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Newbie With Diamonds.. Please Help Me!


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Hi everyone! My fiance is letting me pick out a ring, and I decided to order the stone separately and get a ring in a shop. I have several questions so please bear with me.. any advice is appreciated:

 

I have several friends in the diamond industry, and can get connected to wholesalers. Problem is, everyone is telling me something different! I just sort of want to throw my hands up and order from Blue Nile already.

 

Some friends are saying to never get an SI clarity because it will be difficult to re-sell or upgrade later on, is that true? (They own jewelry stores and say that they would not buy an SI stone, but is that true for all jewelry business?)

 

Is there a difference (to a common person's eye) between the cuts Ideal and Very Good? What about the Polish and Symmetry-- is there a difference between Excellent and Very Good?

 

 

My budget is $15k for the stone and I would like to know if it's possible to get a 2.1 or 2.2 carat round cut that would not be difficult to upgrade later.

 

 

Also, can anyone give their opinion on whether the pricing of this diamond is fair?

$15,040, 2.14 carat, ideal cut, VS2, Excellent polish, excellent symmetry, L/W ratio 1.01, GIA certified, depth% 61.5, table% 59.0

 

 

Thank you everyone!!

Edited by morepugs
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Hello, I am also in the same situation as you. But based on what I've seen, I think the price appears to be on the low side. Please check on the fluorescence of the diamond... it should be none.

 

I also have a question on .. is it really that big of a difference between excellent cut and very good cut. Someone out there, please advise!

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Welcome to the forum. Several confusing things here but I’ll try to do some unraveling. I agree, the dealers tend to make it more confusing than it needs to be.

 

I have several friends in the diamond industry, and can get connected to wholesalers.

Watch out for ‘wholesalers’. They’re starting out standing on a lie. If they’ll sell it to you, they’re a retailer. There’s nothing wrong with this, and there’s nothing wrong with a store that does both wholesale and retail business but it has no affect on the deal at hand. Misleading claims about this are so common that I wouldn’t call this claim a deal killer by itself but it’s a bad sign. If they really were distributing through stores then they’re having a price war with their own customers on their own products, which is just dumb. If they aren’t distributing through stores, what the heck do they mean by ‘wholesaler’? Make each deal stand on it’s own merits. Just because they say it’s ‘wholesale’ doesn’t make it any better a deal.

 

Some friends are saying to never get an SI clarity because it will be difficult to re-sell or upgrade later on, is that true? (They own jewelry stores and say that they would not buy an SI stone, but is that true for all jewelry business?)

Reselling diamonds is pretty hard anyway. Buy what you like and don’t go into this deal expecting to ever see your money again. Trade-in programs have at least as much to do with the dealer as the diamond. They will agree that if you buy a stone from them (or a stone from some limited selection), they will take it back in the future as payment against something else. If you think you might want to do this, it can be a pretty handy thing but carefully read the fine print. Sometimes there are zingers and, obviously, this will require you to go back to the same store again. If it’s not a sufficiently good the deal the first time, it’s unlikely it’ll be any better the second.

 

The reason people buy SI and I grades is because they're less expensive than the VS and VVS alternatives and they count it as an acceptable tradeoff. It results in a bigger stone, more money left over in the bank or both. Only you can decide what works best for you. If you're going to take a 40% hit on your theoretical resale (this is not out of the question), that makes it 40% of a much smaller number. Put another way, buying a stone for $20k and selling it for $14k is a $6k loss. Buying a similar but lower grade stone for $10k and selling it for $5k is a smaller loss, even though the percentage discount is greater.

 

By the way, why aren’t you buying from your friends? The #1 issue in hiring a jeweler is to get someone you trust and starting out with someone you call a friend seems like a good plan.

 

Is there a difference (to a common person's eye) between the cuts Ideal and Very Good?

Yes.

 

What about the Polish and Symmetry-- is there a difference between Excellent and Very Good?

No. It’s worth noting that, on the AGS scale, a stone cannot get an ‘ideal’ cit grade unless the polish and symmetry are both ideal. GIA doesn’t give this grade at all but their top cut grade of ‘excellent’ requires that both be at least VG.

 

My budget is $15k for the stone and I would like to know if it's possible to get a 2.1 or 2.2 carat round cut that would not be difficult to upgrade later.

