3 - 4 carat round prices?

[Retroman]

Hi. Newbie here. Great site! Does anyone who''s been in the business a long time have an opinion on what prices for 3-4 carat stones are going to do over the next 8 months or so? I''m looking to buy sometme in that timeframe and obviously would like to get the best price possible. From what I have seen, the prices for 3-4 carat stones generally don''t seem to fluctuate that much but I want to believe that what I see as a worsening global economy will mean better prices for buyers in the future. I know it''s a complicated subject, but any thoughts would be appreciated. Thanks!

 

[Lorelei]

Date: 9/30/2009 12:14:06 AM
Author:Retroman
Hi. Newbie here. Great site! Does anyone who's been in the business a long time have an opinion on what prices for 3-4 carat stones are going to do over the next 8 months or so? I'm looking to buy sometme in that timeframe and obviously would like to get the best price possible. From what I have seen, the prices for 3-4 carat stones generally don't seem to fluctuate that much but I want to believe that what I see as a worsening global economy will mean better prices for buyers in the future. I know it's a complicated subject, but any thoughts would be appreciated. Thanks!

Welcome Retroman - glad you like the site!

This is a hard question to answer with prices, I would say if the right diamond comes along to seriously consider for purchase, larger diamonds are scarce and in high demand, also depending on your budget, desired colour and clarity grades and cut quality, these are all important factors to consider - well cut stones of this weight are also scarce and in this size if you are looking at SI clarity grades to help the budget ( just an assumption here) then not all will be eyeclean.

 

[FB.]

I don''t work in the diamond trade, but I have been an investor in all kinds of things for many years. In fact, gold has been my favourite (and best-performing) investment for the last several years and I still have a very high portfolio allocation towards precious metals. I regard diamonds as not being greatly different from precious metals; you only have to look back to the late 1970''s to see a high correlation between gold and diamond prices, culminating in a bubble in 1979-1980.

Demand in UK/USA is currently weak but possibly improving, which might allow small price increases. If inflation picks up (especially now £GB is weakening again), the price of most things would increase - especially "raw-materials" and foodstuffs (commodities).
The longer-term for most assets/investables/commodities generally results in increases in prices as a result of inflation.
The large diamond companies remind me of stamp-collector companies; they like to see small rises in price every year (5-10%) and not booms-and-busts. The large companies adjust production levels to try to keep prices fairly stable.

I''d say that the "most probable" range of outcomes for diamond prices would be -5% to +10% during the next several months. I would therefore make a guess that during the next few months, diamond prices will be a few percent higher, based on the mid-point of my expected range.

But I''m not a qualified investment advisor and the above is just my opinion, not investment advice.

Regards,
FB

 

[denverappraiser]

Date: 9/30/2009 8:04:50 AM
Author: FB.
I don''t work in the diamond trade, but I have been an investor in all kinds of things for many years. In fact, gold has been my favourite (and best-performing) investment for the last several years and I still have a very high portfolio allocation towards precious metals. I regard diamonds as not being greatly different from precious metals; you only have to look back to the late 1970''s to see a high correlation between gold and diamond prices, culminating in a bubble in 1979-1980.


Demand in UK/USA is currently weak but possibly improving, which might allow small price increases. If inflation picks up (especially now £GB is weakening again), the price of most things would increase - especially ''raw-materials'' and foodstuffs (commodities).

The longer-term for most assets/investables/commodities generally results in increases in prices as a result of inflation.

The large diamond companies remind me of stamp-collector companies; they like to see small rises in price every year (5-10%) and not booms-and-busts. The large companies adjust production levels to try to keep prices fairly stable.


I''d say that the ''most probable'' range of outcomes for diamond prices would be -5% to +10% during the next several months. I would therefore make a guess that during the next few months, diamond prices will be a few percent higher, based on the mid-point of my expected range.


But I''m not a qualified investment advisor and the above is just my opinion, not investment advice.


Regards,

FB

Diamonds are VERY different from precious metals.

For starters, they are much more difficult to quantify exactly what you have. For the most part, an ounce of gold is an ounce of gold no matter what you get or where you get ti. Even with the most mainstream of diamonds this is not the case. Subtle differences in the stone or the pedigree make a huge difference in the prices. Do a quick search here for a size/shape/clarity/color combination and you’ll see a range of asking prices that’s usually on the order of 50%. That''s just this market and just for ''certified'' stones. This is neither evidence that the least expensive is a bargain or that the most expensive is a ripoff but rather evidence that there''s more going on than meets the eye.

