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How To Estimate a Diamond’s Worth

diamond-appraisal resize

Be it in the form of a family heirloom, an antique piece of jewelry, an engagement or a wedding ring, a diamond is a gem that has symbolized love, legend, and affluence for centuries.

Often called a girl’s best friend, diamonds have been wanted by everyone, from couples looking to commemorate their relationships with a piece of jewelry, to investors wanting to make a fortune. However, it’s rare that all those who own or are interested in owning diamonds are aware of what precisely makes one diamond better than any other.

Here, we outline exactly how a diamond is valuated and how the worth of any particular diamond is determined:

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Primary Factors: Diamonds and the Four C’s

While all diamonds are made of compressed carbon, each individual diamond is unique and different in its own right. Diamonds come in a wide variety of shapes, sizes, colors as well as various internal and external characteristics, which serve as diamond identification. All polished diamonds have some value, but how exactly does one determine which diamond is more valuable than the other?

A diamond’s worth is based on a number of various factors. To dispel arguments about a diamond’s worth – the diamond industry professionals use a set of particular guidelines which help establish the exact quality and desirability of a diamond. These guidelines, or the 4 C’s, were established by the Gemological Institute of America and are the basis of diamond value estimation. They include:

  • Carat
  • Color
  • Clarity
  • Cut

 

1. Carat

A major factor in a diamond’s value is its weight. A ‘carat,’ a word derived from carob tree seeds which were used in ancient times to balance scales, is the unit of choice for the weight measurement of a diamond.

One Carat equals 200 milligrams or 0.007055 ounces. The standardized system of metric carats is further divided into 100 points. A 50-point diamond is half of a carat or 0.5 carats.

Much like everything else in the world, the heavier the goods, the pricier they are. While it holds true for diamonds as well, there are various other factors that influence the overall quality and value of a diamond.

2. Color

Colored DiamondsDiamonds are available in many colors including blue, pink, yellow, and black. The most commonly dealt in diamonds however, are white (colorless) diamonds. Colorless diamonds are more valuable the more colorless they actually are. A colorless diamond allows easier passage of light, hence resulting in easier and far greater dispersion of light or, in layman’s terms, a sparklier diamond. Diamonds can range from colorless to light yellow, brown, and even gray. Diamonds with identical cut, clarity, and carat can have a significant difference in value based on the color alone.

White diamonds are graded from “D” (completely colorless) to “Z” (noticeable color). Colored diamonds (i.e. blue diamonds) have a completely different grading scale where they are actually more valuable the more strongly colored they are.

A diamond is color-graded in a diamond grading laboratory under strictly controlled conditions by comparison to round brilliant diamonds of known color. It is important to know that a diamond’s color grade does not pertain to the face-up surface look of any particular diamond, but rather the body color.

3. Clarity

The description of a diamond’s purity is called its Clarity. The amount and location of internal flaws, called inclusions, or external marks, known as blemishes are what determine a diamond’s clarity. The fewer flaws a diamond has, the rarer it is, and the more it’s value.

All diamonds are systematically graded and plotted under 10X magnification. The clarity grades, assigned by various diamond grading labs, rate the diamonds from being completely flawless to imperfect to the naked eye. The clarity characteristics – the internal and external flaws of a diamond and their effect on the diamond’s clarity grade are determined on the basis of five key factors. They include: the number, position, nature, size, and color or relief of inclusions and blemishes. Diamonds can range from “IF” (Internally Flawless) to “I3” (Included, Level 3). Importantly, beyond a certain level of clarity, the naked eye cannot tell the difference between diamonds. But for valuation purposes, greater clarity has a significant effect on price.

The presence or absence or these internal and external features or irregularities can have a positive or a negative influence on the worth of a diamond. Clarity is the characteristic of a diamond that sets apart each individual stone, helps separate the imitations from the real deal, and helps provide gemologists and scientists valuable information about the formation of a diamond.



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4. Cut

While the diamond’s other Cs are nature driven, the value and brilliance of a diamond is increased or decreased at the hands of the craftsman who cuts it.

The cut of a diamond is what controls the amount of light reflected through the diamond. The cut is what unleashes the fire and beauty within the diamond itself by allowing the right amount of light to interact with every angle and every facet of a diamond and be returned to the eye.

The cut is based on three optical effects it can cause:

  • The Brightness, which is the internal and external white light reflection
  • The scattering of white light into the colors of a rainbow sometimes known as “the Fire”
  • The amount of sparkle a diamond produces with the pattern of dark and light areas caused by the reflections within the diamond itself called Scintillation

The proportions of a diamond determine how the light performs. The proportions, combined with the polish of a diamond’s surface, affect the overall appeal and beauty of a diamond.

The value of the diamond is affected by the rarity of one, or more than one, of the Four Cs. Given the rarity of the larger carat diamonds, they are often priced more per carat as compared to the smaller ones. Similarly, a colorless diamond, far more rare than the yellow or gray tinged diamond, carries a significantly steeper price.
Diamond Cuts

It’s Not Just About Size!

Each of the 4 C’s is extremely important. A 1-carat diamond that is internally flawless, perfectly cut, and “D” color could be worth over $20,000. On the other hand, a diamond of the exact same size that is significantly included, has a “good” cut, and a “J” color could be worth under $3,000.

