How much is a diamond worth per carat? Asked John
I would like to find out how much is a diamond worth per carat. Is there a general method to calculate prices for diamonds? Are there any existing lists or reports to assess the value of diamonds? I’m very fascinated of diamonds and plan to buy some for investment reasons. Please help me to gain more knowledge about this “dazzling” topic. Thank you, John
John from Springfield in Illinois
Hi John! My name is Tamay and today I will assist you with your concern. Diamonds and the pricing of diamonds in general, is a very complex issue. I will gladly share useful and interesting information about existing price lists and a guideline how to assess the value of diamonds at best. I’m glad that you have contacted us, we are more than happy to get into this topic with you. Also for investment strategies, diamonds are of course a lucrative option, but you can easily burn your fingers if you buy your investment diamonds for too much money.
reDollar appraiser, Tamay Rostan
John wants to know, how much is a diamond worth per carat
John: Thank you for your response Tamay. I have saved some money and I would really like to invest my savings in diamonds. I have the feeling that prices for diamonds are more stable than for gold, for example. During the past years I’ve invested in gold and it was a stressful war of nerves for me. I bought the gold when the price was above the average, which was a good point of time to enter and after I bought the gold, the price further increased but than a radical change followed. The price has fallen and the value of my savings too. After some months the price could recover but it still remains an ongoing up and down which makes me very nervous. That’s why I would like to expand my portfolio. When the price for gold drops, the price for diamonds must not drop automatically too. So I hope to get more flexibility with my new investment strategy.
Tamay: John, your point sounds absolute plausible to me. I know lots of stories from people who lost significantly amounts of money with their gold investments, but also lots of positive stories. It’s a delicate issue and always a matter of tactics and the point of time when you buy and when you sell. There is a motto that I really like and that hits the nail on the head, it says “the purchasing price only, makes the profit”. And it’s true. But beside a lucrative price, it also needs consolidated knowledge and experience to follow the market trend and to assess it. I fully agree with you that it’s wise to spread your savings in different mixed investments. Well-known economists and investment advisers also tend to (recommend) investment strategies like that. If one market drops, the profit of the other compensates the loss. To invest in diamonds is an interesting option but also here, you have to be very careful that you buy to adequate prices and to weighing up the associated risks. I will give you tips and information how the pricing of diamonds works. Please consider that I’m not an investment specialist, my profession are the diamonds itself, but not the trade of them.
John: Thank you for your honest words Tamay, I really appreciate that. I heard about a price list for diamonds. Do you know such a list?
Tamay: I’m pretty sure you mean the Rapaport diamond price list. The Rapaport Diamond Report is a pricing standard for diamonds. The jewelry industry, especially jewelers and diamond merchants use this report, which will be published weekly, to set prices for consumers. This report, in form of a table, indicates prices that are calculated on basis of the well-known 4 C’s of diamonds.
John: What are the 4 C’s?
Tamay: The 4 C’s are carat, clarity, cut and color. On basis of this four characteristics, the value of a diamond will be set. These characteristics also apply to the grading of diamonds. The Gemological Institute of America (GIA) has created the first, globally accepted standard for describing diamonds. GIA differs between the four quality characteristics of the cut, the carats, the color and the clarity of a diamond. This “assessing of quality” is a universal method to grade diamonds. On basis of this four C’s the Rapaport Diamond report will be created.
John: Wow that’s so interesting. I was not aware that a list like that is existing. But actually it makes quite sense because there are millions or billions of diamonds in circulation and it must exist a standardized method to assess this diamonds. Is this list considered as accurate?
Tamay: Yes it is. Every now and then the accuracy of the Rapaport report will be criticized or questioned but in general it can be said that it’s definitely a reliable source for diamond prices.
John: That sounds good. Can you give me an example Tamay? I would really like to find out how much is a diamond worth per carat?
Tamay: The Rapaport report orders the prices for 1 carat diamonds in a 1.00 carat – 1.49 carat scheme. We have ten color classifications. D, E, F, G, H, I, J, K, L and M. Beside the different color classifications, also the different clarity grades play an important role for the assessing process. According to the Rapaport report from 20/07/2014 the price for a 1 carat round diamond with a color grade D and a clarity of IF starts at $27,500. The Rapaport diamond report applies only to white diamonds, fancy colored diamonds can’t be assessed with help of this report. The same round 1 carat diamond with a color grade E and the same clarity of IF starts at a price of $19,000. A 2 carat-diamond with a color grade D and a clarity of IF starts at $101,800. So you see the big difference? A price per carat alone can impossibly be assessed, the other characteristics like color and clarity are always involved in the proper assessment process.
John: Yes of course, I can see the big difference. What is the starting price for a 1 carat round diamond with a color grade M and the poorest clarity grade?
Tamay: In that case the Rapaport report shows us a starting price of only $1,100. The lowest clarity grade is I3. That means diamonds with a GIA clarity grading of I3 have large and easy to see inclusions that impact the natural brilliance of the diamond. In comparison that, the clarity grade FL is the best. Diamonds with a clarity grade FL are flawless, that means they have no inclusions or blemishes which can be seen under a 10x magnification. The Rapaport report does not consider the clarity grade FL which is very rare, the Rapaport diamond report considers the clarity grades IF, VVS1, VVS2, VS1, VS2, SI1, SI2, I1, I2, and I3.
John: Alright, I understand. How can I get this report? And who is the inventor of this list?
Tamay: You can download the report for a reasonable fee. The founder of the Rapaport Diamond report is Mr. Martin Rapaport. He published the Rapaport report for the first time in the late 1970’s. Mr. Rapaport started his career in the diamond industry, like so many others, in Antwerp, Belgium. Well, I’m a great supporter of this diamond report but there are also voices in the industry who argue that the published prices do not reflect the real market value of diamonds. In my opinion it’s a great price indicator and in certain cases the prices can be adjusted on basis of other characteristics.
John: Thank you for the information Tamay. Now I have a better understanding for the assessment of diamonds and it’s much more complex than I thought before. Do I have other possibilities to assess the price of a diamond, apart from the Rapaport report?
Tamay: There are not really many other possibilities. What I can recommend is to look for comparative values in archives of past auctions, on eBay, or other sources on the internet. But for people who are not well connected in the diamond industry, the Rapaport report is a really good and recommendable source for assessing the value of diamonds.
John: Thank you for your professional counseling Tamay. I could learn a lot today, I’m very thankful for that. Now I know how much is a diamond worth per carat.