The fallacy of bargains

[kenny]

I often read posts like?
The color grade I is the best bargain because it's not priced like a DEF but is not heavily-colored like an RST.
An eye-clean SI2 is the best 'value' clarity grade.
A pre-loved diamond is a much better deal than a new one.

No. You get what you pay for.
All grades and new or used are identical 'bargains' or 'values'.

With a new diamond you get all that comes with buying from a business rather than from a private party.
That is worth a lot to many people, not all, but many.
The diamond itself may be the same but the transaction is very different.

There may be an element of market manipulation but I'm sure that nature makes D IFs more rare than Z I2s.
That, and supply vs. demand results in every grade being price what it's worth in the marketplace.

A true bargain is when a clueless private seller sells a diamond for a tiny fraction of its market value ... which leaves a buyer to ponder the ethics of the transaction.

If the buyers are fully educated (about common misconceptions like higher color and clarity do not enhance light performance because only the cut quality can do that) the buyer of the new D IF got the exact same 'bargain' as the buyer of a used eye-clean I SI2 and the buyer of the Z I2.
You get what you pay for.

 

[SB621]

ummmmmmm....say what?!

 

[Karl_K]

Kenny,
I have read that 6 times and I still don't get your point or what your trying to say.

 

[Dancing Fire]

Kenny,
I have read that 6 times and I still don't get your point or what your trying to say.

I understood what Kenny is saying..

 

[tyty333]

Kenny,
I have read that 6 times and I still don't get your point or what your trying to say.

I understood what Kenny is saying..

Confused minds think alike!

 

[Niel]

Kenny,
I have read that 6 times and I still don't get your point or what your trying to say.

 

[diamondseeker2006]

Some of those you mention are not bargains, Kenny. But when I go on ebay and buy a high end brand South Sea peal and diamond necklace that retails for $5800 new and is in virtually new condition for $1600, that is a fabulous bargain. My only other choice would have been to buy it at full retail price, and I never would have done so.

People here have bought PS vendor ideal cut diamonds second hand at a discount. If the diamond is still in perfect condition and has the grading reports, etc. and is sold for 30% below current prices, then the person got a bargain.

But certainly buying a retail I color diamond instead of a D is not a bargain. It is a diamond of lower value so it costs less. I hope most people can distinguish when something is a bargain or not!

 

[kenny]

Regardless of the reasoning presented, some grades are not 'better deals' than other grades, as often stated on PS.

All are priced what they are worth, making them all the same 'bargain'.

Used diamonds are not a 'better bargain' than new.
They are not the same.
Each is priced what the marketplace has established it is worth.

That there are bargains in the diamond market (when it comes to GRADES or new vs. used is a fallacy.

Sure, shop for a good price for whatever grades you like.
That's different.

But this seeing some grades as a better values than others leads to disasters like we are seeing in the current EGL debacle.
Oh Look, I got an F VS1 for only X dollars.
Or, my I SI2 is a bargain because it's cut so well it looks just like D IF to me ... but for much less money!
Uhm no, they are not the same thing, with different price tags.

 

[pyramid]

I think he is saying all values are the same, that a mid grade color diamond is not the same as a high grade color diamond so the value is the same as you paid for it, worth the price you paid but not the price of the higher grade. Also a pre-owned diamond is not the same as one that is not second-hand. Don't know how this sits though with people that think color just is and that they are all the same. Yes a D is rarer and more money for a reason, I agree with Kenny.

 

[Asscherhalo_lover]

People are just being lax with terminology. You know that. When they use the term "bargain" they are just referring to "what will look nice enough to the eye and people will think I spent more than I likely did?".

I have seen two rings which to the eye (my eye anyway) were identical. This was at Tiffany, same setting, about the same carat weight, one being thousands of dollars more to the other. Two color grades and two clarity grades separated them. There was no discernible difference at a normal viewing angle. Most people would say the less expensive of the two was a "bargain". Are they using the term incorrectly? Yes. Does it really matter? Meh.

Maybe we should coin a new term for this. Any ideas?

 

[pyramid]

The lower price for the ebay pearl or second hand diamond is the value of it and not a bargain either, because the pearl could have some dents in it and the diamond some chips. It would need to come from the original dealer and to the first owner to be worth the original value. It may be in the same condition but technically it is not, there will be some scratches, dirt etc. Even if there are none and it is all cleaned up - it still belonged to someone else before you so not really a bargain. Just worth what the retail value is now without the mark up which was only on the item as new. Everyone who bought the item new from the designer got a new piece there's is also second hand now so not worth the new price anymore. Like a car loses value when it drives away from the showroom.

 

[Dancing Fire]

Kenny,
I have read that 6 times and I still don't get your point or what your trying to say.

I understood what Kenny is saying..

Confused minds think alike!

