Diamonds. Diamonds. Diamonds.
Discover the truth about diamond grading and why your gemstone may not be the investment you thought it was. From history to resale value, this article has everything you need to know before selling your diamond.
The value of a diamond
What is my diamond worth? A question as timeless as the diamond itself – and unfortunately as difficult to answer as “What is the meaning of life?” The flattering but painfully accurate answer is: “It depends.”
Determining the value of your diamond is about as easy as solving a Rubik’s Cube while blindfolded. It requires the expertise of a gemologist or a professional appraiser who can explain things in a way that doesn’t sound like a bad physics lecture. But here’s the kicker: What you get when you try to resell that sparkling stone is almost always less than what you earned at retail. And by less I sometimes mean just 25 to 50% of the original price. So before you get too excited about rolling out the dough, let’s set some realistic expectations. Excuse me!
But first, a brilliant journey through diamond history
Before we start crunching numbers and playing with magnifying glasses, let’s go back to the origin of diamonds. Believe me, it will make this whole process even more glamorous.
Diamonds were first discovered in India about 2,500 years ago – although they weren’t exactly on display in Tiffany’s display cases back then. These gemstones had enormous cultural, economic and symbolic value, and kings, priests and pharaohs couldn’t get enough of them. They believed that these glittering little rocks had magical and medicinal properties. (To be fair, diamonds can heal a broken heart—but only if they come with a prenuptial agreement.)
Originally, diamonds were a man’s best friend. Yes, for a long time only men wore diamonds, usually in the form of armor or royal crowns. Can you imagine wearing your bling in battle? Diamonds were believed to provide protection on the battlefield, a belief that sounds much cooler than just wearing them to fancy dinners.
Let’s go back to the late 19th century when a huge treasure trove of diamonds was found in South Africa. Suddenly diamonds were no longer just for royalty, but for anyone with enough money to spare. Enter Cecil Rhodes, the original diamond tycoon, who has seized control of the diamond supply like he was playing Monopoly with the world. Rhodes founded De Beers, the diamond company that remains at the helm today, and diamonds became rare and artificially rare.
Oh, and remember the whole tradition of diamond engagement rings? You can thank Frances Gerety, the genius behind the slogan “A diamond is forever.” Introduced in 1947, this slogan single-handedly convinced millions that their love was not real unless a shiny stone symbolized it. The slogan was so iconic that Advertising Age named it the “Slogan of the Century” in 1999. Well played, Gerety, well played.
How diamonds are valued: It’s not just the size that matters
If only diamonds could be valued based on how much joy they bring. Unfortunately, we live in the real world and diamonds are measured by the four Cs: carat, cut, color and clarity. These factors are all fairly technical in nature, but can make a big difference in determining the value of your stone. Let’s break it down:
- Carat: This is the easiest to understand – it’s the weight of your diamond, with one carat equaling 0.2 grams – more carats = more dough. But don’t be fooled into thinking that bigger is always better. You can have a big old diamond that’s dull as a rock if the other factors aren’t right.
- Cut: This is where the magic happens. A well-cut diamond sparkles like a disco ball, while a poorly cut one looks like something you found in the back of a craft store. The cut is all about how the diamond’s facets reflect light and is the key to a diamond’s “wow” factor.
- Color: When it comes to diamonds, less color is more. A perfect diamond is colorless, while a diamond with a slight yellow tinge loses value. In this case, the whiter the better.
- Clarity: Diamonds are not as flawless as jewelry advertising would have you believe. Most diamonds have tiny imperfections called inclusions. Fewer inclusions mean higher value. It’s like looking for as little cat hair as possible on your black sweater – no one notices a little, but too much is hard to ignore.
You might think that more carats would always mean a higher value, but that’s not easy. Fancy shapes like princesses or pillows tend to be valued lower than the classic round cut because the round shape has the best glitter factor. And who doesn’t love glitter?
For reference, here’s how much a one-carat diamond can set you back based on its cut:
- Round cuts: $2,000 – $25,000
- Princess cuts: $2,000 – $10,000
- Pillow cuts: $1,700 – $17,000
As you can see, carat is only one piece of the puzzle, and a large, poorly cut diamond will not fetch the highest price.
Retail vs. Resale: A Diamond’s Expensive Identity Crisis
When it comes to diamonds, there is a huge gap between retail value and resale value. The price you pay at the jewelry store includes a hefty markup that covers everything from rent to overhead costs for that fancy velvet box you were gifted. And believe me, this velvet isn’t cheap. Jewelers typically use a keystone markup, which basically means they double the wholesale price of the diamond to cover their costs.
