For centuries, diamonds have been treated with high regard due to their rarity, sparkle and brilliance. Be it an engagement ceremony or a wedding, diamonds add unmatched elegance to any occasion. Unlike gold or other precious metals that are valued mainly by weight, the diamond evaluation process is far more complex and unique.
This article delves into the differences between market and resale value, explores the factors affecting diamond value, explains the diamond estimation process and the role of market factors in determining diamond value.
How to Calculate a Diamond’s Value?
Diamond value refers to the overall worth of a diamond in monetary terms. This value is estimated taking into account factors such as cut, clarity, colour and carat (4Cs). Any diamond and diamond jewellery, whether natural or man-made, is sold and bought considering these factors.
In the case of fine jewellery set with diamonds, the metal type and weight also influence the overall value.
Market Price vs Resale Value
A diamond is valued twice: during a purchase and while reselling it. The diamond market price refers to the amount that the buyers pay at retail. These are unused pieces and are bought fresh from the sellers. On the other hand, diamond resale value refers to the price received for the diamonds resold.
The diamond resale value is often lower than the original price due to the retailer’s profit margin and demand in the market. Typically, second-hand diamonds command less price than the original retail price.
Factors Affecting Diamond Value
Here are certain factors that are looked into during the diamond appraisal process:
The 4Cs (cut, colour, clarity and carat) are the defining characteristics in diamond value assessment.
Cut
The cut reflects the shine of a diamond. The better the diamond’s cut, the shinier its appearance. It depends on the symmetry of the facets and the angles and proportions in a diamond.
Colour
The colour refers to the natural shade of the diamond. Ideally, colourless diamonds are highly desired by customers, investors and collectors. Colourless or lightly graded diamonds are more expensive.
Clarity
In simple words, 'clarity' refers to how free a diamond is from blemishes and inclusions. Since diamonds are formed deep within the Earth, they develop fractures or cuts during formation. A diamond with fewer inclusions commands a high price.
Carat
'Carat' refers to the weight of the diamond and how big it is. One carat is equal to 0.2 grams. The bigger the diamond, the higher its price.
Besides these features, there are other factors that influence the price of a diamond like
Current market trends
The demand and supply of diamonds in the market play a crucial role in deciding the diamond's worth.
Rarity
Rare diamonds like the naturally formed ones, colourless diamonds, and a few coloured diamonds are unique and command high prices and value.
Certification
Diamonds that are certified by recognised organisations like GIA, IGI or HRD command premium prices due to high grading standards.
Here is a diamond valuation guide that is useful while selling or buying diamonds:
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Stones with clarity grades of VS1 or better (very slight inclusions) are highly sought after.
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GIA-, IGI- or HRD-certified diamonds are recognised globally.
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Superior cut quality ensures excellent appearance and value.
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D to G grades for white diamonds are the most preferred colour grades.
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Diamonds of 1 carat and above receive greater buyer interest.
How to Calculate Diamond Worth
To estimate diamond worth accurately before buying or selling, follow these steps:
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Understand the 4Cs
The larger diamonds are rare and expensive. The diamonds that are cut with precision have symmetrical facets with right angles and proportions fostering brilliance. Colourless diamonds and diamonds with fewer imperfections are highly desirable.
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Determine the price per carat
Based on the diamond’s cut, colour, size, shape and clarity, a price list is prepared by diamond dealers, wholesalers and retailers. Different online sites offer tools and calculators to estimate the diamond’s worth.
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Calculate the base price
Firstly, the total carat weight of the diamond is assessed. To determine the base price, this weight is then multiplied by the price per carat found in the price list.
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Additional costs
Additional costs such as retailer profit markup, and labour charges are included in the base price, which makes up the final price of the diamond.
Selling Diamonds and Resale Insights
Whenever you are planning to sell loose diamonds or diamond jewellery, the resale value is a key factor. To ensure right pricing, a thorough analysis of market value vs resale value is necessary. The resale value depends on the condition of the diamond, certification, demand, quality, rarity, and whether it's natural or lab-grown.
Buying Diamonds: Market Considerations
Each diamond is unique and possesses features that determine its value. Apart from shape, size, colour, clarity and cut, knowing the demand of diamonds in the market helps buyers pay a fair amount for jewellery or investment purposes. Generally, the demand and supply of diamonds has a significant influence on their worth.
Diamond Investment Value
High-quality and rare diamonds are generally considered potential investment options, since they appreciate over time depending on the demand. However, since the resale value is significantly lower than the original price, diamonds are seen more as luxury items than as investment assets.
Tips to Maximize Resale Price
To obtain the maximum resale price, follow these practical steps:
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Keep your certificates safe: Diamonds with GIA or IGI certifications boost trust and confidence among buyers.
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Protect the diamonds: Keep diamonds in excellent condition to preserve their quality.
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Watch Market Trends: Track diamond market trends and sell when the demand is high.
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Compare offers: Seek quotes from multiple sources and choose the one that provides the best offer.
Conclusion
Diamonds have different market and resale values, unlike other precious metals. Hence, understanding this difference is essential, as it helps buyers and sellers make informed and confident decisions.
At Diamond Brothers, we offer free expert valuations of your diamonds and diamond jewellery from our certified gemologists. We ensure your piece gets the best offer based on current market trends.
Frequently Asked Questions (FAQs)
What is the difference between diamond market price and resale value?
The diamond market price refers to the overall cost of a new diamond, while the diamond resale value refers to the price of the diamonds to be resold.
How is diamond value calculated?
The diamond's worth is calculated by multiplying the total weight of the diamond with the cost of the diamond per carat. Further, add extra charges if any.
Which factors most affect a diamond’s resale price?
Factors like colour, clarity, cut, carat, certification, and current market trends affect a diamond’s resale price.
Can selling a loose diamond give better returns than a finished piece?
Yes, selling a loose diamond gives better returns than a finished piece, as a finished piece contains metal settings that lower the resale value.
How can I maximise the resale value of my diamond jewellery?
To maximise the resale value, maintain the diamond jewellery in good condition, keep the certificates safely and consider market conditions before selling.
