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In the 1950s, the Gemological Institute of America (GIA) created a standard, easy-to-understand system for communicating diamond quality. The Four Cs of diamond grading simplified an inherently complex subject. As a result, consumers could be comfortable they had enough knowledge to make an expensive purchase. However, the Four Cs system is a dramatic over-simplification. Most consumers assume that diamonds with the same carat weight and cut, clarity, and color grades are the same. Therefore, they then just shop for the lowest price. Unfortunately, it doesn’t work that way, especially when it comes to cut. Most consumers make critical mistakes in this area when buying online
The Risk of “Buying Off The Numbers”
For example, two diamonds can have an identical cut grade of Excellent. However, they can differ dramatically in how they handle light, which is what makes a diamond beautiful. Round diamonds of the same cut grade can have huge price variations, as much as 20-30%, based on their “make.” That means the overall quality and character of the cut. Yet, their certificates look identical. Distinguishing a great make from an average or above average make takes an expert, someone who truly understands diamond cutting and has examined thousands of diamonds. A lab report can’t capture the make, even if you know the optimal proportions and percentages for a specific cut and/or shape. In fact, in the trade, this is known as “buying off the numbers.” In my experience, consumers who buy off the numbers generally end up paying more than their less-educated counterparts for a diamond of comparable value. Due to overconfidence in their “research,” they pay for things that don’t matter or that they don’t truly understand.
The Numbers Don’t Always Add Value
Take another example. Consider a consumer who was convinced he got an “amazing” deal on a modified cushion. He bought it online for 20% cheaper than anything comparable. When an expert looked at the numbers on the GIA certificate, the “make” of the stone seemed fair, not excellent. The GIA certificate indicated that the girdle was “very thick.” (which makes a diamond difficult to set in a mounting). Second, based on the stone’s weight, 1.62 carats, the face-up size seemed small. The gem cutter had left at least 0.25 carats of weight in the girdle to preserve weight. Thus, the diamond weighed 1.62 cts “face-up” but looked and measured like a diamond around 1.30 cts. The cutter did that because there’s an inflection point in price above 1.50 cts. If he left the girdle thick, eventually, a consumer would pay more for that stone than for a better cut cushion of the same face-up size that weighed 1.35 cts. A dealer, betting on that fact, stocked the stone. He then sold it to a consumer at a “big discount” to comparable stones that he saw online. The consumer paid for 0.25 carats of weight that he literally couldn’t see. It adds no value to the face-up size of the stone. In fact, that weight negatively impacts the stone’s optical performance. It still got a cut grade of Excellent from GIA. This consumer ended up learning two very valuable lessons: a little bit of knowledge is a very dangerous thing, and Reason #2
Most consumers are convinced they can get a “better deal” or a “great deal” by buying online. While being value-oriented in everything you purchase is reasonable, for the most part, there really is no such thing as a great deal in diamonds. Online dealers buy diamonds from primary sources. Cutters will often rework older diamonds to maximize their value, usually on behalf of dealers or jewelers but sometimes on their own. Jewelers often buy diamonds “over the counter” from their customers. They make money by holding them for resale to other customers at a profit or simply flipping them. These people are in the business of buying diamonds. Generally, they don’t have any specific requirements. Their objective is to make money from the consumer when you’re looking to make a purchase. Why would they sell something of value to a consumer for less than they could get elsewhere in the marketplace? They won’t and they don’t. Keep in mind that the consumer’s objective differs qualitatively from a dealer’s objective in that they want to acquire a diamond for a specific purpose.
Dealers who buy diamonds to make money don’t buy online, it’s not reasonable to assume that a consumer should. We have been in the business for 30+ years and would not consider touching a diamond without seeing it and neither should the consumer Diamond Buying Recommendations What to do?
• Work with a jeweler you trust. You can find jewelers in your area from Jewelers of America (www.jewelers.org) that are trustworthy.
• Don’t focus on a “great deal.” Focus on value and, specifically, cut, which is the real driver of value.
• If a deal is too good to be true, it almost always is.