Jump to content

Hearts And Arrows


DLNOK
 Share

Recommended Posts

How much of a premium are there with H&A diamonds?  My jeweler said he could get me a pair of 1.0 ctw, AGS triple 0, round brilliant diamonds, F, SI1, with no fluorescence, in 14 karat white gold martini settings, for approximately $4500.

 

On BG, I can get a pair of 1.2 ctw, AGS triple 0, H&A round brilliant stones, D, VS1, with no fluorescence, in 14 karat white gold martini settings for approx. $7500.

 

That's a big difference in price, but I'd be getting .6 point stones, instead of .5, plus I'd be getting D, VS1's instead of F, SI1's and of course, the H&A's.

 

So…are they really that more valuable?  I realize I'm not comparing apples to apples, but according to my pricing guide (I have an app that has always been pretty accurate).  It says that a triple X, .5, F, SI1 stone should cost $1774.  While a triple X, .6, D, VS1 stone should cost $3052.  Of course that doesn't include the setting, which will add a couple hundred bucks.  Does that sound about right?  Also, are GIA triple X stones more or less desirable than AGS triple 0 stones?

 

Thanks in advance for any guidance!!!!

Link to comment
Share on other sites

I posted this in another area of the forum, but realized it should probably be here.

 

How much of a premium are there with H&A diamonds?  My jeweler said he could get me a pair of 1.0 ctw, AGS triple 0, round brilliant diamonds, F, SI1, with no fluorescence, in 14 karat white gold martini settings, for approximately $4500.

 

On Brian Gavin, I can get a pair of 1.2 ctw, AGS triple 0, H&A round brilliant stones, D, VS1, with no fluorescence, in 14 karat white gold martini settings for approx. $7500.

 

That's a big difference in price, but I'd be getting .6 point stones, instead of .5, plus I'd be getting D, VS1's instead of F, SI1's and of course, the H&A's.

 

So…are they really that more valuable?  I realize I'm not comparing apples to apples, but according to my pricing guide (I have an app that has always been pretty accurate).  It says that a triple X, .5, F, SI1 stone should cost $1774 ($3548).  While a triple X, .6, D, VS1 stone should cost $3052 ($6104).  Of course that doesn't include the the fact that one set are H&A's, plus the setting, which will add a couple hundred bucks. Does that sound about right?  Also, are GIA triple X stones more or less desirable than AGS triple 0 stones?

 

Thanks in advance for any guidance!!!!

Edited by DLNOK
Link to comment
Share on other sites

According to your app and assuming the cost of setting etc. is the same :

 

2 x 1775 = 3550 + "setting" @ 950 = 4500

2 x 3050 = 6100 + "setting" @ 950 = 7050

 

so the premium (if any) is about $450. Which doesn't strike me as a huge amount, particularly considering that with Brian you know you are getting top flight cut and a very consistent look. Simply buying a pair of GIA XXX and hoping that they will look the same isn't quite the same thing.

 

In addition, there are a couple of potential pitfalls:

 

1) 1 cttw is not the same as 2 x 0.50 ct, and there is a significant difference in price staying just above or just below the 0.50 threshold. Around 0.60 there isn't the same jump in prices.

 

2) SI1 is also the point where some inclusions may become visible to the naked eye. Does it matter for earrings? Probably not, and in any case not as much as for a ring, but the price of SI1 is again going to vary significantly depending on visibility. With VS1 you won't have that issue (even though it's in my view total overkill for earrings).

 

Finally, the average AGS000 will tend to be priced at a slight premium vs. the average GIA XXX, but each individual stone is priced on its own. Desirability is entirely in the eye of the beholder.

 

H&A is largely the same issue:

 

1) Definitions of what is "H&A" vary - and neither AGS nor GIA have one.

 

2) Whether you prefer the H&A look or another set of proportions is an individual choice.

 

In general, diamonds claiming (with some reason) H&A proportions will tend to be slightly more expensive than diamonds that do not, but again each stone is priced on its own merits.

Edited by davidelevi
Link to comment
Share on other sites

I have re-read your post, and realised I'm probably answering the wrong question (i.e. not BG vs. someone else, but H&A vs. non-H&A pricing). I think the problem lies with you relying on your app for pricing... (and my previous post still contains relevant info as to why).

 

If you check prices for 0.50 - 0.55 F/SI1 GIA XXX/AGS 000 NF (for example using the ubiquitous Diamond Finder), you find a pretty broad spread from $2200 to about $1400.

 

Same if you repeat the exercise for 0.60 - 0.65: $3900 - $2000.

 

While the values of $1750 and $3050 you are using are fine as averages, individual stones are priced differently and allowing a normal price of $300 or so for the setting ($200 is rock bottom), the prices you have been quoted for the earrings are close to the top but not excessive (and both BG and a brick-and-mortar jeweller will tend to be more expensive on their "own stock" goods than virtual inventory on a list). Note that not all the top-priced stones are or claim to be H&A.

