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Diamond Appreciation

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Hi. New here, hope this is the right forum....

 

My mom just called, said she wants to sell a diamond ring. She has an appraisal from... wait for it... 30 years ago. She wants me to sell it on eBay and is resistant to getting a new appraisal. (As you know, we sometimes become more eccentric with age rolleyes.gif ) 1.3 carats, round, VS2, appraised at 8k, which I am assuming was full bore retail. I do not (yet) know who made the appraisal....

 

Anyway, can someone tell me in the most general way how much diamonds have appreciated since 1980?? Any information would be greatly appreciated. TIA

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It's not a matter of appreciation. Depending on grading accuracy and paperwork included, along with her (or your) skills at selling things on ebay, a reported 1.30/round/VS2 of unknown color and cut will go for somewhere between $1500 - $6000. THAT'S why it's worth her trouble and money to get a more current appraisal and possibly why it's worth getting better documentation in terms of a GIA lab grading as well. A sensible buyer will require the lab, and a sensible seller will require the appraisal.

 

Even if it's reasonably correct, the retail replacement value conclusion from 1980 is irrelevant. Frankly, so is the author of a report that old.

 

I'm pretty eccentric. Worse things could happen, but why is she reisistant to professional assistance?

Edited by denverappraiser

Neil Beaty

GG(GIA) ICGA(AGS) NAJA

 

There's never a crowd when you go that extra mile.

Professional Appraisals in Denver

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Really the only best way to get an accurate idea of what the ring is worth is to have it re-appraised. No way around it. Find an independent appraiser in your area. Then, if you want, you can potentially roll the cost of the appraisal into the asking price for the ring. Just remember, though, selling a used piece of jewelery is never going to fetch the same price that a store can command for essentially the identical thing, brand new.

 

Good luck :)


Diamonds Graduate, Pearls Graduate, AJP GIA

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Would it surprise you if I told you that the diamond has probably depreciated?

 

The late '70s/early '80s were characterised by a speculative bubble in diamonds; in addition, the retail margins have decreased considerably since then, thanks to greater competition and the appearance of internet-based retailing.

 

For starters, assuming the appraisal is roughly correct as to colour and clarity, you can use the Diamond Finder on this site to get competitive retail prices for similar diamonds - bear in mind that:

 

1. These are dealer-to-consumer prices. Consumer-to-consumer will be 30 to 50% lower, or possibly less, depending on the extent of documentation you have and the desirability of the stone (what colour is it, by the way?)

 

2. With diamonds, apparently small details can have very large effects on price. In particular cut has a significant impact on the beauty of the diamond, and correspondingly on its price. At the moment, you have little to no information on that, and cutting skills/tolerances have improved enormously in 30 years. Don't set your expectations too high.

 

If you can post a scan of the appraisal (erasing your name and address), we may be able to point you at closer comparables than simply based on the information you have given so far. In particular, other than the colour, it would be good to know the proportions and angles of the cut, whether it has fluorescence (and if so what colour and strength) and what the finish (polish and simmetry) is like.


Davide - Specialised Consumer Information and Assistance,
Diamonds by Lauren (http://www.diamondsbylauren.com)
davide@diamondsbylauren.com

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Is this diamond certified? if so, would you post it?

Hi. New here, hope this is the right forum....

 

My mom just called, said she wants to sell a diamond ring. She has an appraisal from... wait for it... 30 years ago. She wants me to sell it on eBay and is resistant to getting a new appraisal. (As you know, we sometimes become more eccentric with age rolleyes.gif ) 1.3 carats, round, VS2, appraised at 8k, which I am assuming was full bore retail. I do not (yet) know who made the appraisal....

 

Anyway, can someone tell me in the most general way how much diamonds have appreciated since 1980?? Any information would be greatly appreciated. TIA

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I think you mean "certifiable", Davide ;)

 

I don't think the diamond has papers, as the original poster wasn't even sure of the Color.


Diamonds Graduate, Pearls Graduate, AJP GIA

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Two people divided by a common language...

 

BTW, interesting tidbit: first attested use of certified, 1611. First attested use of certifiable, 1846.