Diamond Certifications

While the diamond industry is known to mostly circle around the 4 C’s: Cut, Clarity, Color and Carat, there is a fifth C that is held in equal importance: it is the Diamond Certificate.

Awarded by various grading laboratories established around the world, the Diamond Certificate is the diamond grade assigned to a particular stone after a thorough evaluation, a professionally unbiased examination which authenticates the attributes of a diamond. The Diamond Certificate provides a careful validation of the color, carat weight, clarity, along with the exact measurements of the diamond.

Most professional diamond grading industries have their own standards and are known to employ and conform to their own terminology. For any diamond owner, it is imperative to understand the difference between the various grading systems and how they compare to one another, as a diamond certificate plays a significant part in the value estimation of a diamond.

Some of the most reputable diamond grading laboratories of the world include:

  • Gemological Institute of America – GIA
  • American Gemological Society – AGS
  • The Diamond High Council – Hoge Raad Voor Diamante – HRD
  • The International Gemological Institute – IGI
  • European Gemological Laboratory – EGL

Apart from these top grading labs, there is a plethora of other types of certificates. Each grading laboratory may offer different kinds of certificates or grading reports. They may be highly detailed reports, straightforward dossiers, or more compact certificates. Different grading labs have different names for the certificates they offer which helps distinguish their brands in the diamond industry.

While the AGS is known to call its certificates The Diamond Quality Documents or Diamond Quality Analyses, the GIA refers to them as either a GIA Diamond Report or GIA Diamond Dossier, whereas the IGI certificates are known as the IGI Diamond ID or IGI Hearts and Arrows Diamond Report.

Each certificate differs slightly in terminology, grading system, simplicity, and layout. There are some, which include diagrams or proportion values while others don’t.

Each certification authority has its unique quirks. GIA is known to be the strictest for Clarity, generally awarding at least one grade lower than other laboratories. The HRD is known to add its own term of clarity grade to all diamonds with impurities invisible to the 10X magnification; the Loupe Clean. The AGS clarity grading is quite similar to GIA while the IGI, EGL, and HRD all award one or two grades higher than GIA.

The same holds true for the difference in Color grading by various diamond-grading laboratories. GIA is the authoritarian while HRD and AGS match closely. IGI and EGL, on the other hand, tend to award grades higher than GIA.

It is important to note that the certificate doesn’t actually alter the value of the diamond – it simply confirms its authenticity and characteristics. That being said, if one laboratory says your diamond’s color is “E” and one says it is “D,” this will have an effect. On the other hand, jeweler’s generally tend to value GIA certificates more in their reliability.

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Secondary Factors

Apart from the 4 C’s, there are a number of other factors which can have a positive or a negative effect on the value of a diamond. These are not as major of factors though they do have an effect.

1. Culet

Parts of a diamondCulet is the bottom point of a diamond. Usually slightly flat or faceted, the culet affects the light performance of a diamond. The culet size and angle are two main factors, which can have a significant effect on the value of a diamond. The ideal culet should be positioned in the exact center of the bottom of the diamond and should be of a small size. Angle deviation and increase in size both adversely affect the diamond.

2. Girdle Thickness

The thickness of the girdle or the edge that is formed where the top (crown) and the bottom (pavilion) of the diamond meet, could potentially have a negative effect on the value of a diamond. Unequal thickness of the girdle will undermine the symmetry of the diamond, which is essential for light performance.

3. Laser Inscription

Laser InscriptionThere is a lot of controversy attached to the effect of laser inscriptions on the value of a diamond. Laser inscription causes microscopic indentations on the surface of the diamond itself, marring it with imperfections. Therefore, it should have an effect on the clarity of the diamond and thus on the overall price value. However, ironically, as most certification companies inscribe the diamonds themselves, they have the ability to exclude them from the grading altogether.

From a technical point of view, laser inscriptions should have a depreciating effect on a diamond’s worth, but they have been known to actually increase the value instead. The laser inscriptions, especially those done by certification companies such as the GIA, are taken as validation and proof of the quality of the diamond. Moreover, these laser inscriptions help avoid confusion, determine ownership, as well as deter fraud in the diamond industry.

The Rapaport Report – Putting it All Together

The Rapaport Report (sample image below) is an industry report created by the Rapaport group and published weekly. This report details the value of diamond’s based on the above characteristics. Once a diamond’s characteristics have been determined, a jeweler will refer to the Rapaport report to determine the actual price.

The report lists prices per carat (in hundreds) on a matrix of clarity and color. Per-point value of diamonds increases the larger the diamond is so, a 1.01 carat diamond may cost significantly more than a 0.99 carat diamond despite the fact that they are almost exactly the same. Once a price has been determined based on this report, jewelers will make adjustments based on cut, girdle, culet, and other secondary factors. Finally, jewelers may apply discounts or premiums of certain percents at their own discretion.

Rapaport diamond report

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Image sources:

Laser Inscriptions


http://www.andrewsjewelers.com/diamond-cut.php

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  1. elie mampuya says:

    I like it and i would like to know more about diamonds

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