See the comment above about upgrading. It depends on the dealer. The best upgrade policies tend not to be with the cheapest dealers. ‘Wholesalers’ rarely do it at all. Without a dealer program or without taking a significant financial hit, upgrading is going to be difficult later anyway.

 

Also, can anyone give their opinion on whether the pricing of this diamond is fair?

$15,040, 2.14 carat, ideal cut, VS2, Excellent polish, excellent symmetry, L/W ratio 1.01, GIA certified, depth% 61.5, table% 59.0

Ideal cut is not a GIA grade. This calls into question who graded it and without knowing who graded it you have no way of even taking a stab at whether the price is appropriate for your market. Get the color and then enter the data into the database at the top of the page titled ‘find online jeweler’. This will get you a stack of competitive offers from some pretty price aggressive folks. Shop around, find comparable offers from competitors. Pricing is actually one of the easiest parts of this whole process.

 

Thank you everyone!!

You’re welcome. Good luck with your shopping.

 

Neil

Edited by denverappraiser
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Hello, I am also in the same situation as you. But based on what I've seen, I think the price appears to be on the low side. Please check on the fluorescence of the diamond... it should be none.

 

I also have a question on .. is it really that big of a difference between excellent cut and very good cut. Someone out there, please advise!

The GIA cut scale on round brilliant diamonds goes like this:

 

Excellent

Very Good

Good

Fair

Poor

 

It was derived from a study where they showed a few hundred stones to a few hundred people in some fairly standardized environments and asked them to force rank them in order of cutting. They then mathematically figured what were the popular cut attributes among their group and split them into the above 5 categories. A stone that is most similar to the most popular ones will get an excellent and a stone that is most similar to the unpopular ones will get a poor, etc.

 

In reality, poor doesn’t exist and fair just barely does. No cutter with any sense would send such a stone to GIA for grading because the grading would be the kiss of death at sales time. This makes the scale realistically only 3 grades, two of which you’re asking about. Not everyone agrees with the scale and their whole methodology (I don’t for example) but if you’re going to go with the program, go with an excellent. If you’re not going to go with the program, be aware of your alternatives. Although I don’t especially like the GIA approach to cut, there are even worse alternatives. I like the current AGS approach. I’m ok with Gemex. There are lots of other scales used by dealers and some of the other labs that don’t make sense to me at all. They might as well be rolling dice. 'Ideal', in particular is a word that gets incredibly abused and you should ask what scale is being used every time you see or hear the word. If you don't understand it, ignore the grade.

 

What don't you like about fluorescence?

 

Neil

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Neil,

 

Thank you for your insightful reply. I really appreciate it and will take it into consideration when I make my decision.

 

The above example (for the 15k, ideal cut, GIA certified etc) was taken from Blue Nile. They have a lot of diamonds that claim to be GIA certified that are "ideal" cut, so I'm going to look further into that as to why they would post those details.. (?)

 

I am considering going to the local jewelry shop (it is local but it is a pretty large brand.. they have 5 stores in the area) because they guarantee that they will buy it back/upgrade at a 10% loss. I don't mind going back to the same shop... because if I just want to upgrade my diamond size, it would just be a matter of them to find my requirements from a wholesaler, right?

 

Anyways, I know that buying a diamond will take a big hit when reselling, if it does resell at all. But at that price, I want to feel like it has at least SOME value so it's not completely worthless while sitting on my finger.

 

Again, thank you so much ;)

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Blue Nile uses their own definition of ideal. They use an assortment of labs depending on the situation and what they think will work out best for them and it seems to boil down to choosing the best thing that at least somebody called it and then naming that ideal. In the case of GIA graded stones, they seem to think it’s interchangeable with ‘excellent’ but, by all means, call them up and ask them to explain what they mean by their terms. If you can make sense of the rules, let us know.

 

A buyback offer at 90% of cost is very reasonable, generous even. A tradeup offer, where you have to buy something else in the store is still pretty good if there aren't too many strings attached and if the original prices are ok. If you have to buy something that's at least twice the price or some similar thing, I'm not impressed. Then again, I'm not all that easy to impress. ;)

 

Neil

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Neil,

I have nothing but respect for your knowledge and integrity in this business. But I beg to disagree with your remark about trade up policies that require the buyer to spend double.

 

If you look on the database lists on this site, I believe we are the only sellers that offer any sort of trade up at all.Even though they do need to spend double . No matter how you look at we are buying back our own merchandise.

For my money, that's pretty impressive.

