Diamonds are not investments and rarely increase in value
We want to get this out of the way straight away. Diamonds are generally not good investments and do not usually increase in value over time at a rate greater than inflation.
Here’s how the price of a 1 carat diamond has changed over the last 12 months:
There are some exceptions to this: colored diamonds.
Coloured diamonds are much rarer than white diamonds and as a result often do increase in value over time.
The rarer the color, the more likely they are to increase – you can see in the graph below that pink diamonds have increased in value more than blue diamonds,
Understanding how much your loose diamond ring is worth
There are many values that are assigned to a diamond throughout its life.
When selling a diamond though, there’s only one that matters: what someone will actually pay you.
It’s much more accurate than any kind of diamond price calculator ever could be.
However, it’s important to understand each of the values that can be assigned to a diamond and how they relate to each other.
This is the price that was actually paid for a diamond.
While it’s common to look at a ring in a store and assume that a diamond which still looks the same is worth that, a diamond that is being sold will will usually be valued at around 50% of the original price paid.
The replacement value is the amount that an insurance company has agreed to pay if the diamond is lost or stolen.
Replacement values are usually quoted on ‘appraisals’ and unfortunately are often overstated, sometimes being higher than the initial purchase price.
This can make understanding how much you are actually likely to receive when you sell your ring more difficult.
Secondary market value
This is the amount that your diamond will be able to be sold for by the person who buys it from you.
Understanding the secondary market value for your ring can help you understand what the fair market value for your diamond is likely to be e.g. if a ring featuring a pre-owned diamond is currently being sold for two-thirds of the original purchase price in a store, the owner of that store would have to have bought it for less than that.
Fair market value
Fair market value is the amount that someone is actually be willing to pay for your diamond.
When you’re selling your ring, this really is the only value that matters.
This can be subjective, depending on the individual buyer’s needs at that time.
One of the best ways to understand the current fair market value is to look at recent sale prices. Worthy.com has an excellent tool which shows
A great feature is that you can use the dropdown menus to find a diamond with the same carat weight and quality specs as yours. It’s definitely worth clicking through to understand what people are actually paying for loose diamonds.