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Calculating a Fair Price for Diamonds

Calculating a Fair Price for Diamonds

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Buying diamonds is a fraught business with two visually similar stones potentially thousands of dollars apart in price, all due to the tiniest differences, many of which cannot even be seen with the naked eye. For this reason, trust and direct knowledge of those involved in the industry – from wholesalers to cutters to jewelers and traders – is absolutely vital. This means that when someone is looking to sell diamonds, either because they need the cash and are selling off the family jewels or because an investment is due to be liquidated and used elsewhere in the trader’s portfolio, they can find themselves the target of careful scrutiny and very guarded dealings, unless or until they prove themselves trustworthy.

It is possible to get a fair price when selling a diamond, but it is important to manage expectations as to which steps add value to the stone and how much that service should cost – for example, an uncut stone might be quite cheap, but when it has been cut it will have multiplied in value – but the cost of cutting, a tricky and delicate procedure, will be steep, adding to your costs. Let us take a look at the various factors that will help to decide the price of a diamond.


Wholesale vs Retail


Following on from the cutting floor, so to speak, a diamond will pass into the hands of a trader – the wholesale division of the industry, if you will – in groups of twenty diamonds and up. These are sold on to jewelers who may take a whole group, or they may just need one or two stones, depending on how big their premises are and how skilled the jeweler at creating wonderful pieces. The difference between wholesale and retail can be quite large, and if you can find someone to sell stones to you at near wholesale prices, you should snap these up!


Taxing Concern


Buying your diamonds from a retailer will also make you eligible for paying sales tax, which can add enormously to the amount you pay for the stone – and that is an amount that the diamond will have to increase by in order for you to simply break even. Check your state’s rules on diamond buying and selling before you commit to making what could be poor deal for you, whether you are buying or selling the stones!


See Also

Second-hand Depreciation


Often, we become attached to our family jewelry and it can be hurtful to hear it dismissed in less than ringing tones, but the sad truth is that sentiment has no place in the diamond industry! You will often get much less for a diamond than you might expect, simply because it is mounted in a setting which can a) disguise any flaws and faults in the stone through careful positioning of the claws, and b) stop the diamond from showing its full beauty – or lack thereof. The setting of a diamond will always have some effect on the sparkle of the stone, and as beautiful and costly as it might be, the setting is usually seen as a negative: something that partially hides the stone, giving the scrupulous a chance to perform a confidence trick on a buyer.


Finally, as well as the certification, the cut of the stone will have an impact on the price you can ask. Princess cut diamonds are usually costed at around 20% less than round brilliant cut diamonds, simply because of the differing amounts of wastage the two cuts. So once you are ready to sell or buy certified loose diamonds or a diamond piece of jewelry, you need to remember that they should come with a certification from either GIA or AGS, which can be accessed and verified by any potential buyer, that will reassure them as to the stone’s authenticity and provenance.


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