Market Conditions

The world has many diamond mines. The world also has laboratories creating gem-quality diamonds. Realistically, supply is very high, and the addition of a few more laboratories or a new diamond mine should not impact the diamond ring prices. Additionally few people realize that the diamond market is not a ‘perfect market’ like that for stocks and bonds—it is a near monopoly that for more than a century has been controlled by the Oppenheimer family through their majority stake in the DeBeers holding company. Today the Oppenheimer family shares majority ownership with a global mining conglomerate Anglo American. Founded in 1888, DeBeers managed to gain a monopolistic position in the world’s rough diamond markets in the 1930’s by tightly controlling the supply of rough stones to the diamond market. They achieved this through ownership of or strict partnerships with all the largest diamond mines in Africa (primarily Botswana, Africa’s largest diamond producer) and, at some point, with Russia.

Even if there were a sudden spike in the number of engagements requiring diamond rings, the demand would not likely impact diamond ring prices in the open market. Realistically, couples get divorces. Others pass away. Some inheritors of diamond rings return them to the market, selling them to jewelers or whoever makes a decent offer.

The only possible shock to market conditions that would significantly impact diamond ring prices would be either a huge anti-diamond ring movement or a major breakup of the DeBeers monopoly on rough diamonds supply. DeBeers monopoly has been gradually diluted over the last two decades as Russia’s Alrosa, a giant diamonds producer based in Siberia, has been largely refusing to play by DeBeers’ rules. However, Alrosa has also learned that dumping stones into the market is not in its own interests. So, it started pricing diamonds at or close to DeBeers’ own prices, which effectively established a duopoly in the market when both players divided the market share and managed to keep the diamond prices largely intact.

However, market conditions do have an impact on the price of metal used for the ring setting. Gold, platinum, and palladium all cost money. The amount of metal used in a ring setting is a factor in the diamond ring price overall. Often an increase in ring size, for some sellers, will include an additional cost to cover the extra bit of needed metal.

To estimate the value of the setting’s metal, find out its exact weight, and then look up the current market price for that particular metal. If you don’t know the exact metal type, look inside the ring band for a stamp describing the setting’s metal. A stamp such as “10 K,” “14K,” “18K,” “585,” “750,” “900,” “950,” “PT,” and “Plat” describe the metal used.

Setting Style (Craftsmanship)

There are many different diamond ring setting styles, and there is an infinite number of individual embellishments that can create the diamond ring’s style. The more time the jeweler needs to craft the setting, the higher the labor-related portion of the cost should be. A ring that requires unusual skill to craft or will take longer due to intricacy will naturally cost more than a diamond ring set in a standard setting.

Conception

Diamonds have been dug out of the ground for centuries. Diamonds have been grown in laboratories for industrial purposes for mere decades. As laboratories perfected their techniques, they were able to produce gem-quality stones, diamonds impossible to differentiate from natural diamonds without sophisticated testing.

Most jewelers can’t tell the difference—until they look for the brand name inscribed on the diamond girdle or read a brand name on associated packaging. There are a few indicators, though. Natural diamonds are more likely to have internal flaws. Fancy color diamonds—very rare in nature—are more likely to have been cultured in laboratories. Nonetheless, both natural and man-made diamonds can be certified by major gemological laboratories and are held to identical standards. There is, however, one large differentiating factor: price. Natural diamonds command a price premium over “man-made,” “laboratory grown,” “cultured” diamonds. So, if you have your heart set on a diamond pulled from the dirt in a diamond mine, expect to pay more for it.

Certification

Diamonds can be sold with or without certificates authenticating their 4Cs. Diamonds without certificates should cost less than their certified counterparts. For example, one popular jewelry retailer sells a round, one-carat solitaire diamond in a 14-karat white gold ring for $3,100. The same jeweler sells a ring with the same description, plus the word “certified” for $4,800. Both diamonds are I-color, I1-clarity, one-carat, round. So, they may be exactly the same diamonds, except one is certified.

There are many sources of certifications, from world-known gemological institutes to jewelry store in-house gemologists. Diamonds certified by well-known laboratories such as GIA and AGS carry a premium, so they will naturally cost a little more than diamonds certified elsewhere. If you are certain the diamond’s qualities are being accurately represented, you can always send the diamond for certification after its purchase, usually for much less than the price difference between certified and uncertified diamonds.

Transparency (Cloudiness)

Colorless, transparent diamonds are valued more highly than white, milky, or cloudy diamonds. However, transparency is not specifically graded during certification.

To test for transparency, view the diamond from several directions, including the sides, to judge whether you can see through the diamond like you would through a clear glass of water.

Transparency is often confused with clarity. Clarity describes inclusions and surface blemishes; a white cloud is one type of inclusion that can impact clarity grade. However, some diamonds are white or cloudy throughout. These non-transparent diamonds will not have the same sparkle as transparent diamonds; at one time they were considered industrial grade, not worthy of cutting into gemstones.

Transparency is sometimes confused with color. When a dealer requests certification for a cloudy diamond, he can ask that clarity grade not be included. The resulting evaluation may determine the diamond is “fancy white” in color.

Beauty is in the eye of the beholder. If you want a white diamond, buy a non-transparent diamond. It may be the perfect piece in your diamond ring’s design. And it may help lower the overall diamond ring price.

Shape (Cut Design)

All diamond shapes are not created equally. Some require larger rough diamonds from the start. Others waste more rough diamond than their peers. And some require jewelers with higher levels of expertise.

Round cuts, which remove more of the rough diamond than most other cuts, are more expensive to produce. By comparison, an emerald cut diamond with similar grades in carat weight, color, clarity, and cut, may cost 30% less than its round cut counterpart.

However, since over 75% of the diamonds sold are round cuts, if the diamond ring may ever need to be resold, it should be easier to resell if the stone is a round cut.

What is a Blood Diamond?

A “blood diamond” (also known as conflict diamond, war diamond, dirty diamond, hot diamond, or converted diamond) is mined or produced in unethical conditions, including in war zones to finance insurgencies.

In 2003, the UN-backed Kimberley Process began requiring participating countries to certify that their exported diamonds were conflict-free. According to the World Diamond Council, this program has been very successful, with 99% of the world’s diamond supply certified as conflict-free. Some other estimates are not as optimistic, but the Kimberly Process does seem to work—the amount of blood diamonds in the market is estimated to have dropped from 15% before the Kimberly Process was introduced to less than 5% today.

Some retailers also offer “conflict neutral” diamonds. The retailer or the consumer makes a donation to a relevant charity, with the expectation that the good works promoted by that donation help balance against the negative works in the diamond industry.

An alternative to purchasing a new diamond is to “recycle” a diamond—purchase or be gifted someone else’s older diamond. While there is always the chance that the diamond was originally mined as a blood diamond, at least reusing it does not add to the funding of recent conflicts. A reused family stone carries the additional bonus of sentimental value.