 

[cflutist]

bargain - a thing bought or offered for sale more cheaply than is usual or expected

Buying all of my new Hansgrohe bath fixtures for 45% off from an online vendor versus the local kitchen/bath specialty shop was a bargain.
Buying the new tub for 50% off was a bargain with free shipping too (that 18-wheeler backed down my street to deliver it).

Buying my Fancy Yellow diamond ring at Tiffany & Co. was not a bargain.

 

[Niel]

Well.. sense I am sure some of this is direct at me and my recent post, Ill be happy to decent.

The definition of a bargain

a thing bought or offered for sale more cheaply than is usual or expected.



If Blue Nile has a sale on their diamonds for Valentines day, is that not a bargain? They have the exact same inventory pre sale, yet now its cheaper than usual


If a person sells their diamond second hand, often times they choose not to consign the stone. By doing so, they compromise in selling, sometimes listing it less than such diamond would be sold on the second hand market. Same product, less money than usual.

Now thats to take the definiton as "more cheaply than usual" but also, there the second part, more cheaply than expected.

A person who shops at Tiffanys or Cartier may expect a diamond solitaire to cost a certain amount. After doing research they may find they can get a relative comparable product for last money. That person may consider that a bargain, as they paid less than expected.

 

[Niel]

The portrait you are painting is of getting the best value for your money. But because that is an issue of value, does not mean the concept of bargains does not exist.

 

[WinkHPD]

hmmm,

In 1975, when I was a young man still at GIA studying to be a gemologist, I bought a 0.97ct light Fancy blue - VVS2 in a platinum mounting with 0.88cts of white melee goods for $1,300. The dealer I bought it from was also new to the business and when he told the owner how he had bought from an estate and sold that diamond in only a couple of hours for a nice profit the owner (his father-in-law) told him to buy it back. I kept asking my lovely wife, for whom I had bought it, if she wanted to sell at $2,500, $5,000 and then $10,000 all in the space of about three minutes of negotiations.

Turns out the son-in-law had about as much experience in the trade as I did and was in a LOT of trouble with his father-in-law.

They had a buyer for that diamond at well over $20k I would find out later, but my wife still owns it.

I would say that was one heck of a bargain.

Wink

 

[Circe]

Wink, I would LOVE to see a picture of your wife's ring!

 

[Karl_K]

hmmm,

In 1975, when I was a young man still at GIA studying to be a gemologist, I bought a 0.97ct light Fancy blue - VVS2 in a platinum mounting with 0.88cts of white melee goods for $1,300. The dealer I bought it from was also new to the business and when he told the owner how he had bought from an estate and sold that diamond in only a couple of hours for a nice profit the owner (his father-in-law) told him to buy it back. I kept asking my lovely wife, for whom I had bought it, if she wanted to sell at $2,500, $5,000 and then $10,000 all in the space of about three minutes of negotiations.

Turns out the son-in-law had about as much experience in the trade as I did and was in a LOT of trouble with his father-in-law.

They had a buyer for that diamond at well over $20k I would find out later, but my wife still owns it.

I would say that was one heck of a bargain.

Wink

Naw the real bargain was the smiles your wife got/gets when looking at it and thinking of her wonderful husband.
Each of those is worth a million bucks plus!

 

[kenny]

hmmm,

In 1975, when I was a young man still at GIA studying to be a gemologist, I bought a 0.97ct light Fancy blue - VVS2 in a platinum mounting with 0.88cts of white melee goods for $1,300. The dealer I bought it from was also new to the business and when he told the owner how he had bought from an estate and sold that diamond in only a couple of hours for a nice profit the owner (his father-in-law) told him to buy it back. I kept asking my lovely wife, for whom I had bought it, if she wanted to sell at $2,500, $5,000 and then $10,000 all in the space of about three minutes of negotiations.

Turns out the son-in-law had about as much experience in the trade as I did and was in a LOT of trouble with his father-in-law.

They had a buyer for that diamond at well over $20k I would find out later, but my wife still owns it.

I would say that was one heck of a bargain.

Wink

That's wonderful!

... and it has nothing to do with my point of this thread that all grades are an equal bargain.

You are bringing up a seller selling for a tiny fraction of going value, which I've already stated is not the subject of this thread.

But again, congratulations!
I'm jealous!

 

[kenny]

Neil, I endeavor to post about topics, not about people.

If a person posts grist for a topic's mill, so be it.
It's not personal.

 

[Niel]

Neil, I endeavor to post about topics, not about people.

If a person posts grist for a topic's mill, so be it.
It's not personal.

Of course, of course.

 

[kenny]

Thanks Neil.

 

[pyramid]

I love Wink's story and love that his wife still has that diamond. Lots of luck to her, it was her diamond and meant to be.

