much more visible in the stone.
The scale ends with the letter Z, which represents diamonds with a brownish, yellow color. There are some exceptions to this rule. This goes to the “fancy” colored diamonds, such as the pink sapphires, rubies, and black diamonds.
Although you probably imagine cheaper diamonds being literally yellow, these color variations are usually not visible by untrained people. However, they make a big difference in the price.
Learn More: What Colors Do Real Diamonds Shine?
Diamonds are naturally formed under a lot of pressure and extreme heat. Because of that they usually contain internal or external marks. The second factor, clarity, determines the absence of those marks. The clearer the diamond, the better. And of course – pricier.
Diamonds that are found without those marks are extremely rare. Rarity is one of the main things that determine the value of the diamond. That’s why clarity is so important in rating a stone.
Some say that the cut is the most important factor of all of the C’s. Maybe that isn’t true, but it is definite that the beauty of the diamond certainly depends on the way it’s cut.
The brightness of the diamond indicates the light that it reflects. On the other hand, fire indicates the dispersion of light through it. Scintillation, simply explained, is actually the sparkle of the diamond when it’s moved.
These first three factors are related to the appearance of the diamond. The last four are results of craftsmanship. Besides those seven factors, the cut of the diamond is graded on another scale. Diamonds are rated excellent, very good, good, fair, or poor, depending on how good they are crafted.
When people think of “carat” they usually presume that it indicates the size of the diamond. Sorry to burst your bubble, but diamonds are measured in weight – not in size. Well, the fourth C refers to the weight of the stone. One carat is equal to 200 milligrams
Although “the bigger the better” is a popular term, you shouldn’t decide on buying a diamond just because it’s carat weight is big. Two diamonds that have the same carat weight can have a very different price. Keep in mind: the total value of a diamond is determined through all four of the factors.
Carats are granted points to define their value. One carat has 100 points, half a carat has 50 points… you get it. The calculation is pretty straightforward. Carats are an important way to measure a diamond’s value. It’s hard to find a large crystal that can be made in a heavy diamond.
What Are The Most Expensive Diamonds?
As mentioned before, a diamond’s value is measured mainly through rarity. That’s why the 4C is a good way to determine its value. If all of the characteristics are rated good on the scales: that means that the diamond is very rare. Thus, expensive.
However, what diamonds are rarer than others? For starters, the “fancy” colored ones are extremely rare. These colored stones account for only 0.1% of all of the diamonds mined in the world. Even though they’re famous for being expensive, some of the fancy colored diamonds are affordable.
For example, brown, grey, or yellow-colored diamonds are known to be quite cheaper. On the other hand, pink, blue, purple, and pure orange is the most expensive. With fancy colored diamonds, the rule of value is the stronger the color, the more expensive the diamond. Of course, when all of the other C’s are in good condition.
As for white diamonds, their cost usually depends mostly on the four C’s. The most important factor is the cut, because if your diamond is poorly crafted – that affects the value a lot! The most expensive white diamonds are usually with a D grade color, an excellent cut, flawless clarity, and high carat weights.
Just like we explained before, the value of white diamonds differs in regards to all of those factors combined. When it comes to fancy colored diamonds, the rarity and value depend on the color mostly.
Can a Diamond Lose Value?
Unfortunately, diamonds can lose value over time or when accidents happen. If you’re thinking of selling your diamond, you’re in for a lot of disappointment. Diamonds lose their value the second you buy them.
Although all diamonds have a resale value, the price is always much less high than when you bought them new. That’s mostly because it’s difficult to sell a preowned diamond.
The differences in the value of a new and preowned diamond vary. Sometimes, diamond jewelry will have a resale value of about 20% to 60% of the price when it was originally bought. So, the chances that you’re going to lose money when you sell your diamond are pretty big.
But, how much money will you lose? It depends on a few things. For starters, where you bought your diamond and how much you paid for it are important factors. Besides that, it also depends on how and where you’re planning to resell it.
Let us explain. For example, when you buy a new diamond at the jewelry store, you pay the market price, plus the markup added to the price by that jewelry store. That’s why it’s very important where you buy it. Some stores have a much bigger markup.
Some jewelry stores have a markup as high as 100%! That means that you’re buying the diamond at double the price than when the jewelry store got it. It’s good to know that when you’re buying online the markup is significantly smaller. But you should be very cautious when buying an expensive stone online!
Aside from losing value because it’s “second-hand”, diamonds can lose even more value over time. If you damage your diamond even a little bit, chances are, its value has dropped greatly.
For instance, you chipped your very expensive engagement ring. Although you can “repair” it, it will never be the same. Repairment of a chipped or damaged diamond consists of re-cutting.
Your diamond is probably going to look great if a good jeweler re-cuts it. However, it’s going to change in carat weight and probably in even more aspects.
Besides recutting a diamond, you can even exchange it or sell it. However, selling a damaged diamond probably isn’t going to be very profitable for you. As far as the exchange goes, you could exchange it in a jewelry store. Yet, you can only exchange it for a much less valuable diamond than yours was originally.
Although it seems quite unfair, keep in mind that all diamonds have a resale value. So you can always earn some money. However, losing some money when reselling diamond jewelry is inevitable.
How To Pick a Diamond?
It’s very hard for an average consumer to know what diamond is good and if the price is okay. Especially if it’s your first time buying one! Well, no worries – we’re here to help.
When picking a diamond, the first thing that pops into your mind is the shape. So, how do you know which one is a good option? Well, it all depends on personal preference.
However, if it helps, by far the most popular shape is round. Round diamonds are popular because of their sparkle and light performance. They’re so popular that they make up nearly three-quarters of all diamond purchases!
The next thing you’re going to think of is probably size. Although the thought of a big rock on your finger probably sounds appealing, not everything is about size. Sometimes you’re better off with a smaller diamond, but that’s going to have better characteristics. Also, don’t forget that carat is only a measurement for weight, not the actual size of the stone.
Just like we mentioned earlier, one of the most important things is certainly the cut. The cut impacts the fire, sparkle, and brilliance of your precious gem. With a bad cut, the diamond will look lifeless.
And lastly, picking a color for your diamond. If you’re not into fancy colored diamonds – we suggest that you buy a diamond that’s as near as possible to colorless. Depending on your budget, the best option would be a completely colorless diamond.
However, if you manage to find a slightly colored diamond that’s not detectable with an untrained eye – it will also be gorgeous if it has the other three C’s in a good state.
To conclude: a diamond’s value varies depending on a lot of factors. However, the most important is the four C’s. The four C’s indicate the quality and rarity of your precious diamond.
So, when you see two diamonds with similar looks and characteristics, check out the four C’s in more detail. Maybe they’re not so similar at all.