Add to this that diamonds have no liquid marketplace. It’s the nature of ‘investments’ that you need to sell at the back end to see how you made out. With gold bullion this is relatively easy and fairly standardized. There’s a certain amount of dealer fees to deal with but the marketplace is broad and easily quantified. Selling bullion for, say, 10% below the current listed price is usually fast and easy. This is not the case with diamonds. Finding a credible buyer is often an enormous headache and the transaction fees can be considerable.

There is also a fashion component to deal with. 20 years ago, marquise cuts were hot and people paid a premium to get them. Now they’re dead in the market. Nothing about the product changed, and a 20 year old marquise is likely still every bit as beautiful as it was when it was new. What changed is the temperament of the buyers. Now they want ‘ideal’ cut rounds in a fairly narrow range of grades. What does the future hold? Who knows, but it’s sure to change, it always does. Perhaps a marquise would be a good investment because they’re cheap now and they may come back into favor and the prices rise as a result. This would be less of a bet on the diamonds business as it would be a bet on fashion trends. Bell bottom pants came back; who saw that coming?

Neil Beaty
GG(GIA) ICGA(AGS) NAJA
Professional Appraisals in Denver

 

[Lorelei]

Date: 9/30/2009 10:26:44 AM
Author: denverappraiser


Bell bottom pants came back; who saw that coming?

Neil Beaty
GG(GIA) ICGA(AGS) NAJA
Professional Appraisals in Denver

I certainly didn't!!!

 

[Retroman]

Thanks to you all for your replies. Although it''s obviously an investment, I''m really only looking to find a beautiful stone for a ring for my wife and I''m trying to gauge when the best time to buy might be. Sounds like in that size/price range there may not be a whole lot of price changes over the next several months.

Perhaps I need to provide more specifics as to the parameters I''m looking at so someone may be able to tell me about the demand for what I''d like and hence the price. What I''m thinking of getting is 3-4 carats, D-G color (though someone please tell me if G might not be a good idea), VS2 or higher clarity (definitely want eyeclean), and very good or ideal cut. Budget is $50-65k. If that helps frame the question of what the pricing for that type of stone might do over the next several months, please let me know your thoughts.

As a side question, in a stone that size, I''m assuming clarity takes on greater significance or will cut still be the most important factor?

 

[FB.]

Although I can’t find my files of diamond price data, I can pull up some basic comparisons that show diamond and gold prices to have a noticeable correlation.

Diamond prices rocketed in the late 1970’s.
Diamond prices peaked in 1980 and then crashed.
Diamond prices in recent years finally reached levels seen at the peak of the 1980 bubble.
Diamond prices peaked in early-mid 2008.
Diamond prices bottomed in late 2008-early 2009.
In all of the above statements, you could substitute the word “gold” for “diamond”.
I see a high correlation between diamonds and gold. I’m not saying they are as good or bad as gold – just that where one goes, the other is fairly likely to follow.
The common link being that they are both commodities.


Regards,
FB

 

[stone-cold11]

No, diamond are not commodities. Each polish stone is different. A commodity is something that has no individuality. 1kg 24k gold is the same no matter where it is bought, a 1 carat polish D/IF diamond is different depending on the cut and shape and priced differently.

 

[FB.]

Retroman

Your question regarding price movements is difficult to answer. Although a few of us saw last year''s financial crash coming, a lot of people didn''t and took it right on the chin. Prices of all kinds of items can move unexpectedly due to unforseen events.
Suppose government stimulus measures start to fade - like a junkie needing ever more drugs - and the economy then slides into a depression. I can imagine that diamond prices would be persistently weak.
But suppose the debt-ridden "Western" governments devalue their currencies to try to get us out of this recession (just like in 1933)......the price of tangibles could sky rocket.
There are many factors to consider - and we''ve rarely been in such an economic mess as the present. Things could move in all kinds of directions.

If your budget is in the $50-$65K region, I doubt that the $50K stones would move out of reach within the next few months - although I think that a small rise of a few $K is quite possible.
If the stones currently priced at $50K start to look as if they might get out of reach of your budget, then I''d consider bringing forward my purchase before the stone "gets away".

Many virtual stones stay on the inventory list for months, so why not do a weekly scan of the prices over the next several months, for stones that interest you and plot down the % change each week. You can then see where prices may be heading - and how fast.