 

I look at it this way. There is a cost to doing business. It's kind of like insurance. If you buy too much, you might be very safe, but you will go out of business.

Trade up policies cost a lot of money... but the value in return is also great.

 

In my way of thinking offering this sort of service is very valuable. By restricting it so that people have to spend double to get us to buy back their diamond at full price, it allows us to give everyone a better price.

 

Hats off to those who have a 90% policy or any policy at all, because they are so very rare.

Edited by diamondsbylauren
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Neil,

 

Thank you for your insightful reply. I really appreciate it and will take it into consideration when I make my decision.

 

The above example (for the 15k, ideal cut, GIA certified etc) was taken from Blue Nile. They have a lot of diamonds that claim to be GIA certified that are "ideal" cut, so I'm going to look further into that as to why they would post those details.. (?)

 

I am considering going to the local jewelry shop (it is local but it is a pretty large brand.. they have 5 stores in the area) because they guarantee that they will buy it back/upgrade at a 10% loss. I don't mind going back to the same shop... because if I just want to upgrade my diamond size, it would just be a matter of them to find my requirements from a wholesaler, right?

 

Anyways, I know that buying a diamond will take a big hit when reselling, if it does resell at all. But at that price, I want to feel like it has at least SOME value so it's not completely worthless while sitting on my finger.

 

Again, thank you so much ;)

 

By the way, I agree, Neil's replies are insightful.

In terms of a chain jeweler offering buyback policy, it's likely going to cost quite a bit.

 

There's nothing wrong with buying an SI clarity diamond. As his been discussed here, you're not buying this as a financial investment.

 

I am also an advocate of buying the ring from the same place that you'd buy the diamond from. That is, unless you already pick something out from a particular store, and know what you want to get.

Of course, a place you will be comfortable handing over your new $15,000 diamond to.

That's a big reason why I think it's better to get everything all together. You only have to trust one company.

Good luck, and please keep us posted!

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Like many appraisers, I’m a recovering retailer and I spent many years on the other side of the counter. Spend twice as much the second time was my trade in policy and I’m certainly familiar with the issues and why a retailer would choose that and it's not an unreasonable offer. I regularly advise dealers to make this exact offer. The math just doesn’t work very well from a consumer side except in very rare circumstances.

 

Let’s look at a hypothetical situation with two stones. Stone A and Stone B.

(I made a nifty table in excel with this but there seems to be no way to post a table to the forum. Sorry for the difficult format)

 

2008 Cost at ‘discount’ Internet store / Cost at the store with tradein policy (25% premium) / Resale value(50% of discounter)

Stone A 8000 10000 4000

Stone B 12000 15000 6000

 

2013 Cost at ‘discount’ Internet store / Cost at the store. Resale value

Stone A 12000 15000 6000

Stone B 18000 22500 9000

 

I just made up the numbers and there’s some key assumptions. I’m assuming a 50% inflation rate in 5 years, I’m also assuming a 25% premium for the store and a 50% haircut on the resale. All the ratios are the same for both stones and at both stores.

 

Customer #1 buys stone A from the discount store in 2008. In 2013 he sells it for $6k and buys stone B for $18k. He lost $2000 on the first deal although he got use of the stone for 5 years while he saved up some more money and his total outlay for diamonds is $20,000.00 to date.

 

Customer #2 buys stone A from the tradein jeweler for $10k and 5 years later trades it in with an extra $12500 to end up with stone B. He’s out a total of $22500. If he decides to opt out of the program, sell the stone on the open market for the $6k and buy from the discounter the second time he’ll be spending a total of $22,000, roughly the same and markedly more than they guy who ignored the whole tradein thing in the first place.

 

Tweak these numbers however you like and pretty much the only scenarios where they start to make sense is when the ‘premium’ associated with the tradein is low, when the appreciation of diamonds is low (or negative) or when the differential between the cost at the discounter and resale is even worse than I’ve put it. If the premium is higher than this, the inflation is more, or the resale potential is better, the numbers get much worse.

 

For the last decade or two, a 10% appreciation rate assumption has shown to be reasonable if actually a little low. Who knows where it will be in the future but historically diamonds have gone up in price fairly continuously and I see no reason to expect this to change. 2007 was quite a bit more than that and 2008 is well on track to do even more. Obviously the 5 year figure is completely arbitrary. At the same time, a 25% premium for most branded stores is fairly low and a resale value at 50% of what the discounters are charging is definitely on the low side, at least for diamonds.

