Sunday, June 12, 2011

Investing in Diamonds: Carat, Color, Clarity, Cut

I'm quite clueless how to tell a good quality stone.  I don't have the eye to tell the difference and totally rely on the seller's words.  If you don't have the eye like me, it is important to buy from reputable sellers and here are basic facts you need to consider when buying diamonds:

1. Carat

Hint: A bigger cut diamond per carat is more valuable.
The carat is a unit of mass equal to 200 mg (0.007055 oz), and it is used for measuring gemstones and pearls.

The Rapaport Report is the jewelry industry standard for the pricing of diamonds and is exclusive to subscribers.  The price matrix is quite extensive with price shifts near the edges of the size bands.  The price difference between cuts and weight defy logic and may jump depending on marketing and consumer expectations.  For example, a buyer expecting a carat diamond may not accept a .9 carat diamond.  The price of a .9 carat diamond and a carat diamond for a similar quality has a material difference.  The bigger carat per cut diamond, is much more expensive per carat for example:
0.49 carats (98 mg) stone may list at $5,500 per carat
0.50 carats (100 mg) stone of similar quality lists at $7,500 per carat

As of this writing, in the Philippines, a color grade H round brilliant .10 carat is at P58,000 per carat, .20 carat at P70,000 per carat, .30 carat is around P90,000 per carat, while a .90 carat is estimated at P160,000 per carat, and a 1 carat cut is roughly P300,000.

2. Color

Hint:  A diamond color grade of "near colorless", between H, I, J are good enough to have.

Diamond color grading scales[5]
GIA Status: current AGS Status: current AGS Status: historical: pre 1995 CIBJO Status: current IDC Status: current Scan. D.N. Status: current Old World Terms Status: historical
grade and description[6] grade and electronic colorimeter scale[7] grade and electronic colorimeter scale[7] grade[8] grade and description[8] grade for .50ct and over[9] grade for under .50ct series 1 scale[8] series 2 scale[8]
D Colorless 0 0 - 0.49 0 0 - 0.75 Exceptional white + Exceptional white + Colorless River White Finest White Jager
E 0.5 0.5 - 0.99 Exceptional white Exceptional white River
1 0.76 - 1.35
F 1.0 1.0 - 1.49 Rare white + Rare white + Colorless when viewed through the crown Top Wesselton Fine White
2 1.36 - 2.00
G Near Colorless 1.5 1.5 - 1.99 Rare white Rare white Top Wesselton
H 2.0 2.0 - 2.49 3 2.01 - 2.50 White White Wesselton White Wesselton
I 2.5 2.5 - 2.99 4 2.51 - 3.0 Slightly tinted white Slightly tinted white Slightly colored Top Crystal Slightly tinted white Commercial White Top Crystal
J 3.0 3.0 - 3.49 5 3.01 - 3.75 Crystal Top silver cape Crystal
K Faint Yellow 3.5 3.5 - 3.99 Tinted white Tinted white Top cape Tinted white Top cape
6 3.76 - 4.5 Silver cape
L 4.0 4.0 - 4.49
M 4.5 4.5 - 4.99 7 4.51 - 5.50 Tinted color 1 Tinted color Slightly colored to colored Cape Tinted color Light cape Cape
N Very Light Yellow 5.0 5.0 - 5.49 Tinted color 2 Low Cape
O 5.5 5.5 - 5.99 8 5.51 - 7.0 Light yellow Cape Very light yellow
P 6.0 6.0 - 6.49 Light yellow
Q 6.5 6.5 - 6.99
R 7.0 7.0 - 7.49 9 7.01 - 8.5
Dark cape
S Light Yellow 7.5 7.5 - 7.99 Tinted color 3 Yellow
T 8.0 8.0 - 8.49
U 8.5 8.5 - 8.99 10 8.51 - 10.00
V 9.0 9.0 - 9.49
W 9.5 9.5 - 9.99
X 10.0 10 + 10+
Diamonds that rate toward the colorless end of the range are sometimes known as "high-color" diamonds, and those toward the other end, "low-color" diamonds. These terms refer to the relative desirability (as demonstrated by market prices) of color grades, not the intensity of the color itself.

3. Clarity

Hint:  Most diamonds sold in the Philippines are at the most of VVS clarity.

Category Flawless Internally Flawless Very Very Slightly Included Very Slightly Included Slightly Included Included
Grade FL IF VVS1 VVS2 VS1 VS2 SI1 SI2 I1 I2 I3

The Gemological Institute of America (GIA) diamond grading scale is divided into six categories and eleven grades. The clarity categories and grades are:
  • Flawless category (FL) diamonds have no inclusions or blemishes visible under 10x magnification.[2]
  • Internally Flawless category (IF) diamonds have no inclusions visible under 10x magnification, only small blemishes on the diamond surface.[2]
  • Very, Very Slightly Included category (VVS) diamonds have minute inclusions that are difficult for a skilled grader to see under 10x magnification.[2] The VVS category is divided into two grades; VVS1 denotes a higher clarity grade than VVS2. Pinpoints and needles set the grade at VVS.[1]
  • Very Slightly Included category (VS) diamonds have minor inclusions that are difficult to somewhat easy for a trained grader to see when viewed under 10x magnification.[2] The VS category is divided into two grades; VS1 denotes a higher clarity grade than VS2. Typically the inclusions in VS diamonds are invisible without magnification, however infrequently some VS2 inclusions may still be visible to the eye. An example would be on a large emerald cut diamond which has a small inclusion under the corner of the table.[1]
  • Slightly Included category (SI) diamonds have noticeable inclusions that are easy to very easy for a trained grader to see when viewed under 10x magnification.[2] The SI category is divided into two grades; SI1 denotes a higher clarity grade than SI2. These may or may not be noticeable to the naked eye.[3]
  • Included category (I) diamonds have obvious inclusions that are clearly visible to a trained grader under 10x magnification.[2] Included diamonds have inclusions that are usually visible without magnification or have inclusions that threaten the durability of the stone. The I category is divided into three grades; I1 denotes a higher clarity grade than I2, which in turn is higher than I3. Inclusions in I1 diamonds often are seen to the unaided eye. I2 inclusions are easily seen, while I3 diamonds have large and extremely easy to see inclusions that typically impact the brilliance of the diamond, as well as having inclusions that are often likely to threaten the structure of the diamond.[1]

4. Cut

Hint: Round brilliants is the most popular cut given to a diamond.  It is the best choice for its marketability.  It appreciates faster than the other cuts.

Most gem-quality diamond crystals are octahedra in their rough state. These crystals are usually cut into round brilliants with minimal loss of weight. If the crystal is malformed or twinned, or if inclusions are present at inopportune locations, the diamond is more likely to receive a fancy cut (a cut other than a round brilliant).  Fancy cuts are more fashionable yet are of lesser value.

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