Demystifying diamonds to ensure the right choice

The price choice:
By divulging the following information we want you to fully understand diamond grading and then make an informed decision according to your budget. 

The difference that the grade of a diamond makes to the price is very significant.  Our stock is arranged into price brackets helping you to decide whether, for similar prices and thus the same budget, you would prefer a smaller, higher colour and clarity diamond or a larger stone with a lower colour and clarity.

A good example is to look at a budget of $5,000 and take three very different options you could choose to purchase.  You could opt either for a 2.50ct M I1, or a 1.00ct G SI1 or a 0.70ct D VVS1.

Jewellers, with limited stock, push to sell the stones in their window rather than sourcing your perfect diamond.  However, at SA Cut Diamonds, because we have access to such a vast range of stock, we prefer to explain the entire grading system and then let you make the right choice for your budget and preference. If we don’t have it in stock we will find it for you.

The price structure:
Within the diamond trade, pricing is based on a matrix called the Rapaport Diamond Report or “Rap list”.  This groups stones according to weight (caratage) and then gives a recommended price for different combinations of colour and clarity within each of those brackets.  Stones are then traded at a discount or premium to that recommended price, depending on relative market popularity at the time.

Colour:
Diamonds are weighed and then graded according to colour and clarity.  Standard white colours range from D-Z.  Pure white is graded as ‘D’, after which the colour grade rises through to ‘Z’ as the tint of yellow gets progressively stronger and the price falls. 

Fancy colours include yellow, green, orange, pink, blue and red.  Fancy colours are extremely rare and significantly more expensive depending on their shade and intensity.

Clarity:
Clarity is graded from Internally flawless to P3: 

• VVS1 to VVS2 clarities are only visible with a microscope.
• VS1-VS2 would only be found with a 10x magnification loupe. 
• SI1-2 is normally invisible to the naked eye but can be found using a 10x loupe. 
• SI3 and even some P1’s can be invisible to the naked eye depending on the position, size and shape of the imperfection. 
• P2-3 is obvious to the naked eye.

Differences between colours and clarities are so slight that it takes years to train a professional diamond grader. Even then, within the same laboratory, two graders can have opinions two colours apart. The same is true for clarity due to the microscopic nature of impurities. This is exemplified by the fact that within most laboratories, three graders grade each diamond before certification is issued. If there is still a difference of opinion, a fourth and sometimes fifth or sixth grader may be called in to settle the dispute.

Consider that dirt picked up while wearing your diamond can have a much bigger impact on its appearance than its graded colour and clarity. Before grading, a diamond is boiled in acid to remove any dirt from the surface, after which it is only handled with tweezers. But within a week of wearing, a VVS clarity stone can have the appearance of a P2 clarity stone. Even colour is altered because of the reflective nature of diamond and how external deposits can influence the hue of a stone. Thus, although dirt cannot alter the underlying value of a diamond it will drastically affect its appearance.

To add a bit more complexity the price per carat paid for a diamond jumps at key weights – 0.5ct, 0.7ct, 0.9ct, 1.0ct, 1.5ct, 2ct, 3ct, 4ct etc so that the amount you pay for a 1ct diamond can be 20-30% more than a 0.9ct diamond of the same colour and clarity. We often advise our customers to fix a budget and an ideal size and then trade off colour and clarity until you get the balance right. If you can’t quite afford the size you want, dropping down a size bracket (or a colour and purity) can often make it far more affordable

The manufacturing of diamonds is an Art as well as a Science - click here for a guide to the cutting and polishing process. Lots of customers forget the 4th ‘C’ – ‘cut’ when buying a diamond. A well made stone of the same size, colour and clarity can be 10-30% more expensive than a badly made one, because it reflects light better and thus has more life. The 4th C can have the biggest effect on the impact of your ring, but it is one that many people don’t even consider.

One customer recently told us that he had been ‘reliably informed’ at a very respectable London jeweller that “all our fancy shaped diamonds are obviously more expensive than our round diamonds because of their rarity”. This is complete nonsense as you can see from our price guide. Like-for-like round diamonds of the same size, colour and clarity are always priced higher. The reason for this is that the weight recovery of a round cut diamond from the original rough diamond is significantly lower than the weight recovery for a ‘fancy cut’ diamond. (See our section on diamond cutting to understand this in more detail).

Diamonds are a commodity and are universally valued in American dollars. Thus, when valued in any other currency, they are subject to exchange rate fluctuations. At SA Cut Diamonds we value all our diamonds in dollars and then apply a daily updated exchange rate converter for your local currency in order to maintain price transparency.

Like all things, diamonds can be both a good and bad investment depending on when you buy, what you buy and how much you pay for it. 

Middle colour and purity stones (often known in the trade as ‘commercial stones’) of moderate size (under 2cts) have appreciated steadily over the years. While stones of large size – above 2cts and stones of high colour and purity are much more volatile – for example if you bought a 5ct D IF in 2003 you would have made approximately a 200% return to mid 2008 vs a return of around 30% on a 1ct I SI1. But if you bought the same 2 stones in mid 2008, while your 1ct I SI1 would have stayed stable through the economic downturn to mid 2009, your 5ct D IF would have lost up to 70%.

However, if you buy at a high-end retail outlet the mark-up from wholesale to retail is often 100-200%.  By contrast, at SA Cut Diamonds, you are buying direct from the source and thus paying ½ to a 1/3rd of the High Street price.