Why are Diamonds so Expensive?August 29, 2019 - Diamond Articles
Get answers to the following questions:
- Why are diamonds are so expensive?
- How much is my diamond worth?
- How to buy affordable diamonds?
- How to sell diamonds?
Why are diamonds so expensive?
To understand why diamonds are so expensive, we need to follow their journey from mine to store.
Mining is an incredibly resource heavy, time consuming and destructive process. According to the United States Geological Survey (USGS), the average diamond in an engagement ring requires the removal of 200 to 400 million times its size in earth. With about 133 million carats of rough diamonds are produced each year, that is a staggering amount of earth removed to extract a finite number of diamonds. In fact, it is the equivalent of filling the Rose Bowl Stadium with dirt – 34,000 times!
According to the Better Diamond Initiative one carat of mined diamonds results in:
- 3.10 tons of earth displacement (just 1,600 Rose Bowl Stadium filled with dirt!)
- 0.056 C02e tons of greenhouse gas emissions
- 8.9 liters of fuel
- 0.34 GJ of energy use consumption
- 2,534.87 liters of water use
To counteract this environmental damage, members of the Diamond Producers Association (DPA), such as the De Beers Group, Rio Tinto, Lucara Diamond, dedicate about £5.5 billion annually towards conservation efforts for their mining communities. DPA members partner with local governments to manage the environment, build infrastructure and help local businesses flourish.
After a diamond is mined, it can go through three or more “middle men” who each increase the diamond’s price in order to make a profit. This chain of mark-ups, over and above the cost of the natural resource, results in consumers having to pay high prices for diamonds at jewellery stores.
Below is an example of the price mark up at the four different stages (example prices to illustrate markups):
- A diamond miner sells a diamond to a diamond manufacturer for £100.
- A diamond manufacturer sells the diamond to a diamond dealer for £125.
- A diamond dealer sells the diamond to a retailer for £150.
- A retailer sells the diamond to a consumer for £300.
The diamond we followed from the mine to the jewellery store would likely have ended up with a 300% mark-up from the miner’s cost. The exact mark-up that gets passed onto your diamond largely depends on where you bought it and the exact markups along the way. For instance, brick and mortar jewellery stores place greater mark-ups on their diamonds than most online stores. Physical jewellery stores do this to cover operational costs, such as paying bills and staff, as well as slow moving inventory.
How much is my diamond worth?
Now that you know why diamonds are so expensive at retail, you likely want to know what your diamond is actually worth. Regardless of how long you have had it for, you will be selling your pre-owned diamond at a lower price than what it was originally bought for. This is due to the markups incurred along the way, and additionally it may need to be recut and/or re-certified before the diamond can be sold to the public again.
The value of your diamond is based on the 4C’s, globally used diamond grading criteria. The 4C’s consist of:
- Carat Weight: How much your diamond weighs, commonly abbreviated to ct. The higher the carat weight, the more valuable the stone.
- Clarity Grade: The amount of internal and external marks in your diamond, referred to as inclusions and blemishes. Clarity is graded on a scale from FL, for flawless diamonds, to I3, for eye visible flaws. A high clarity grade is more valuable.
- Colour Grade: How much colour is present in your diamond on a scale of D (colourless) to Z (light yellow). The less colour, the more valuable the stone. This grade only applies to white diamonds, while fancy coloured diamonds, such as fancy blue, are graded from Fancy Light to Fancy Vivid depending on their colour intensity.
- Cut Grade: How well cut and proportionate your diamond is on a scale from Excellent to Poor. Cut grade only applies to round diamonds, while fancy shapes, such as ovals and hearts, do not have official cut grades.
When you purchased your diamond it likely came with certification from a diamond grading lab, such as the GIA. This report will detail the 4C’s of your diamond as well as other useful information such as its fluoresce and symmetry that also impact price. If you do not have any paperwork for your diamond, you can meet with a local jeweller to get a verbal appraisal of your diamond’s characteristics.
Complete our online form to learn how much your diamond is worth.
How to buy affordable diamonds
Looking to buy diamonds or diamond jewellery for the best price? Here are our top 3 tips:
- Pre-owned diamonds: When it comes to buying affordable and high-quality diamonds, it makes sense to buy pre-owned. Not only are recycled diamonds an eco-friendly and sustainable purchase, as they reduce the demand for mining and the negative impact that this has on the environment, but pre-owned diamonds are also more affordable. By buying second-hand you are eliminating much of the markups and yet not compromising on the quality of the stone. Our partner, Gemma By WP Diamonds, sells pre-owned diamonds and diamond jewellery of all shapes and sizes at deep discounts.
- Trade in old jewellery: To make your perfect diamond even more affordable, sell diamonds, designer jewellery and luxury watches to WP Diamonds and we can provide a cash offer to put towards a new purchase OR receive 10% more on your offer in the form of Gemma By WP Diamonds store credit (store prices exclude VAT).
- Affordable payment plan: Gemma also provides affordable monthly payment plans on a variety of pieces through Affirm.
How to sell diamonds
WP Diamonds provides a modern and streamlined solution to selling diamonds, designer jewellery and luxury watches. Selling with WP Diamonds is so simple and fast that the entire process can take as little as 48 hours. Thanks to our international presence, global connections and team of industry experts, we always provide our clients with honest and competitive cash offers. Our trustworthy selling process has earned us hundreds of excellent reviews from satisfied customers.
To start the selling process today:
- Complete our online form with information about your diamonds, jewellery or luxury watches.
- Our experts will shortly contact you with a price quote.
- Getting your final offer is just as easy. You can schedule a complimentary appointment at one of our offices in Birmingham, London, New York or Hong Kong or request a free and fully insured Royal Mail Special Delivery Pack.
- Once our experts evaluate your items, we will provide you with our final buying offer which you can accept by bank transfer OR in store credit for an additional 10%. Best of all, there are never any hidden fees or commissions deducted from your price so the final price we tell you is exactly how much you will be paid.
Click the button below to see how much you can get paid for your diamonds, designer jewellery and luxury watches today.