Link to comment
Share on other sites

I can’t speak specifically about either set of stones because I haven’t actually seen them or even the offers but, as the saying goes, the Devil is in the details. 

Diamonds are generally sold ‘per carat’.  That means that it’s got a certain price, times the weight resulting in the final price.  A $1000/per carat price  for a 0.55ct would cost $550 for example.  The price per carat goes up with clarity, color, weight, cutting, etc.   You’re asking about cutting but most of your difference is in other areas.  I’ll explain.

 

The price per carat (PPC) goes up with weight, and there are some significant jumps.  A 1.00 costs more per carat than an otherwise similar 0.90 for example.  There’s a big one of these at 0.50.   Your 1.00ct total weight is almost certainly NOT 2=0.50each.  It’ll be 1=0.48 and 1=0.52 or something similar because of this.  Why does this matter?  Because the PPC on a 0.4x/F/VS1 is just over HALF of the PPC for the same stone at 0.5x/D/VS1.

 

Spend a few minutes playing with the ‘diamond finder’ at the top of the page.  Do a search, look at the results, and then tweak the parameters and do it again.  You’ll see what changes with what.  It’s easier to hunt for GIA stones than AGS because there are so many more of them in the database and this issue applies the same with them.

 

Other premiums you may be seeing might be a premium for AGS-000 or a premium for a branded line.  It depends on what stones you’re actually looking at.   Whether any of this is worth it to you depends on what you’re looking for.  For some people it is, for others it’s not.

  • Like 1
Link to comment
Share on other sites

I wanted to do a more accurate comparison, so...

 

I also looked at the BG virtual selection and found GIA, triple X, 1.2 ctw, D, VS1, with no fluorescence for $6042.

 

So…what I'm really comparing are GIA triple X 1.2 ctw, D, VS1, with no fluor for $6042, versus AGS triple 0, 1.2 ctw, D, VS1, with no fluro and H&A for $7500.  So, that's a difference of approx $1500 to get AGS instead of GIA and to also get H&A.  

 

If it were anyone else, I'd be a bit more skeptical, but because it's BG, I'm more comfortable with the quality and pricing.

 

Also, what are the premiums for AGS 000 versus GIA XXX (all other variables being equal) and for TRUE H&As (like BG)?  Some say H&As are just a fad.  But how can that be when others say that they represent the highest quality in cut?

 

Last question…how much do high quality diamonds depreciate after being purchased?  One other poster said it was 80%.  I find that hard to believe.  I'm not too worried about it because these will be heirloom pieces, but still, it is a concern and I just wondered if that is the case and if so, does it only apply to lower quality pieces or even higher quality stones like I'm considering?

Edited by DLNOK
Link to comment
Share on other sites

AGS vs. GIA - the premium can be considerable... or none at all. It all depends on what you take as your comparable populations. If you take stones that would (most likely) get AGS 000 but just happen to have a GIA report, you are looking at a very small premium. If you take the average of all GIA XXX and the average of (the few) AGS 000, the premium may well be of the order of 20-25%.

 

This is why - once again - if you are trying to make a purchasing decision, it makes no sense to compare "averages", but only individual stones. Same for H&A: there may well be some GIA XXX that are more expensive than some AGS 000. Either may or may not be H&A (and some may be "H&A" based on someone's definition that doesn't tally with mine - that doesn't make mine or theirs right or wrong).

 

To some extent "H&A" is a fad; there is nothing inherently "better" about H&A proportions than similar proportions that however fail to produce an "acceptable" H&A picture in a viewer. However, the consistency and precision in cutting required to achieve an H&A picture is far less of a fad. To give you a non diamond example: having a pink Hermès Birkin bag may well be a fad (if it is indeed one - I have no idea); a Hermès bag remains a paragon of quality for materials and manufacture, be it pink, Birkin or otherwise.

 

Depreciation: a lot depends on what you buy, from whom and over what period you look at things. Let's assume you buy today and you want to resell tomorrow:

 

1. Take away taxes and seller margin. In the US, taxes are relatively low, say 5-10%, but in other places this can account for 25%+ of your retail price. Seller margin is also hugely variable depending on what you buy and from whom; strangely enough, the highest margin percentages are on lower quality, lower price items. If you look at good quality diamonds and jewellery, Blue Nile has an average gross margin of about 20%, while Tiffany is over 50%. Whichever way you look at it, at best you are left with about 70% of your retail price to match a "wholesale" price to your retailer.

 

2. To sell to a retailer, your offer must be more attractive than the wholesaler's. However, upfront price is just one thing that wholesalers offer: extended payment terms, variety of offer, reliability and trust are all worth quite a bit to a jeweller. Which is why there is no way you are going to get a 70% cash offer from a retailer... but probably something between 30 and 50%.