 

[pyramid]

Re: The f allacy of bargains

How about then the diamonds are not on an equal level and we leave bargain out of it. So it looks the same to amateur eyes but is
not the same. In the case of pre-owned the market is different, we wouldn't buy a pre-owned pearl necklace on ebay for the
same we would pay Tiffanys for example. There is not just the damage issue but also that it may look the same but not be the same. A copy, things can be made identical nowadays. If it is a Tiffany's it is still not the same as it has other peoples memories attached to it, it was not always yours. May be the same to some but surely should not be the same price as a brand new one in Tiffanys, I wouldn't buy one from Tiffanys if they said they loaned it out for four months to their previous customer and now I can buy it 'new' for $10,000.

 

[Gypsy]

I posted this in a different thread. On a different topic. But the core logic applies. Buying a diamond is about balance. Our job here is to help posters find the right balance FOR THEM and their budgets. And if their budget is 10K and they want a 2 carat stone and size is what matters most, then we might recommend a J 1.8 carat SI1 stone.

But here's the post, extrapolate the logic of it, and you have my explanation.

YES you can tell the difference between a BGD Signature or an Infinity and a GIA EX/EX with a fanastic ASET/IS combo or a 'regular' AGS0 without the precision faceting when you see them side by side, and definitely once your eyes are trained. And even if they are untrained some times and not next to a less precisely cut stone.

It's like saying... will I be able to see the difference between a D and a G. Well, YES. Your eyes work, presumably. I am not color sensitive (I don't generally let color bother me and appreciate each color for what it is), but of course I can SEE color difference, quite well actually.

And even a novice can spot the difference between a D and a G when they are side by side, such as in a tray of 5 stones. Just like most people can see the difference between a GIA Ex with a great idealscope image and a perfect Infinity when side by side. Why? Because there IS a difference.

That's not the issue for me.

The "Super Ideal" issue is just like color to me. YES, I can see the difference between a D and a G. But... does it have to bother me? No. I can appreciate the G for what it is. And I don't NEED to buy a D. Even though there IS a difference.

Not everyone can afford a D. In fact MOST of the time on PS we don't push colorless at all, let ALONE D. Why? Because buying a diamond is about BALANCING the 4 C's.

Not everyone can afford a D IF Super ideal in the PERFECT size. So the question then becomes: what CAN you compromise on without compromising TOO MUCH.

That's where that thread I posted comes in. YES, super ideals are fabulous. D's are fabulous too. Do you NEED a super ideal to get a fantastic looking stone? NO. You DO NOT. Same as you do not need a D to get a fantastic looking stone.

You wear diamonds on the hand ALONE or with stones of similar cut quality and color.

You don't wear them in a tray next to a Super Ideal. Just like you don't wear an H next to a D. Why? Because there is a difference, of course. Now, does that mean the H is not a gorgeous color? NO. Does that mean the GIA Ex with a great idealscope is not a beautiful stone? No.

The issue is... what is the acceptable level of compromise on CUT QUALITY when you are BALANCING the 4 C's.

My answer, and MY OPINION (which is what this thread is) is that you do not NEED a super ideal. Just like you don't need a D. Yes, if you CAN afford it... get one. But all too often on these boards people are faced with balancing size, color and BUDGET. And SOMETHING has to give.

Super ideals cost more. Often a LOT more per carat. And I'm not of the opinion that someone should buy a 1 carat J Super ideal over an H GIA 3Ex with a fantastic idealscope because the difference between a Super Ideal and a stone without precision faceting but with 'ideal' light return is GREAT ENOUGH to justify the color drop. Again it's about BALANCE.

For MOST consumers: a GIA Ex with an excellent idealscope/ASET performance is going to be a fantastic stone AND will allow them to balance color and budget BETTER, than someone telling them they have to have a Super Ideal. Because IMO, telling someone they HAVE to HAVE a super ideal is just as INCORRECT as telling them they HAVE to have a D because it's the best.

I always try to explain this to people AND encourage them to go see (WHEN POSSIBLE) super ideals (like Hearts on Fire) next to great GIA Ex stones to decide what THEY personally NEED for themselves. Just like I try to encourage people to go in and see what their personal color tolerances are. BUT, it is not always POSSIBLE that that they do so. So I try to provide them with as much information as possible.

Not everyone has to have or CAN have the best in all categories of the 4 C's. It's about BALANCE. That's what the thread I linked to you is about. It's about differentiating between LIKE TO HAVE and HAVE TO HAVE. Would I like to have a D Super ideal. Of course. Do I HAVE to have one to get a fantastic and beautiful stone? No.

I hope that explains the issue better.

 

[HopeDream]

Interesting question!

Kenny, I agree that there is no one best set of characteristics that makes a certain caliber of stone "the best deal" because different consumers value different stone qualities. However, I respectfully disagree with your narrow definition of a true bargain.

For me a bargain happens when an item that will satisfy my requirements for a certain degree of quality aligns with my limited budget and willingness to pay.
I think a used item at a fair market value is often a bargain, and it doesn't necessarily have to be at the expense of the seller.