 

There may very well be other reasons to buy from a particular store and why they may be worth their price. I’m a big fan of the value-added that comes from a good jeweler and I think they deserve their money but this one doesn’t impress me. It’s not that it’s a bad thing, it’s just not terribly valuable in most situations.

 

Neil

Edited by denverappraiser
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Interesting hypothesis Neil, however, it's completely slanted against the benefits of this policy.

Sure, it would be a dream for us if every client waited five years, and traded up a diamond that had gone up in value so much. But that's just not the reality.

 

 

Let's take a lok at some examples that would be completely different than your hypothesis

*) Someone who buys a ring, and trades it in six months after purchase.

*) Someone who buys a diamond which is a slower moving item, then trades up to a super desirable stone.

*) A person buying a pair of 1.00tw earrings , who has a windfall the next year ( or month) and decides to move up to a 2.00tw pair.

 

Even IF the majority of trade ups involved your "dream scenario" where the seller buys back 5 year old G/VS1's to trade to K/I1's today..... it seems that so few sellers have the confidence in their merchandise to make ANY such guarantee.

 

Rather than make assumptions, we have real figures, because we offer the policy.

Many people take advantage of it after a much shorter period of time than 5 years. Many people trade from lesser stones, to more salable , and desirable ones.

In many cases we even accpet the ring back as well as the diamond.

 

It requires a HUGE commitment to our own clients and merchandise for us to offer this policy, but the advantages to the consumer are very real.

 

I can tell you from personal experience that MANY people find ways to use it to their advantage.

 

 

 

Remember, we,re not "recovering retailers", rather we're still successful at what we're doing... our trade up policy has been in place for about eight years, and has been appreciated by many people.

In fact many hundreds of people have taken advantage of the policy we offer.

This compared to the competion's offer which is....well, nothing.

 

I'm still very proud of our policy.

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I would not describe myself as having been unsuccessful at it, I’m just retired. They're still there and they’re still prospering. I don’t know how popular the tradein program is now but we had remarkably few takers when I was involved and, when we did get them in, it tended to be at about that 5 year mark. Maybe this has to do with the region of the country or with the fact that you’re primarily an Internet firm and we were definitely brick and mortar. I made no comment at all about the relative desirability of the respective stones but, presumably, the one at twice the price is better in at least some way, possibly many. By the way, most tradein offers don’t apply to worn jewelry, just to diamonds, and often only to a limited selection of those. It's unusual to take back the mountings. Is the program available on everything you sell?

 

Reducing the time and therefore the price inflation actually skews the numbers the other direction but increasing the frequency of selling/trading increases the transaction costs for the reseller so it’s sort of a wash. I suspect that in your case the ‘premium’ for shopping with you vs. your competitors is way less than my postulated 25% and may actually be negative (meaning that people choose to shop with you for reasons that are entirely unrelated to the tradeup policy). Reducing this spread makes it considerably more attractive. If the price is the same, there’s no downside at all.

 

I’ve no clue what the policies of the other advertisers here are like but I’ll take your word for it that you’ve looked into it and that they don’t include a program like this. Until this discussion I didn't know yours.

 

Neil

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Just caught a bit of this discussion about trade in policy, will try and read through it later. Not an advertiser here yet, but have had the same trade in policy for about 23 years. Ours is a 100% lifetime upgrade on one of our center diamonds. We do not have any double the purchase restrictions. We have had many clients use this and they usually go up in size a bit anyway. ;)

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Just caught a bit of this discussion about trade in policy, will try and read through it later. Not an advertiser here yet, but have had the same trade in policy for about 23 years. Ours is a 100% lifetime upgrade on one of our center diamonds. We do not have any double the purchase restrictions. We have had many clients use this and they usually go up in size a bit anyway. ;)

 

Bradley,

 

If you had to guess on some statistics, what percentage of your customers ever take you up on it and, on average, how long does it take for the ones that do to come back and trade in? Do you see a lot at less than, say, a year or more than, say, 10 years?

 

Neil

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Neil, I never meant to say you were unsuccessful. I've been buying and selling diamonds pretty much my whole adult life... AS a business owner, I really couldn't conceive of retiring, as long as we continue to sell diamonds.

I know that you enjoy a great deal of well-deserved success in what you do now.

