If you have been reading any of my other articles, you will recall that I encourage the purchase of certified diamonds by an independent grading laboratory as compared to those that have not been graded and certified. The certification provides an objective analysis of a diamond’s quality and gives you the comfort of knowing what you are buying. I offer this reminder only as a prelude to an important issue that I want to address.
Sometimes Diamond Grades Don’t Make Sense
A potential customer recently e-mailed me with a question regarding the pricing of certified diamonds. He had followed my advice and was doing his research on the Internet when he encountered a wide discrepancy in the prices of very similar (almost exact) diamonds. He was looking for a one carat diamond with a “G” color, “SI1” clarity grade with a “Very Good” cut. (As a side note, I was very proud of him for doing his homework and knowing exactly what he wanted to buy.) He said that there was as much as a $3,000 discrepancy in the prices he found. He had his Masters in Business Administration, and determined that with his knowledge of economics and business pricing models, “something doesn’t make sense”.
He’s absolutely correct- it doesn’t make sense. Nobody would consistently sell a diamond for less than its real value and stay in business very long, especially with the thin margins that now exist in the diamond business. The same reasoning can apply to someone that attempts to charge more than its real value.
Why Can They Differ So Much?
The reason for the pricing difference may be due to slight differences in the diamond that can have a significant impact on the ultimate grade and pricing. But, the most likely reason is that not all grading laboratories are created equal. They may have similar written standards for grading, but they will interpret them differently. If you gave the same diamond to two different laboratories you should get grades that are very close – but, you may not. It depends on the grading laboratories you select.
The biggest differences in grades happen more with lower quality diamonds. Some laboratories are simply more liberal with grades they assign to lower quality diamonds as compared to their competition, essentially up-grading the diamond. Up-grading lesser quality diamonds help dealers sell their inventory, which is the main reason why dealers prefer them. In other words, up-grading gives lesser quality diamonds a higher grade that makes the lower price of these diamonds look more attractive, when compared to the higher price of correctly graded diamonds.
The laboratory that sets the highest standard for grading is the Gemological Institute of America (GIA), which is the oldest and most reputable. The GIA is not without its critics, but is recognized internationally for its high standards, accuracy, consistency and reliability. The American Gem Society Laboratories (AGS) is also a highly regarded grading facility. You would be wise to rely on one of these.
In summary, diamonds certified by the GIA and AGS may be higher priced because they truly represent the quality indicated by the grades, which is not the case with some other grading laboratories.
I hope this article was helpful. If you have questions or comments, please let me hear from you.
Bella Ideale Diamonds