 

To the OP: sorry for the threadjack.


Davide - Specialised Consumer Information and Assistance,
Diamonds by Lauren (http://www.diamondsbylauren.com)
davide@diamondsbylauren.com

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Although they've been offering the service since the 50's, 'certificates' have really only been a significant part of the jewelry industry since the mid 80's and they've only been a dominating factor in diamonds since the 90's. As you point out, GIA certifies nothing, not diamonds, not gemologists, not even their own employees. That said, the documents commonly known as 'certs'(GIA calls them diamond quality reports) haven't been around from time immemorial as many people assume. In 1980 it would have been decidedly unusual to have one. As they say, that was then and this is now. GIA makes close to $90,000,000 a year from this business. That's some serious non-profits!! That's roughly 10 times what they take in from tuition as a college. (according to the IRS and their public form 990 that they have to submit in order to keep thier 'non profit' status. 2009 is the most recently available filing)


Neil Beaty

GG(GIA) ICGA(AGS) NAJA

 

There's never a crowd when you go that extra mile.

Professional Appraisals in Denver

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For those who want to wade through it and who have the patience for IRS type paperwork, it's actually a pretty interesting document.

 

http://www.guidestar.org/FinDocuments//2009/953/797/2009-953797687-0697ff45-9.pdf


Neil Beaty

GG(GIA) ICGA(AGS) NAJA

 

There's never a crowd when you go that extra mile.

Professional Appraisals in Denver

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The point is, for the most part, that diamonds do appreciate as history has proven, although most people do not buy diamonds as an investment.

If you buy a diamond for $5000 that the dealer tells you is 'worth' $10,000, you hold it for 5 years and then sell it for $2,500, has it appreciated? What if the dealer tells you that similar things are now 'worth' $15,000? Some would call that a 50% gain, and in some definitions of value so would I, but for most of us and under most circumstances that's a 50% LOSS.

 

This concept is important with any investment but it seems especially true for diamonds. Perhaps it's just because people are expecting something different. The big variables in the above scenario are:

 

How well did you buy in the first place?

What did they mean by 'value' when they said $10k?

What did they mean by value when they said $15k?

What are the holding and transactions costs?

How well did you sell at the end?

 

NONE of these things are gemological properties but they are absolutely what drives the the 'investment' question.

Edited by denverappraiser

Neil Beaty

GG(GIA) ICGA(AGS) NAJA

 

There's never a crowd when you go that extra mile.

Professional Appraisals in Denver

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Denverappraiser,

I enjoyed your analysis and reading your posts. 

Can you answer one question straight up? Over all on average, wholesale and retail, how much has the value of diamonds increased in the past 30 years? 40,50 years? 

I heard recently heard a story on Bloomberg there was an over supply of diamonds that was expected to last for some time, contrary to many articles published on the web I've seen about how scarce diamonds are supposed to become in the future because of the so-called "limited" resource available.  I've heard some new mines were discovered in recent years. Can you shed some light on this also?

Thank you for your time. 

Sincerely,

John D -  S Florida

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10 hours ago, JDE said:

Can you answer one question straight up? Over all on average, wholesale and retail, how much has the value of diamonds increased in the past 30 years? 40,50 years? 

I'm not @denverappraiser, but the straight answer to your first question is "no". Not because there is some great secret about diamond prices (if anything there is more data than you want - much of it contradictory), but because the question truly has no answer. You may have seen graphs like this one:

Image result for diamond prices over time

(source: https://www.wsj.com/articles/SB10001424052748704337004575059723597630174)

followed by something like this:

Image result for diamond prices over time

(source: https://www.leibish.com/how-color-diamonds-have-appreciated-over-the-years-article-624)

followed by something like this:

diamond_price.png

Source: https://fortune.com/2017/08/29/gold-and-diamond-prices-charts/

So doesn't this answer the question? At least, doesn't it answer as far back as 43 years ago? (I can also tell you that in the 1970s prices of diamonds grew fairly constantly in both real and nominal terms, not least thanks to high inflation and the creation of a speculative bubble that exploded in the last months of 1979/early 1980 - you can see the peak in the first graph.) No, in my opinion it doesn't:

1. These are "asking", (supposedly) trade prices; not what the diamonds actually sold for. Discounts (or premiums) were not consistent over time and over categories (see 3. and 4. below)

2. Retail prices have had a different evolution - broadly following the pattern, but with a more consistent drop over the last 20-25 years as competition in diamond retailing (internet) has eroded margins very significantly.

