The fourth and final C in evaluating a diamond for purchase is the carat
weight. The term carat is a reference to biblical times when diamonds were
compared against a carob bean because carob beans tend to have a uniform size
and weight. One carob bean became the equivalent of one carat. The carat is
still the primary unit of diamond weight used today. However, a carat is
further broken down into 100 sub units called points. One point equals 1/100
of a carat.
When you buy diamonds it is often mentally economical to break the price of
the stone down to a per carat basis. A rather crude example would be if you
were buying drugs you would break the price of a kilo down into a gram weight
to establish what you are actually paying per unit. The same is true in
diamonds. You should divide the weight of the diamond into the price to get
the carat weight.
The next thing to realize is that carat weights do not follow a linear
progression in terms of price. There are certain man-made break points in
diamond pricing. The first break is at .50 (1/2) of a carat. The second break
is at 1 carat and then succeeding breaks occur at each carat thereafter.
These breaks, although arbritrary, are valid and a diamond that is .52 of a
carat will cost considerably more than a diamond that is .44 of a carat. A
diamond that is over 1 carat, say 1.03 carats, will cost considerably more
per point or per carat than would a diamond that is .94. Because this break
is so critical, one should always see a diamond weighed in front of one on a
scale that has been verified by using an accurate unit of measure. In other
words, put a one gram weight on the scale and see if it actually reads one
gram.
Because of the price involved, these break points are quite important and one
does not want to pay the price differential for over a 1 carat diamond for one
that’s actually a couple points under. When it comes time for resale, the next
buyer will not be so generous in his consideration of the weight.
These price breaks are very substantial and are one of the few things in
diamond selling that is not subjective. As such they are quite evident in all
diamond sales. The difference per carat weight in a diamond that weighs from
1 to 2 carats may be as much as $1,000 per carat or more, on a 2 to 3 carat
diamond. This holds true on a 3 to 4 carat diamond also. One could expect to
pay not $1,000 more but $1,000 per carat more. This tends to increase as one
gets into the heavier weights and good grades of stones because the stones
become much rarer. It is much easier to find small good stones than it is to
find large stones of the same quality.
Wholesalers and for that matter, diamond retailers, buy their diamonds on a
per carat basis and if you are going to buy from anyone in the business, you
should consider the stone in that same light.
It is practically impossible to quote diamond prices in a paper like this
because they are subject to change and market fluctuations. Retail diamond
prices are also subject to seasonal conditions and one will find that holidays
and gift giving times such as Christmas tend to bring about severe prices from
retail outlets while the spring and summer months will often evoke a more
favorable estimate from a retailer who needs to make his rent that month.
Wholesale diamond prices should not change too much due to seasons or gift
giving times. Wholesale prices will vary when the market demands exceed supply
and also tend, as with gold, to function somewhat independently and opposite
of “soft” currency such as the dollar.
The price one pays is determined by how much the seller wants to sell the
stone and how much the buyer wants to buy it. Obviously in certain situations,
stones are cheaper than they would be in a high markup area such as with a
retail jeweler.
A stone may come with an appraisal sheet from one of the two gemological
societies recognized in America. This sheet, as we have seen, details a number
of qualities about the stone and will establish an appraised price. A couple
things one should be aware of about appraisals; the first is that they’re
invalid generally.
Appraisals are an instrument designed for insurance companies to establish a
possible price on a diamond that includes a number of factors such as increase
in value during ownership. The appraisal sheet will be inflated over the value
of the diamond. One never expects to pay full appraisal price for a diamond
and if one does, the term “saw you coming” falls quite aptly into place.
Appraisals also vary from person to person even with accredited gemologists.
The same stone can bring about two entirely separate appraisals that may
differ in value by hundreds or even thousands of dollars. Again, the appraisal
is a piece of paper that allows the insurance company to set a value on the
stone, not that the insurance company will necessarily pay off the appraisal
at full price either.
One cannot make a living by buying diamonds, having them appraised and then
reporting them to the insurance company for too long.
Appraisals, on a very general basis, tend to be nearly double the price that
a stone will actually sell for. This is a very wide statement and some
appraisals will, of course, be closer to the actual value of the stone than
will others.
Appraisals cost money and if you are good enough to sell the qualities of the
stone after a little bit of practice, your own word and your own peace of mind
will be more valid than a piece of paper. You are buying a piece of paper
that someone else may not want to buy.
One should actually consider that one is buying the stone, not a piece of
paper telling one how valuable the stone is. This could be compared to buying
a car because the owner wrote an article about how exciting the car was.
Needless to say one should base the actual purchase price on the vehicle
itself…
Reasons for getting an accredited appraisal are having the stone you want
insured, or when you go to sell the stone, having an appraisal that verifies
the stone’s quality to an unsophisticated buyer and that lists the price
considerably higher than you actually expect to get for the stone, which may
help sell the stone.
This is a nice line of thinking as long as you are the seller and not the
buyer. This is a buyer beware type of business and you should know what you’re
getting and should take all safeguards possible to insure you’re getting what
you think you are. If you’re buying in a slightly dubious situation and
perhaps are not as concerned with the stone’s pedigree as some people would
be, you should be prepared to never see the seller again and live or die on
your evaluation of the stone, not a piece of paper from an appraiser.
It should also be pointed out that in certain situations one would not want to
take a stone in to an appraiser. I will leave this to the imagination of the
reader.
Although appraisals are intended for an insurance company’s benefit, one
should realize that if an insured stone is stolen or otherwise destroyed, the
insurance company may want additional information regarding the purchase of
the stone along with an independent appraisal. There are exceptions to this
rule. If this stone was a gift or was left to one in an estate, obviously an
appraisal becomes the primary instrument of value determination and, as such,
is extremely useful to have on hand.
As a sidebar here, there are ways of destroying or damaging a diamond, even
though a diamond is one of the hardest materials known to man. As previously
pointed out, they are brittle. If you strike a diamond with a hammer, you’ll
dissolve it into useless industrial dust. If you touch a diamond to an
acetylene torch of significant temperature, you will observe an extremely
interesting and costly phenomenon where the diamond turns back into the same
black carbon that it came from.
Graphite, in other words. Once this happens the only recourse is to hope the
diamond was large enough to burn in the furnace and get some heat because
there is no way of changing it back quite as readily to its crystalline form.
