Your complete guide to investing in Diamonds and diamond price estimation

Throughout history, diamonds have been sought after not only for aesthetics, but also because they can be very sound investments. To understand the potential of diamonds as assets, it is important to understand why the world values them.

Diamonds have intrinsic value: While diamonds have many unique properties, their primary and objective merit lies in the fact that they are the hardest substances on earth, and last virtually for ever.

Diamonds are highly portable: For all their value, diamonds can easily be concealed and carried, and in times of war or threat, diamonds have invariably been the only precious items that fleers have been able to retain.

Diamonds carry their value all over the world: Diamonds are currency and country agnostic, and hold their value anywhere in the world.

Investing in diamonds:

How are diamonds priced? Unlike gold or other commodity, there is no simple price-per-gram system for deciding diamond price. However, the diamond industry refers to international diamond pricing guides that price diamonds according to colour, cut, clarity, carat weight and other parameters.

Do diamonds appreciate in value? Yes, diamonds do appreciate in value, but this is truer of larger solitaires than of small stones. Certain kinds of diamonds are better bets in terms of value appreciation than others.

For example, the round brilliant cut is considered the best choice for diamond investors. Fancy shapes like the princess-cut, heart-shape and cushion cuts are fashionable choices for jewellery, but do not hold value as well as the ever popular round brilliant-cut diamond.

What about quality?It is true that higher the grade, higher the value of diamonds, but the highest-grade diamonds are not necessarily the best investments. In fact, diamonds in the upper mid range (clean and a good colour) are the most "current", i.e., the most bought and sold, which means they are more liquid than the highest grade stones. For example, it is typically easier to sell an H colour, VVS or SI clarity stone, than a D colour stone of flawless clarity.

Most importantly, an investor should only buy diamonds certified by international grading agencies like the GIA, IGI, HRD, or AGS. Certificates bear detailed descriptions of the stones, including unique traits that form the "thumbprint" of the stone. Labs also offer laser inscription services, which makes a diamond readily identifiable. In any case, certified diamonds are easier to sell, since uncertified diamonds will need a full, fresh appraisal, invariably at the seller's expense.

As a tangible, durable asset class with high intrinsic value, diamonds are excellent value holders that form a good hedge investment to retain money value, especially in uncertain and inflationary times. Although they are not a conventional choice for those seeking a quick profit, a shrewd and patient investor can reap handsome gains if he exploits the unique potential of diamonds as investments.

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The Price of Diamonds

What Influences The Price of Diamonds?

Diamonds are cut in a range of shapes, sizes and qualities all of which influence the price. Diamonds that have an excellent or very good cut grade will reflect maximum fire, brilliance and sparkle and the price of these diamonds will be higher than diamonds with a good cut grade.

The Shape of Diamonds

Round Brilliant Cut Diamonds are the most popular diamonds for diamond engagement rings followed by Princess Cut Diamonds. Any diamond that is not Round in shape is known as a Fancy Shape Diamond. Asscher, Cushion, Emerald, Heart, Marquise, Oval, Pear, Princess, Radiant and Trilliant cut diamonds are all fancy shape diamonds.

Round Brilliant Cut Diamonds are the most expensive mainly because when cutting a Round Brilliant Cut diamond there is a greater loss in rough which has to be factored into the price. Another reason why Round Brilliant Cut diamonds are priced higher is because they take longer to polish and cut than other diamond shapes and the demand for Round Brilliant Cut diamonds is greater than all the other diamond shapes.

Clarity Influences Diamond Prices The Most

The clarity grade of a diamond influences the price obtained more than any of the other factors. Diamonds that have high clarity grades of VVS1 or VVS2 have extremely hard to find inclusions even with a jewellers 10x loupe. These diamonds are almost pure and rarer to find than diamonds with lower clarity grades such as SI1 or SI2 and therefore command a much higher price. The rarest of diamonds have an Internally Flawless Diamonds -IF or Loupe Clean clarity grade and these diamonds fetch premium prices.

Colour Influences Diamond Prices

Colour is another important factor that influences the price of a diamond. Diamonds are graded for their colour alphabetically starting at D colour going down to Z colour. Diamonds that are colourless or show the least amount of colour obtain the highest prices along with fancy coloured diamonds such as pink, red, green and blue diamonds. Diamonds that display the least amount of colour are known as exceptional white. Exceptional white diamonds includes D and E colour graded diamonds. Rare white is the next colour grade and this includes F and G colour diamonds. H colour diamonds are graded as white and I and J colour diamonds are known as slightly tinted white diamonds.

Cut Influences Sparkle, Shine & The Price of Diamonds

Did you know that if the diamond is poorly cut, the colour and clarity can not make up for it? The cut of a diamond is what makes a rough diamond sparkle and shine. If a diamond is poorly cut, the light that enters the diamond from above will leak out of the sides and bottom of the stone, and the diamond will not have the optimum amount of sparkle or fire-regardless of its colour or clarity.

Excellent and Ideal Cut Diamonds have been cut to precise standards to display the beauty of the diamond. Excellent and Ideal Cut Diamonds have perfection in proportion, symmetry and polish and they will always display the maximum brilliance, fire & scintillation.

Excellent and Ideal Cut Diamonds have properly proportioned facets, excellent symmetry & polish. Since 97.5% of a diamond's brilliance is controlled by the quality of the cut Excellent and Ideal cut diamonds obtain higher prices. The Diamond Cut Grade is made up of three main controlling factors - Proportion, Symmetry and Polish. The light return of the diamond more commonly known as sparkle or brilliance is also an important factor but it is governed by the proportions and symmetry of the diamond cut.

Diamonds with a Very Good cut grade reflect most of the light that enters them, dispersing a good deal of brilliance. Very Good cut diamonds have proportions which often overlap and are comparable to Excellent cut diamonds but just differ slightly in one area or measurement. Very Good cut diamonds are also highly valued.

Diamonds are Sold By Carat Weight

Carat is a unit of measure not size. Two diamonds that have the same carat weight may appear to be different sizes depending on how the diamond is cut. Some diamonds will have extra weight on the bottom part of the diamond, the pavilion, or a thick girdle and therefore will appear smaller visually.

Diamonds are sold by their carat weight. The heavier a diamond weighs once it is cut the higher the price per carat. A diamond cutter always try to retain as much carat weight and as few inclusions when cutting a diamond in order to obtain the best possible price per carat. Sometimes the cut of a diamond might be sacrificed in order to produce a diamond with a higher carat weight. Hundreds of tons of rock and ore must be processed to uncover a single one-carat gem quality diamond.

4C's - Cut, Colour, Clarity & Carat

After diamonds have been sorted into their different shapes they are then assessed with what is known as The 4C's- The Cut, Colour, Clarity and Carat weight. These individual factors are all combined resulting in the price of the diamond. The price of diamonds is also influenced by international market conditions such as exchange rates, supply and demand, fashion trends as well as inflation.

Diamonds, just like your marriage, are an investment, and have been an investment device for several thousand years. Diamonds are a symbol of love and commitment so buying the perfect diamond for an engagement ring or that special occasion is a crucially important decision.

To learn more about diamonds and for further information about diamonds please visit our website - Diamond Education

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