Diamond Valuation

[itsjustmeagain]

I have a question about diamonds i am not 100% sure on.

Is a diamond of specific features a fixed market value, the same as gold or silver is, or is it only as much as someone is willing to pay for it, such as buying a car??

Say if i were to by the exact same 2 diamonds, are they going to be the same price or will i be paying different amounts depending on who is selling them to me??

 

[hippi_pixi]

yes and no. mostly they will be a different price depending on who is selling them to you. particularly if the vendor owns and has possession of the stone in question.

diamond values are based off a Rapaport sheet. a pricing guide for the industry that is very difficult/impossible to get access to as a buyer. this sheet has price guide for each combination of color and clarity and weight range (eg 2.00 - 2.99 carats) which is given per carat and multiplied by the actual carat weight of the stone.

however one vendor might use this sheet to work out a price and add A% while another vendor will add B% for their profit margin

other vendors slightly further away from the loose diamond dealer business like antique dealers might do this a bit less scientifically

if you see a stone listed by 2 different vendors for the same price its likely because the stone is owned by a third party.

 

[ChristineRose]

It's radically different from both of those because the diamond market is a controlled monopoly.

If you buy from jewelers they are all getting their stones at the same prices. A jeweler will have some stones in stock but will also have a list of stones owned by other dealers and their prices. The jeweler will decide on their markup and may or may not negotiate depending on how large their markups are and their own individual situation. Tiffany has high end stones and high markups, the mall chains have (mostly) low end stones and high markups, speciality jewelers have whatever they have.

There is no organized resale market for diamonds. Most eventually end up back in the monopolized supply chain and are priced according to their cut/color/clarity/carat. You can buy from a private reseller (e-bay, etc.) or you can buy from a pawn shop or on consignment. These prices are all over the place but are typically related to what the stone would have sold for in the stores. Pawn shops go as low as 10%, private sellers as high as 70%.

Rap is roughly equivalent to those blue book guides you can find online but it's not much use to consumers because a premium cut stone might be "Rap times two" and a poorly cut stone might be "75% of Rap." If you had the Rap sheets and could evaluate stones, you could tell whether your store was a high or low markup store.

 

[RockyRacoon]

It's radically different from both of those because the diamond market is a controlled monopoly.

Just to be clear, the diamond industry doesn't fit the definition of a monopoly.

If anything, it is an oligopoly, and even that is stretching.

 

[diagem]

It's radically different from both of those because the diamond market is a controlled monopoly.

Just to be clear, the diamond industry doesn't fit the definition of a monopoly.

If anything, it is an oligopoly, and even that is stretching.

A little more on the ones who still call the Diamond industry a monopoly.
It's no monopoly (period).
DeBeers don't control the market anymore than any other entity. It's been this way since DeBeers went private in the start of the new millennia.
The only price setters these days are consumers themselves.
Rough producers attempt to push prices of rough upwards all the time. That is one of the reasons this market is extremely vulnerable & volatile.
Primitive business models cause long term speculations on value but no one is in control excepts the buyers themselves.

But back to the pricing question, there are no to exact Diamonds alike, some are close in resemblance but not identical. Even Rapaport is becoming less relevant. Added value components are not calculated via the Rapaport sheet.
This industry is beginning to understand added value other than price is a must.