But ultimately, it''s all a balance of probabilities and financial market player like myself would make a trade based on a significant skew of the expected outcomes. I don''t see enough of a skew in possible outcomes to justify "panic-buying" right now, but I see a small skew to the positive.
Here''s a "back of the envelope" "balance of probabilities" estimation of diamond prices based on how I would model my expectation, including all the variables that I can think of:

5% chance of prices dropping >20%
5% chance of prices dropping 10-20%
10% chance of prices dropping 5-10%
20% chance of prices dropping 0-5%
25% chance of prices rising 0-5%
20% chance of prices rising 5-10%
10% chance of prices rising 10-20%
5% chance of prices rising >20%

But the above is my opinion and is provided for amusement only. It is definitely not a recommendation to buy or not to buy and should not be relied upon for large sums of money. Consult a professional advisor if you need advice that allows you to sue someone for making a mistake with your investment.

Regards
FB

 

[Retroman]

I appreciate the gold v. diamonds as commodities debate but if you could tell me how that might relate to answering my original question (as clarified in my earlier reply) I''d appreciate that even more.

Thanks!

 

[FB.]

For a "leading indicator" of diamond prices, I would look towards "spot" gold, silver and platinum prices.
It is my belief that gold, silver and platinum prices will lead the way, with diamond prices following with a few weeks lag. Diamond prices are not as volatile, so they would be expected to move less - both up and down.

But I emphasise that the above is my opinion and should not be used as investment advice.
Would you trust a complete stranger on an internet forum to manage a $65K investment for you? I wouldn''t.

 

[Rockdiamond]

HI All!
Stone cold was 100% correct in saying diamonds are not a commodity.
I could be wrong here, but I believe gold is at record levels, while diamonds have returned to pre 2008 levels.
To me this indicates that gold prices and diamond prices do not neccesarily follow the same pattern.


Retroman- the current situation looks soemthing lke this, from where I sit:
Sales are below the level of last year in the jewelry and diamond industry, as a whole.
THis is NOT reflected directly in the prices of larger high quality diamonnds, such as the one you''re considering.
The prices are less than the peak of 2008- yet still quite strong. Plus, such stones are not all that easy to find.

FB gave some great advice about trusting people posting on a forum to manage a 65K investment....


BUT- I''ll still add something to think about: Instead of trying to guess what prices will do, buy the diamond when you are ready.
When discussing the financial investment in diamonds, it''s easy to overlook the emotional payoff.
In other words, it''s something you are buying for enjoyment.....as well as somethign that can hold value better than most consumer purchases.
If you think about the enjoyment it''s bound to bring, why wait?
Over the long haul she''ll remember how much she loves it.
A few points one way or another in the price won''t really make a long term difference.

 

[stone-cold11]

Diamond is not an investment, you will loose value with any resale, probably around 50% unless the vendor has a buy back policy, unless it is one of those named famous diamonds.

 

[diamondseeker2006]

I am far from an expert, but I know enough to tell you that you need to start looking now because stones with your specs are not readily available at all times. You need to buy when you find the right stone and not try to time it based on potential price increases since that is impossible to predict. I''d certainly recommend an ideal or excellent cut G color stone. Please don''t sacrifice cut quality! You''ll probably find it hard to stay within your budget if you get into the D-F VS range.

 

[FB.]

Stone cold is correct; you are likely to lose a substantial amount if you try to re-sell your diamond. It is only a semi-investment. It will retain some of it''s value, but should also be enjoyed for it''s beauty - much as you might spend money on a bunch of flowers because they give you (her) pleasure during the time that you own it.

diamondseeker2006 is also correct; you may need to make a move on a good stone when one appears that "ticks all the boxes" for your needs.
Wouldn''t you kick yourself for holding back from buying a good stone in the hope that it gets cheaper, only to find that someone else buys it while you''re hoping for the price to come down?

 

[Rockdiamond]

Great points- I did not mean to imply that diamonds should be considered a financial "investment".
Although they are not a money maker for consumers, diamonds have historically held more value than most other things people buy.
How much is the $20,000 car someone bought 10 years ago worth today?
A well purchased $20k diamond from 1999 might still be worth $8-10K even selling back to a dealer.
Losing half over 10 years is still not great financial performance.

The point I was making is that many people that own diamonds look at them as an investment in themselves- or another.
When you combine the emotional, as well as the financial, the picture is different.