 

3. You may be able to get more if you resell to a consumer - but the chances of finding someone who wants exactly the diamond you bought and is ready to trade off certainty, return privileges and expertise are pretty low... and again they will want to pay a fair bit less than going to a retailer.

 

This is where the "80% loss" comes from in certain cases: fast resale, on not particularly desirable goods, going to a member of the trade.

 

Once you are past this, you are to a large extent tied to diamond prices; they have generally gone up in the last 15-20 years, and for some items (e.g. Argyle pinks) you would see today a nice return even reselling at 50% of retail if you bought something say 10 years ago. However, this is not a guarantee, fashions change (try reselling today a marquise you bought for a premium in the early 1990s...) and timing is crucial: people who got caught in the 1978-1979 "investment diamond" bubble still haven't made a profit in real terms today. Compare with stocks, where (average) prices over the same 35 years have gone up by a factor of 3.5 in real terms.

Link to comment
Share on other sites

I have an ever so slightly different take on the depreciation question.  The product doesn’t change.  Diamonds are pretty durable so, in that sense, it’s not like buying clothing or electronics.  What changes is the definition of ‘value’. 

 

You are buying at retail and selling at below wholesale as explained above.  On the front end, ‘value’ means what it costs for similarly documented goods at competitive stores.   On the sales end it means how much a dealer is willing to lay out in cash to take it into inventory.   These aren’t just different with diamonds, they’re different with nearly everything you buy.  Just try and sell some clothing, food, old electronics, furniture and so on.  Depreciation isn’t really the right word for this but the effect is the same.  You won’t get on resale the same amount that you paid.  Sorry about that.

 

So how much do you lose?  Unfortunately there’s not a straight answer to that.  How much you can sell things for has a LOT to do with you.  Some people are better at this than others and it’s not a gemological property.  If you're in sales you already knew this, no matter what you're selling but if you're not, take my word for it.  Sales is a skill.  If you buy highly saleable goods, you’re decently good at selling and you get a bit lucky, some people recover 80% or more.  If what you buy turns out to be unpopular when you get around to selling it, the dealers can’t move it and it’s only recycle value is the gold recovery, you can easily lose nearly 100%.  If you’re good at selling and get a bit lucky, you can make a profit.  Jewelers do it every day. :)    Just bear in mind that it’s harder than it looks. 

 

Grim, I know, and again it applies to nearly everything you buy so I’m not generally inclined to call jewelers ripoffs because of it but I regularly advise that you shouldn’t go into a jewelry deal expecting to ever see your money again.  The last time I gave this advice on this board the person asking called me all kinds of bad names so take it for whatever you want.  To minimize the problem, buy right, spend most of your money on a single stone rather than fancy mountings or clusters, buy things that have been popular for a long time, and then hope that they will continue to be popular in the future.  Even better, buy as a ‘consumer’, buy what you or your beloved will like, and do your investing somewhere else.

Edited by denverappraiser
  • Like 1
Link to comment
Share on other sites

Here’s an example and an explanation of where that 80% number might have come from.  I’ll make up the numbers but trust me, they’re not insane.
 

Imagine you buy a diamond for $10,000.  The dealer paid $8000 for it.  That’s a 20% margin.

 

Go to another dealer to sell it the next day.  They don’t have that kind of money in the bank.  Most people don’t.  They’re going to sell it immediately to the above mentioned dealer who supplies them as well as the place where you got.  Let’s figure they’ll hope to get $7000 for it from the dealer.   They bid $6000.  They’re trying to make a profit after all.   He’s making 16% on this deal.  

 

Badda bing badda boom, you’re down 40%. 

 

Now it gets tricky.  The original store tells you it’s ‘worth’ $14k and he’s giving you a discount because he’s your buddy.  It might even be true.   Some stores get better margins that others and some just lie to make the deal look good.   Maybe he really does get better money from most deals so lets give him the benefit of the doubt.  Bully for him.   You take in that appraisal to the buyer and he STILL offers you $6000.  He doesn’t care a whit what some appraiser thinks.  Now you’re ‘losing’ 57%   eek.

 

Now we consider the mounting.  You have your $10,000 diamond set in a mounting costing $2000, and you pay $1200 in sales taxes for the deal.  $13,200 out the door and that's without the extended warranty or the finance charges.   Appraised value $18,500.   He’s your buddy after all.  Visit that buyer and the bid is STILL $6k.  Maybe a hundred or so more for the metal in the ring.  Now we’re down 67%, and that’s without any bad faith or anyone actually ripping you off.  If he (the buyer) doesn’t really want it or thinks it’ll be hard to move, he may very well bid LESS than $6k.   Possibly quite a bit less.   Pawn shops don’t work on 16% for example.  

Edited by denverappraiser
  • Like 1
Link to comment
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.

Guest
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.

Loading...
 Share

×
  • Create New...