Diamonds are such funny things really, they have all sorts of essential uses but we still get excited about the glittery ones, at least until we see the price tag. Should you be surprised? Here is Heirloom London diamond price guide to set some expectations.
I’ve written other blogs about diamonds, and they never loose their allure. However, in practical terms, when I have a client sat with me, it sometimes gets a little difficult when trying to understand all the variables of what influences the value of a stone. So I wanted to make it really simple;
The bigger they come, the higher they sell
Value is driven by scarcity. Don’t think about quantity discounts with diamonds. The larger the stone gets of a particular quality, the higher the price is going to climb. So say a 0.50 carat diamond ring is £3,000 – you might expect that a one carat diamond ring is going to be £6,000. But it is more likely to be £8,000 and if the size increased to 1.5 carats you could be sweating over £20,000. Key sizes where the prices leap up start at 0.7, 0.9, 1.0, 1.2, 1.5 & 2.0. It doesn’t stop – look at the 100 carat stone which sold at Sothebys in New York in 2015 – that was $220,000 a carat!
What you see is what you get
I’ve got a client looking for a very specific stone at the moment, and we have been searching for three weeks to find it now. Have we not seen anything? Of course we have. However in general we’ll reject around 8/10 stones at first glance which means when we are looking for something very specific, the market becomes very small. Why is this? Well, it is a bit like recruiting for job vacancy. There are plenty of CVs submitted that say the applicant is of certain experience and calibre. When you interview them, this number dwindles as you look for the person who meets/exceeds that criteria. Sometimes the CV reads like somebody who you’d never recruit – but somebody insists you meet them and you find they have a truck load of talent. I can’t guarantee clients are getting the very best stone for their money if I buy off a list. I have to view it, decide it is pretty and is fairly priced. I’ve seen VS1 stones which look like SI2’s.. I wouldn't allow a client to pay VS1 price on a SI2 stone. (Although I would if the price was the other way around obvs).
The value of scarcity
The more boxes a diamond ticks, and the larger it is getting, the more the price can skew out of proportion. The simple reason for this is that they become rarer. It is very easy to own an internally flawless round brilliant that is 2mm in diameter. Move that up to 6.4mm (so about a carat) that is excellent in cut, and a good colour and the price will have increased nearly 6000%!
We are all about the cut of the stone, as the more skilfully it has been done, the prettier the stone is going to look. In the day to day diamond world, this is still what has the highest value attached to it, as these are stones that are going to make the most attractive jewellery. At the top of the tree, they also carry the greatest premium to them. This is because they will hold their value.
Moving on to investment diamonds (which are in general stones priced in excess of £100,000) the same criteria will apply. Some large diamond owners have had a nasty shock when the insurance value of their stone has not matched up to a resale value. This is often because the size of the stone makes it something that will be expensive to replace, but the actual appearance of the stone is not considered exceptional.
In a way (and I actually hate this analogy, but I can't think of a better one right now) it is worth looking at a diamond like a piece of art. There are good and bad examples, and these should be priced accordingly depending on what the value is considered at the time of selling, as well as the future value.
The shape of things to come
When choosing a stone, round shape diamonds are always popular, symmetrical and curved they suit all hand shapes and have a large appearance. But as a diamond is naturally octahedral, they waste a lot of crystal being cut, and so are not the most cost-effective shape (emerald, asshers, cushions and princess stones are easier to maximise cutting plans). Choosing an alternative shape to the round stones, can make the difference of a few hundred to a few thousand pounds.
There is no democracy to diamond buying, it is very subjective and driven by market demands. As more man made stones enter the market, it is likely that natural prices may drop at the low end, and increase further the higher the quality. After all, something that nature has created, is always going to have more allure than something that has come from a factory. But buy carefully and remember that just because a certificate says the stone is good, it doesn't mean the stone is going to look good.