I would also add that my feelings about this have changed a lot over the past 12 months.
A stock portfolio that lost hundreds of thousands of dollars is very common.
I still do not advise folks to buy diamonds as an investment, but the losses suffered in the stock market have actually made diamonds seem better.
If you lost 30K ( or whatever) on a diamond because you had to sell it, at least you''d have gotten a lot of enjoyment from it.

diamondseeker''s point about availability is a good one- it might not be all that easy to find!

 

[luv2sparkle]

You mentioned that you were looking for a D-G colored stone, but if I was going to spend that much money I would definitely check out Brian Gavins stones
and see what he can get for you. His stones are so well cut you might be able to go to a slightly lower color to save a little bit. Is your wife or you extremely
color sensitive? In a really large stone there is so much sparkle and flash you might not notice color as much. The size is a little mesmerizing. I have a 2.57
I VS2 from Brian and I cant imagine anything whiter. I wear it with an eternity band of E-F stones and it looks whiter to me.

You may want the whiter color in the end, but for me, I would definitely want to check that out. It may make the difference in size for your budget. Also, I think
BGD diamonds are well priced. I am a little biased because that is where I got my stone, but I had done quite a bit of research initially and found his stones
to be quite amazing. Good luck, I am sure your wife will be thrilled beyond belief!

 

[Retroman]

Thanks very much again to you all for the replies. Sounds like I need to get off the internet and out to some stores and start looking at some stones! If what I''m looking for is in limited quantity and hard to find as DiamondSeeker suggests, what''s the best way to narrow down the range of what''s going to be acceptable to me? (And thanks luv2sparkle for the advice to consider going down in color). Do I go to a reputable store and ask them to start looking for some stones that I can compare side-by-side? Is that asking a lot if I don''t end up buying from them? If I have one place looking for me, is it acceptable (or advisable) to have others looking as well? I''d like to understand the stone-buying etiquette if there is one.

Once I settle on a more precise range of what''s acceptable, what''s the best way to actually choose which stone to buy? Does it make much difference whether I buy from a store or off the internet? (I realize there are already probably many threads on this subject so I''ll search them). Are there trustworthy agents who I can pay to either find me a stone that fits my criteria or go with me to a store to help me choose from among those that the store finds for me? Can I do just as well on the internet (and asking for opinions from people here when I find two or three to compare)? (Given the price range I''m in, will the internet sellers allow me to go somewhere (with an agent to help me) to view two or three stones in person?

FB, I understand what you''re saying about trusting strangers on a forum when consideing a $65k investment, and I view this place only as an excellent resource for diamond info. I''ve learned more here than I have anywhere else. I''m not looking for investment advice, just gathering as much good info as I can so I can make the most informed decision possible. As we all have heard, there are no guarantees in life except death and taxes (and I might argue with the death part depending on one''s definition.

 

[diamondseeker2006]

By all means deal with someone who specializes in ideal cut stones! When we began looking for my anniversary diamond, I can tell you that I looked at local jewelers and NONE could call in the selection of stones that these vendors I found here could access. I''d never, ever buy a diamond except from one of the vendors I learned about here, because I know the quality they have and the prices are SO much better than in the stores.

Here are my recommendations:

Good Old Gold is where I got my new ring stone, and they absolutely have outstanding diamonds and customer service. They are also a brick and mortar store and offer a 75% lifetime buy-back on their high quality stones (as well as full value for an upgrade).

WhiteFlash is where I got my diamonds for earrings. Their "A Cut Above" line is top cut quality.

Brian Gavin Diamonds...Brian was the originator of A Cut Above (he is a diamond cutter himself) and was involved with WhiteFlash but now has a new business. His prices are competitive and the quality is top of the line. He also allows upgrades of his stones.

These are the ones that I have had personal experience with and would recommend without reservation. I''d probably call two of them and tell them to be looking for a stone for you. I think you''ll waste time and money trying to do this by going to random jewelry stores.

And I think G VS2 would be a great choice, personally. Good luck to you!

 

[diamondseeker2006]

Date: 10/12/2009 7:21:55 PM
Author: Retroman
FB, I understand what you''re saying about trusting strangers on a forum when consideing a $65k investment, and I view this place only as an excellent resource for diamond info. I''ve learned more here than I have anywhere else. I''m not looking for investment advice, just gathering as much good info as I can so I can make the most informed decision possible. As we all have heard, there are no guarantees in life except death and taxes (and I might argue with the death part depending on one''s definition.