Important Information

KNOW YOUR DIAMONDS – INVEST WISELY- MAKE MONEY

by

Robert L. Fielding

1. Investing in gems

Diamonds are forever, they are a girl’s best friend, and they are precious.  But the terms ‘precious’ and ‘semi-precious’ have little meaning in reality.  ‘Investment grade’ is a better guide to the value of gems.  It may surprise you to know that ‘precious’ gemstones are not as good an investment as ‘semi-precious’ stones; they often appreciate in value more and are easier to ‘liquidate’ – sell, to me and you.

You can make money investing in gemstones, but you need to know what you are about – don’t expect to buy from retailers and increase your investment in a short time.

‘Primary’ dealers offer the best prices – they mine and cut the stones

‘Secondary’ dealers buy from wholesalers and ‘primary’ dealers and sell to retail outlets – still well below retail prices.

You can find ‘pre-owned’ gems at flea markets, pawn shops and estate sales, but again you have to know what you are looking for and what you find.

Look on the Internet, and in trade magazines for listings of dealers.

Beware!  Low priced gems get a higher price markup than expensive gems – up to three to five times higher.

Cut gemstones are not the only things to look at – rough gems, mineral specimens and finished jewelry also have potential for investors.

Selling your gemstones is the next step – realizing their value in places like jewelry stores, auction houses and online auctions.

The greater the difference between wholesale and retail, the more chance you have of making a profit – but everything is relative – you would surely accept 10% profit on a $40, 000 stone, but might not be prepared to accept that on a more modestly priced item.

A lapidary can turn low value into high – buy rough and allow enough markup to justify the work you put in.

Gem cutters can up the price of your gemstone – if you do your homework, this is one of the best ways of adding value to your gemstones.

1. Diamond buyer’s guide

The 4 Cs – Clarity, Colour, Cut, Carat and of course, Cost, are the main considerations when buying diamonds.

Clarity
Diamonds invariably contain ‘inclusions’ – natural identifying blemishes, known as nature’s ‘birthmarks’ or ‘fingerprints’.  The greater clarity - fewer inclusions, the more valuable the diamond.

Inclusions that are visible to the naked eye affect the flow of light through the diamond – sparkle can be lost.

Diamonds with inclusions visible to the naked eye are graded 11-12 – those with small inclusions are graded S11-S12, and those with very small inclusions are graded as V11-V12, or smaller still, VV11-VV12.

Rare diamonds with no inclusions are ‘flawless’ (FL) or internally flawless (IF)

Colour
Diamonds seem colourless, but many have faint colouring – the more colourless the diamond, the more valuable it is.

Set in gold, warmer colours are better, in white gold, silver or platinum, white or near colourless diamonds look gorgeous.

Carat
Gem weight was once done using the weight of a carob seed – hence the term, ‘carat’.

One carat weighs one fifth of a gram, and a carat is divided into 100 points – a .33 carat diamond is the same weight as a 33 point diamond.

The larger the carat, the more valuable the diamond, but two diamonds of the same weight can have differing values because of their Cut, Clarity and Colour.

Cut
The word ‘cut’ refers to the physical shape of the diamond, to the angles and the proportions a craftsman creates to release sparkle and fire from within the diamond.

A diamond’s cut allows light to be dispersed and reflected from one facet to another.  Well cut diamonds allow the greatest amount of fire and sparkle to be reflected from one facet to another, and of course, this will increase the value of the diamond.

A well cut diamond is more valuable than other diamonds of the same colour, clarity and weight.

Cost
The cost to you, the buyer, will increase because of any one of these (Colour, Clarity, Cut), but what is beautiful is really a matter of taste – but value is a function of the three, plus its setting, which must also enhance the diamond’s qualities.

1. Choosing a diamond

Diamonds are graded into many categories, which can be a source of confusion for the uninitiated, but are generally graded on the ‘4 Cs’ – colour, clarity, cut and carat.

Colours D, E, and F designate the highest grades – colourless
             G, H, I, and J are next down – ‘near colourless’ or ‘white’.
             K to Z are tinted – ‘yellow’ or ‘yellowish’
             K, L, and M are “set white” – they will appear white if set in gold.

Along the alphabet, tinting gets stronger and value lower, until you reach extreme colouring – a ‘fancy coloured’ diamond – the price of these goes up again.

Colour grading is simply a matter of comparing diamonds’ colours and seeing which is closest.  This is relatively expensive though.

More commonly, batches of similarly coloured diamonds are grouped together as GH or IJ – the diamonds are in those ranges.

If you have a verty expensive diamond, you could have it graded (grading can cost over $100), but this is not cost effective for the majority of diamonds.

Clarity is determined by size and number of inclusions in it.
Clarity grades use the letters V, S, and I (Very, Small, and Inclusion)

Flawless diamonds are graded: VVSI1 (Very, Very Small Inclusion One) through VVSI2, VSI1, VSI2, and SI1 and SI2.

Down the scale, there are: I1 and I2 – ‘eye’ visible inclusions but still gem grade diamonds.

Grades P1 and P2 are not usually considered gem grade because of the fact that little light passes through them.

Caveat emptor. “1 carat diamond rings costing $299 – may not be a gem but an industrial grade of diamond.  

Cut can be a hard property to judge.  Watch out for:-

• Brilliance of the gem


• Terms – “Single Cut” or “Old Mine Cut” (These may only have 17 facets – a brilliant diamond has 57!)


• Shape of the gem (ideally symmetrical, not lop-sided)


• The girdle of the gem is the widest part seen from the top and the thinnest viewed from the side (if cut too thin, it will have a weak area that may give trouble later)


• If two diamonds are the same grade, but one is brighter than the other, the cut is different.

Carat is the easiest to fathom – smaller diamonds are commoner than larger ones – smaller ones cost less.

Robert L. Fielding