Even if your diamond seemed like a solid investment when you bought it, don’t expect to resell it for the same amount. It’s like buying a brand new car – as soon as you drive it off the lot (or, in this case, out of the store), the value begins to decline.
When trading diamonds, you need to keep three price points in mind:
- Purchase value: That’s what you paid at the jewelry store – probably with the great markup.
- Estimate: A professional appraiser will estimate the value of your diamond, but this may not reflect what you will receive on the resale market.
- Resale value: This is the real deal – what you get when you sell the diamond. Spoiler: Often it is only 25 to 50% of the original amount paid.
- Certification: Your Diamond’s Hall Pass for resale
Here’s a little insider tip: To get the best price when reselling your diamond, make sure it’s certified. Diamond certification is like a fancy certificate for your gemstone. It shows potential buyers that your diamond is a real bargain and lists all the important technical details – carat weight, cut, color, clarity, etc.
The Gemological Institute of America (GIA) is the gold standard for certification. However, there are also other reputable laboratories such as the AGS (American Gem Society) and the EGL (European Gemological Laboratory). Think of accreditation as your diamond’s hall pass; Without it, it becomes harder to convince people it’s worth the price.
Lab-Grown vs. Natural Diamonds: The New Kids on the Block
Once upon a time, diamonds were all about being rare and natural. Then lab-grown diamonds came onto the market that look exactly like the real thing (because they are chemically real) but cost much less. Think of them as the rebels of the diamond world.
Lab-grown diamonds are created in high-tech laboratories and possess the same physical properties as their natural counterparts. To the naked eye they are identical. But here’s where it gets tricky: When it comes to resale value, lab-grown diamonds don’t fare so well. While natural diamonds can retain up to 50% of their value, lab-grown diamonds tend to fetch close to zero when resold.
Although lab-grown diamonds are cheaper and more environmentally friendly, don’t expect to get much back if you ever part with your sparkler. It’s a bit like buying a brand new phone – you know it will lose value quickly, but at least you had fun while it worked.
Diamonds as an Investment: Should You Even Bother?
The short answer? Probably not. Of course, diamonds are pretty and make for great Instagram content, but they’re not the best investment if you’re looking to grow your wealth. Unlike stocks or real estate, diamonds do not pay dividends or interest. They just sit there, look pretty and don’t do much else.
The diamond market is subject to wild fluctuations and prices have fallen a whopping 18% since their peak in February 2022. So don’t expect to fund your retirement with diamonds unless you’re sitting on a rare, historic gem (such as the Hope Diamond).
What do you get for your diamond?
Now to the million dollar question: How much can you resell your diamond for? The answer, as always, is: it depends. Expect between 25% and 50% of the price you paid at retail. Loose diamonds perform better in the resale market because buyers are not interested in your setting style. Diamonds that are part of jewelry are more difficult to sell at a high price due to the additional elements (such as the setting) that may not appeal to all buyers.
Where to sell your diamond
When it’s time to part with your diamond, you have several options for selling:
- Jewelry stores: Some will buy back diamonds, but remember that they are in it for profit, so don’t expect a generous offer.
- OOnline marketplaces: Sites like eBay or dedicated diamond resale platforms allow you to sell directly to buyers. To get a good price here, you’ll probably need certification.
- Pawnshops: A quick way to sell, but you won’t get top dollar. Think of this as the fast food version of selling diamonds.
- Private buyers: If you find someone willing to buy directly from you, you may be able to negotiate a higher price. Just be careful of scams!
Final Thoughts: What We Learned About Diamonds and Their Value
So what’s the takeaway? Diamonds are beautiful, sparkling, and have incredible sentimental value, but they aren’t necessarily the best investment for resale. Unless you own a rare gemstone or a piece with historical significance, you can expect to sell your diamond for much less than you paid.
However, diamonds always have a certain magic. Whether on your finger or in a safe, they carry stories, memories and lots of sparkle.
Diamonds: Finally
Even though diamonds sparkle seductively, their financial value is not always so overwhelming. Whether you’re buying a diamond, selling it, or just admiring its beauty, it’s important to understand that a diamond’s value depends more on mood than investment. So treasure the memories they represent, but don’t rely on them to fund your future.
Further information on investments: