Diamonds’ value is purely arbitrary, but it is their worldwide appeal that keeps them in great demand year after year. Diamonds have long been recognised as one of the original forms of payment, with thousands of years of history behind them. In our twenty-first-century society, it is now recognised as the worldwide symbol of love, wealth, and success. Diamonds are incredibly costly due to their rarity, especially when mixed with their beauty. Even in the lowest grades, a diamond of outstanding beauty can be found. There are numerous additional crucial factors that determine the diamond’s value, in addition to its colour, clarity, and size.
It’s crucial to remember that not all diamonds are equal in value. Over 90% of all naturally occurring diamonds contain defects that prevent them from being used in jewellery. These diamonds are incredibly inexpensive, despite their vast range of industrial applications. Once you’ve settled on a high-priced ring, the majority of mined diamonds aren’t ideal for it. As a result, diamonds can only be used in a tiny number of items of jewellery and are thus exceedingly valuable.
To obtain colourless diamonds, you must choose diamonds of the proper shape and grade. As you may have observed, many diamonds have a yellowish colour. The more colourless and clear a diamond is, the more valuable it is. It’s critical to be as transparent as possible when it comes to pricing. Even though the diamond is colourless, a black line or other evident flaws can increase the value of a colourless diamond. Finding a diamond that is entirely colourless and devoid of any defects is extremely rare and challenging.
Despite the fact that diamonds’ value is wholly arbitrary, their global appeal assures that they will always be in great demand. Diamonds have been regarded as one of the earliest forms of payment since antiquity. In the twenty-first century, it is connected with love, money, and success. Due to their rarity and aesthetic worth, diamonds are extremely valuable. Diamonds of all grades, even the lower ones, have stunning beauty. A diamond’s value is determined by a number of criteria, including its colour, clarity, and size.
What is it about diamonds that makes them so valuable in terms of price?
The Price Is Affected by the Grade
The GIA has been tasked with grading the massive diamond horde that was financed with so much cash. A one-carat diamond now costs $120 extra, plus there’s a two-week waiting period. The grading report, on the other hand, is the most crucial aspect in establishing the diamond’s value. You’re still competing with everyone else who has a G colour, VS2 clarity, superb cut grade diamond, even if you spend more on finance, raw materials, sorting, and cutting. Diamond specialists can more effectively define the quality of diamonds by using grades. They, on the other hand, make the sector extremely competitive. Diamond markups have been decreased by dealers and merchants in recent years. Because there is less markup in the system, diamonds are travelling throughout the world at a faster rate than ever before.
Sorting and cutting are demanding tasks
Due to the high cost and poor returns of diamond rough, sorting and grading each piece is incredibly challenging. A team of specialists must thoroughly evaluate an item to determine its worth. Each piece of rough has a monetary value, and the cutters must figure out how to maximise it. Will cutting a single large round result in a higher carat pricing but at the expense of more rough? With two smaller pears, you get a lower selling price and less waste. Which choice is the most profitable for you? Even with sophisticated equipment like the Sarin, which offers exact measurements and three-dimensional pictures, it’s still challenging to perform these calculations.
There is a scarcity of rough diamonds
Don’t you believe you’ve made it after moving tonnes of rock and uncovering that one glittering carat of a rough diamond? Wrong. Rough diamonds often provide 30% of the finished product. The one-third carat of raw diamond may produce the same weight as the polished stone. Makeable, sawable, near gem or cleavage rough, an industrial-grade diamond rough are the four varieties of diamond raw. The sort of rough determines the yield, which is defined by whether it is formed able, sawable, near gem, or cleavage. When rare octahedral crystals are cut into two princess cuts, the yield might exceed 70%. This is why it costs less than round brilliant diamonds.) “However, the majority of the carats of gem-quality diamonds are polished away like dust during the cutting process.
Diamonds attract people from all over the world
Now that De Beers only produces half of the world’s diamonds, consumer marketing to assist increase demand for diamonds is no longer necessary. A whole new generation of clients has never seen generic diamond commercials. Despite this, diamonds continue to pique the imagination of people all over the world. Developing countries such as China and India are fast increasing, in contrast to the traditional markets of the United States and Europe, where most diamonds were traded. As these markets become more prosperous, demand for diamonds will continue to rise.
Even if sales are growing, a company might go out of business due to a single blunder or a shortage of funds. Despite the fact that sales are growing, the diamond industry is falling and consolidating. There are fewer merchants, manufacturers, diamond wholesalers, and raw dealers in the aftermath of the recession. The output of diamonds is decreasing as mines are depleted.
Diamond prices rise as a result of inventory financing
Miners require a large sum of money in order to develop their operations. To keep their cutting operations running, cutters require millions of dollars in raw materials. Jewellers need diamonds and gold to make their masterpieces. Retailers also require product storage in cases as they await customer purchases (and often require the vendor to provide these goods on consignment.) Every stage of the diamond pipeline necessitates a significant investment.
Banks are hesitant to lend money to the diamond industry because they lack the expertise to value the collateral. Financing is a significant issue in the business, and it’s getting more expensive by the day. This is true in any sector, of course. The diamond industry, on the other hand, has the most costly raw materials of any. This payment arrangement, it’s similar to taking out a weekly mortgage. The interest continues to rise.