3. Depending on what particular diamond size, shape, colour, clarity and cut quality you look at, you may have very different results. Marquises were very fashionable and highly prized in the 1980s; now they are as dead as a dodo, but worth about as much as a dead common pigeon - whether wholesale or retail. Pink diamonds were a relatively cheap collector's curiosity in 1980; now they are hugely expensive.

4. Standards have changed - especially over cut for rounds (and less so for other shapes). Something that was a very commercially viable diamond from the 1980s or 1990s would struggle to be sold at a discount today, and something bought as a super-premium cut in the early 2000s would not go for as much of a premium now.

5. In recent years (last 5-10? Too close to call), the overall jewellery market has changed size and shape; occasional jewellery has become much more popular and diamond jewellery far less aspirational in developed countries, yet demand for diamonds has continued to increase because developing countries are catching up (pace the last graph above). The overall impact on prices is hard to determine, and may be more variable (relatively) by geography than it used to be.

(6. Not a factor that determined historical prices, but a significant influence in the future is the presence of gem synthetics. This is still minor nowadays (at least overtly) - but it will shape prices much more significantly in the coming years, and it is something that was conspicuously absent until the mid 1990s.)

So, if you want a meaningless average, you could argue that roughly the real price of diamonds has remained about constant over the last 50 years, it has declined strongly over the last 40 (because of a timing fluke), and it has decreased a little over the last 30. Yet there are people who bought a diamond 50 years ago and are sitting on a huge loss, and there are those that have bought one 40 years ago and could make a nice amount of money on it - for different reasons.

Wanting to make an analogy, it's a bit like asking "what has the price of cars done over the last x years". On the one hand, on average, it has certainly declined relative to average earnings; on the other, luxury car prices have increased more than earnings and some of the most expensive cars ever are on the market today, and on a third hand (Larry Niven and Jerry Pournelle anyone?) the price of a 50 (or 60) year old car is even more variable than that of a new one.

11 hours ago, JDE said:

[according to] Bloomberg there was an over supply of diamonds that was expected to last for some time, contrary to many articles published on the web I've seen about how scarce diamonds are supposed to become in the future because of the so-called "limited" resource available.  I've heard some new mines were discovered in recent years.

All "true" to some extent; a lot depends on the time horizon one is looking at. At the moment, there is relative oversupply, which is why prices are soft, and that is expected to continue for the next 2-3 years, but not beyond that. Population keeps growing, and even though demand from India and China (and other developing economies) has not grown to the extent expected 10 years ago, it has grown and it is continuing to grow. There are diamond mines that are running out (e.g. Argyle in Australia - one of the reason pink diamond prices have increased as much as they have), and there are mines recently opened and being prospected in Russia, Canada and Central Africa.

If you want a lot more data and information you could do worse than reading through some of the "Diamond Industry Reports" published by Bain & Co. between 2011 and 2019. Just bear in mind when you are reading that they are being sponsored by the Antwerp Diamond Council... https://www.bain.com/insights/global-diamond-industry-report-2019/ 


Davide - Specialised Consumer Information and Assistance,
Diamonds by Lauren (http://www.diamondsbylauren.com)
davide@diamondsbylauren.com

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Excellent summary by Davide. I’d you want to dig into it, I would start with the annual reports on the diamond industry by Bain & co. as he linked. They’re all free and available. They aren’t exactly beach reads but they’re content rich. My only caution as you read those is that they’re talking about rough stones only. They report on the mining business from the perspective of where’re or not you should be investing in the mining companies. Jewelry is related but bit different. It’s a complicated soup. 


Neil Beaty

GG(GIA) ICGA(AGS) NAJA

 

There's never a crowd when you go that extra mile.

Professional Appraisals in Denver

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