Market value of diamonds today?
Learn How to Calculate Diamond Prices..
The market value of diamonds or as an investment is of significant interest to the general public, because they are expensive gemstones, often purchased in engagement rings, due in part to a successful 20th century marketing campaign by De Beers.
The difficulty of properly assessing the value of an individual gem-quality diamond complicates the situation. The end of the De Beers monopoly and new diamond discoveries in the second half of the 20th century have reduced the resale value of diamonds.
The modern recession has engendered greater interest that exhibit safe haven or hedging properties that are uncorrelated to investments in the equities markets.
Academic studies indicate that the investments in physical diamonds exhibit greater safe haven characteristics than investments in diamond indices.
Pricing formula
Tavernier‘s law is used to determine the price of a diamond. The formula is for basic calculation and demonstrates how the price of a diamond increases along with its size. Larger gemstones are rarer and go up rapidly in price. Diamonds of quarter carat and more usually have their own names.
where:
- W is the weight in carats
- C is the basic price of a one-carat stone as per the rapaport
Example
Here is how the price of a diamond might go up with the formula applied to a Internally Flawless / D Color round brilliant cut per-carat base price:
- 1ct = $20,700
- 2ct = $44,000
- 5ct = $1300,000
- 10ct = $2020,000
Diamond prices are influenced by global trends. The largest markets are USA (55%), China and India. From the second quarter results 2008, larger diamonds have appreciated better than smaller ones.
The market
Diamonds of a certain size, generally half a carat and above, are traded and processed by the industry individually. Each has unique attributes and a corresponding unique market place. Diamonds of this size, whether recycled or not, have a similar market price. It is impossible to tell the difference between a recycled one-carat diamond (as long as it is undamaged) and a “freshly mined” one-carat diamond with the same characteristics. The market does not differentiate between them in price.
Diamonds of smaller sizes are traded in parcels of similar stones, called ‘melee’, after the French word for mix. Generally diamonds of exactly similar size, cut, shape, color and clarity are used in a single piece of diamond jewelry. If not, the stones would not match and the piece would not sell. Small recycled diamonds are treated differently from large individual stones.
A single small diamond has limited value by itself. It is only of use if it can be matched with other similar diamonds, reset into jewelry and sold to a customer, thereby creating value. Small recycled diamonds need to be sorted, re-cut and re-sold to manufacturers in large parcels to allow them to pick matching stones to set in jewelry.
In conclusion if you looking for a magical mathematical formula to calculate prices, The truth is, diamond pricing is a very complex subject which involves many variables. Learn more become a diamond valuation professional today
Reserach links
- Historical diamond price trend evolution graph, Antwerp World Diamond Center, March 2015.
- China revs the diamond market, WSJ blogs, China RealTime, February 2012.
- PriceScope Diamond Price Chart, 1 Aug 2012 update.
- Have You Ever Tried to Sell a Diamond?, E.J. Epstein, The Atlantic, 1982.