A bargain on a used item happens when you pay for the materials cost of the piece (ie. gold melt value) without paying for retail mark-up or the cost of the skill of the original jeweler. The seller could always take an item to a cash for gold place, but sells to me instead, and I can enjoy it. Bargain.

On the estate market an intelligent seller will always try to sell for as much as possible (Retail price), and the buyer will try to purchase at the materials value price. The closer the buyer can get to that price (or below), the better the bargain.

If the seller chooses not to asses the proper value of their goods before selling, then on some level they accept the difference between the low selling price, and the actual market value as a convenience fee for not bothering to take the piece to a jeweler for evaluation. Getting some money for their item without having to do any additional research is worth it to some sellers. For other sellers getting rid of an item fraught with emotional baggage and negative associations is worth more than the material value of the piece. A third consideration is that some sellers need money quickly and choose to sell swiftly at a low price, rather than waiting for the perfect buyer that will pay the seller's ideal price (time is money!).

Remember that sellers don't have to sell, no one is forcing them to.

 

[Circe]

I think there's an interesting premium being placed on the "mind clean" aspect in this thread. I can see what you're saying if we compare the apple-to-apples world of retail. Estate? While different ballpark. Pyramid, you're placing the emphasis on the emotional aspects ... the uncertainty of whether one has the expertise to judge authenticity or condition, the lack of ambiance, the knowledge that somebody else has worn a piece before you have.

I think the first two are valid, and people should think about their odds of getting rooked, have a good appraiser on hand, consider the value they place on the experience as well as the object, etc., etc. but on a purely monetary basis ... yep, there are bargains out there. To me, the differential between buying a piece fresh from the forge out of a shop with lovely wood paneling just isn't worth the triple keystone markup I see vs what I pay if I poke around on 47th and buy from an old dude who'll tell me his war stories. Heck, I think I like the experience there as much as I like the savings!

Like somebody around here keeps saying, people vary. The fiscal value is a category in its own right, and the intangibles are ... intangible. No need to denigrate either preference, is there?

 

[MelisendeDiamonds]

If the buyers are fully educated (about common misconceptions like higher color and clarity do not enhance light performance because only the cut quality can do that) the buyer of the new D IF got the exact same 'bargain' as the buyer of a used eye-clean I SI2 and the buyer of the Z I2.
You get what you pay for.

No.. you don't need to be educated to get a bargain, you just need be lucky enough to pay less than the market is willing to pay.

The grading of a diamond and the market where it is being sold determines its market value, any set of grading parameters has some sort of value and bargains should be judged by what you paid relative to the market value. Determining market value is sometimes difficult, and the consumer has very imperfect information. That is why the seller can leave the buyer thinking they got a 'deal' when in fact they paid market price or even above it.

When it comes to luxury items like Diamonds consumers rarely get a bargain, even if they paid less than what the market is willing to pay, the spread between buying retail and selling wholesale is virtually always greater than the 'bargain savings'. So there aren't any true bargains for consumers in the jewellery business.

If consumers want to dilute themselves into thinking they got a 'Deal' on a diamond, ignorance is bliss, their bubble will be burst when you they to sell it, or when they consider the opportunity cost of the investment they made.

 

[diamondseeker2006]

I think there's an interesting premium being placed on the "mind clean" aspect in this thread. I can see what you're saying if we compare the apple-to-apples world of retail. Estate? While different ballpark. Pyramid, you're placing the emphasis on the emotional aspects ... the uncertainty of whether one has the expertise to judge authenticity or condition, the lack of ambiance, the knowledge that somebody else has worn a piece before you have.

I think the first two are valid, and people should think about their odds of getting rooked, have a good appraiser on hand, consider the value they place on the experience as well as the object, etc., etc. but on a purely monetary basis ... yep, there are bargains out there. To me, the differential between buying a piece fresh from the forge out of a shop with lovely wood paneling just isn't worth the triple keystone markup I see vs what I pay if I poke around on 47th and buy from an old dude who'll tell me his war stories. Heck, I think I like the experience there as much as I like the savings!

Like somebody around here keeps saying, people vary. The fiscal value is a category in its own right, and the intangibles are ... intangible. No need to denigrate either preference, is there?

Yes, I generally try to buy things with a return policy. So when I buy a branded piece, I can evaluate the condition and authenticity before deciding to keep the item. I have many very fine jewelry items that were bargains and many were either like-new pre-owned or new items discontinued from a jeweler. I don't generally take risks when I buy bargains. So Pyramid's concerns aren't an issue for me. My bargains balance out my full-price branded purchases such as diamonds!

 

[diamondseeker2006]

Wink, I think you'll probably win the prize for the best bargain! You might be able to sell that ring now and buy a nice retirement vacation cabin somewhere!