From understanding the difference between diamond resale value and retail prices to learning about the attributes that enhance the value of a diamond in the global markets - here’s your guide to diamond values in the resale market.
Understanding a diamond’s retail vs. resale value
All diamonds possess an intrinsic value, yet the notion that
a diamond is forever has led many to believe that diamonds serve as investment pieces, appreciating in value over time. While that can be the case with a very select number of rare fancy color diamonds, those of one-of-a-kind color, the notion regarding diamond value over time does not hold true with the vast majority of diamonds worn every day throughout the world. Like a new car being driven off the dealership lot, so too does a diamond’s value depreciate once it’s purchased from a retailer.
What is the markup on diamonds?
As with all retail businesses, jewelers and jewelry stores add a markup on diamond jewelry. Retail diamond markups can be as high as 200%-400% or as low as 20%-30%. Though the exact markup on diamonds is unique to each retailer, it is generally influenced by things such as the type of retailer (e.g. mall-based chains, local mom-and-pop jewelers or online retailers), and whether the retailer or jewelry are branded (such as Tiffany & Co. or Tacori).
Determining diamond resale value
When diamond jewelry is resold back into the market, its value is mainly dependent on the quality and beauty of the center stone diamond; setting, branding or other extrinsic characteristics are not necessarily considered. That is why the majority of ‘recycled’ jewelry is broken down into its components (i.e. diamonds, other gems, and metal) to determine the diamond ring price. The center stone diamond, which holds the majority of the jewelry value, would be priced in the secondary market based on the diamond’s inherent characteristics such as the 4Cs (cut, clarity, color, carat), fluorescence, fire, scintillation and others. Simply put, a diamond’s resale value is the direct reflection of industry market conditions, and the supply and demand for that specific diamond.
The exception would be important signed jewelry from companies like Tiffany & Co. or Cartier. These exceptional pieces would likely fetch a higher value in their original, unaltered form (assuming they are in good condition and haven’t been tampered with).
Beyond the 4Cs: Characteristics that add value
Take the two diamonds shown below. They have both been graded by the Gemological Institute of America (GIA) as 1.02 carat, F color, VS2 clarity with Excellent cut, polish and symmetry. They look the same, right?
Tap on the image to reveal a drastically different characteristic about the diamonds – one fluoresces under UV light, and one does not. This one difference accounts for a 50% variance in the diamonds’ value.
Every diamond is unique. They come in a variety of sizes, shapes and have different characteristics. While a diamond’s 4Cs are important for determining an approximate value, there are many other attributes, such as fluorescence (as shown in the image above), that must be considered to accurately determine the diamond’s value.
Many of these attributes contributing to a diamond’s price, including fire, brilliance and scintillation, can only be properly measured by examining the diamond in person – even a diamond grading report won’t provide a comprehensive view of a diamond’s true beauty and quality. Trying to buy diamonds without an in-person inspection is like trying to decide on buying a house just based on a floor plan.
Technology can enhance diamond value
There are also many state-of-the-art technologies that can help add value to the diamond’s resale value. A Sarine machine measures the facet arrangement and proportions of a diamond to determine if re-cutting will enhance a diamond’s appearance by improving its cut grade (e.g. from Very Good to Excellent), clarity or at times even improve the color, and therefore its value. To see a Sarine machine at work, visit our “Our Process” page and watch the video about our evaluation center.
What can negatively impact diamond ring prices?
Just as there are ways to add value to a diamond, there are considerations that impact a diamond’s value in a negative way, especially damage. While diamonds are considered to be one of the hardest materials (a 10 on Moh’s scale of mineral hardness), they are susceptible to damage from general wear and tear. If not properly cared for, diamonds can incur small chips or fractures, which will drastically decrease the diamond’s resale value. By re-cutting a damaged diamond, Mondiamo can dramatically improve the value buyers will be willing to pay for it.
What makes fancy shape diamonds unique and creates value
While round brilliant diamonds always reign supreme (round diamonds account for about 80% of all diamond engagement rings), fancy shape diamonds, such as princess, pear, cushion, oval, or radiant, remain popular and are truly unique. In an age of personalization and self-expression, fancy shapes become an important part of personal style and fashion trends.
Because of their unique shapes and facet patterns, there are even more considerations and nuances when determining the value of fancy shape diamonds. While well cut round brilliant diamonds transmit light evenly, fancy shapes are hand crafted and are always slightly different from one another. Light reflection and the proportions of the diamond are the key elements that lend any diamond their beauty and desirability and therefore must be visually assessed to determine their worth and the right diamond price.
Why access to the global diamond trading market can increase a diamond ring’s resale price
Diamonds are a global business. With major industry hubs for buying diamonds in the US, China, India, Israel and Belgium, having access to these international markets is a notable advantage when selling your diamond jewelry. Therefore, the diamond price per carat is bound to vary.
Like other commodities, diamond values are driven by demand and liquidity. It’s important to consider that some diamonds, whether it be a particular shape, color grade, or carat size, are more in demand than others in different markets.
For example, round brilliant diamonds with D-E-F color and IF to VVS1 clarity have much higher demand in the Asian markets, China, Japan, India, than in the United States. Typically diamonds of more commercial type, those with SI clarity and below, sell well within the United States and Europe. A local jeweler or a pawn shop wouldn’t have such a global network and/or sufficient liquidity and therefore would often extend a lower buy-back price.
At Mondiamo, we build upon our knowledge of global diamond prices to understand where your diamond has the highest demand. With this information, our team works to maximize the resale value of your diamond, resulting in a higher cash offer for you.
There are many things for you to consider when selling your diamond jewelry, and Mondiamo is here to simplify the process and do the leg-work for you. Leveraging our expertise in buying diamonds and our direct access to global buyers, we carefully consider every attribute of your diamond and strive to provide you the highest offer and best diamond prices from around the world.