 

Reducing the time and therefore the price inflation actually skews the numbers the other direction but increasing the frequency of selling/trading increases the transaction costs for the reseller so it’s sort of a wash.
It's not a wash at all. When people trade up in a short period of time, there is a great cost to the seller involved.

 

 

I have always attempted to operate this business in a manner I would find pleasing if I was a client.

Here's what I would look for in a trade up program:

1) A competitive price at the outset purchase. I don't want to have to pay for a trade up, when I buy the thing.

 

Somehow we manage to keep very competitive in our pricing and still offer the trade up policy

 

2) A large selection of items to pick from on my initial purchase, as well as a large selection to trade up to

 

We try to keep a pretty large selection on hand. For example, our site cutrrently features 83 available Three Diamond Rings- ranging from $1,150-$40,000.

AMong a whole bunch of other stuff, we've got over 40 halo, or micro-set rings. 73 pairs of stud earrings between $299, and $20,000.

We've got over 20 diamonds GIA graded "Fancy Intense Yellow", and 12 Vivid Yellows. ALL listed on our site with actual prices, and actual photos.

 

3) Lack of restriction

 

It would be great if we did not have to have the two to one ratio on the trade up, but we do substitute a valuable buyer advantage.

 

By the way, most tradein offers don’t apply to worn jewelry, just to diamonds, and often only to a limited selection of those. It's unusual to take back the mountings. Is the program available on everything you sell?

 

Here's the way we handle that one: if the purchase is made from are in stock inventory of rings, the ring will be eligible for trade up.

You use the term "worn". What we look out for is excessive wear. Many of our rings that have come back after years, have had only a few scratches. Those rings were accepted in trade ups.

If a ring is really beat up, we can't accept it. The policy is also written to say that we do not accept damaged or chipped diamonds.

 

 

If we are making a ring at a clients request, then only the center will be eligible for a trade up.

We offer this for almost all our items. The only jewelry I can think of that we do not would offer trade up on would be necklaces or bracelets....

 

Although in the store you use to be involved with saw very few takers, this program has proved very popular to us with many clients trading up multiple times.

Thank you for asking Neil.

I'd be interested to hear how Bradely handles this.

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Bradley,

 

If you had to guess on some statistics, what percentage of your customers ever take you up on it and, on average, how long does it take for the ones that do to come back and trade in? Do you see a lot at less than, say, a year or more than, say, 10 years?

 

Neil

 

Hi Neil I`d say right around the first five years (3-5) is a starting point for most. The ten year mark we get too, but not as often I think.

If I had to guess I`d say somewhere around 5% of our engagement ring customers eventually do an upgrade with us.

 

We also do the same kind of upgrade on our earring studs too which people tend to use a lot on the holidays, birthdays, etc.

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Is the trade-in program transferable? If someone buys a diamond from you and sells it to someone else, does the new owner have the same rights? What if they gift it to the new owner (for example, in a divorce situation where the ex-bride keeps the ring but the man was the actual customer). Can she trade it in on something else?

 

Neil

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Is the trade-in program transferable? If someone buys a diamond from you and sells it to someone else, does the new owner have the same rights? What if they gift it to the new owner (for example, in a divorce situation where the ex-bride keeps the ring but the man was the actual customer). Can she trade it in on something else?

 

Neil

 

Sure, I think we have even had that situation before. As long as its an upgrade of the original diamond we sold.

 

If she needs another diamond no problem. ;)

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Is the trade-in program transferable? If someone buys a diamond from you and sells it to someone else, does the new owner have the same rights? What if they gift it to the new owner (for example, in a divorce situation where the ex-bride keeps the ring but the man was the actual customer). Can she trade it in on something else?

 

Neil

 

Ours IS transferable- which has also happened a lot.

 

In terms of average, I'd say it's about 1 year- although many people have traded up in less than that.

Since the program is rather liberal, it's very common for us- we've had a few just in the last two weeks for example......

 

 

Bradley, from what I understand your policy only covers engagement ring diamonds ( not the ring) and stud earrings?

 

We also allow trade ups on right hand rings, halo rings, three stone rings- as well as most engagement rings as well as the diamonds.

 

By the way, these rings that are traded up don't simply disappear, they go back into our inventory. Although, when the ring is in very good condition, you can polish it and it will look just the same as it did the day you made it, we still offer these rings at a discount, and inform the buyers that they are traded up rings.

In fact, it's a very popular page on our website

Edited by diamondsbylauren
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