Diamond Rarity, Quality, and Cost
Word is out that diamonds aren’t that rare. So, why are they still so expensive? Learn about diamond rarity and quality and how they impact cost.
8 Minute Read
Are Diamonds Rare?
As a mineral, diamond is pretty common, but that's not the whole story.
Finding a gem-quality specimen of any mineral is rare. Generally speaking, what we consider "gemstones" are mineral pieces selected for their beauty and durability, then cut and polished for wear or display. Most mined diamonds have an unattractive color or clarity that makes them unsuitable for jewelry. These low-quality specimens are typically used for industrial purposes only.
Nevertheless, gem-quality diamonds aren't terribly rare, either. In fact, many jewelry pieces contain diamonds. You probably don't know anyone who doesn't own a diamond of some sort. (In contrast, here are ten gemstones rarer than diamonds, highly prized but rarely possessed).
What are Diamonds Really Worth?
If diamonds are so abundant, are they really worth anything? Well, the market says that something is worth what you'll pay for it. And the actions of the diamond company De Beers have ensured that you'll pay a pretty penny.
The Influence of De Beers
For decades, De Beers controlled the supply of diamonds because they owned the vast majority of diamond mines. In conjunction with this, starting in the 1940s, their ad campaigns firmly established in the public imagination that a diamond was the only option for an engagement ring. As a result, consumer demand skyrocketed. So, with a tightly managed supply and a growing market, De Beers could drive up diamond prices.
By the end of the 20th century, De Beers' control of the diamond supply declined significantly. However, the company still wields tremendous influence, especially over pricing. Most likely, today's diamond retail prices wouldn't be as high without De Beers.
Diamond Resale Prices
Supply and demand aside, there's another way to look at a diamond's worth: resale prices.
Like a new car, a diamond loses much of its value once purchased. If you ask a store to buy back your diamond, you'll probably be disappointed. The offers would be for 30% less than what you paid, or worse.
But, even if a diamond isn't quite worth what it costs, if you want a diamond, you'll still buy one.
Which Diamond Rarity Features Impact Cost?
Like all gems, diamonds with rare features will usually cost more than those with common ones. (This is true even if the gem isn't necessarily all that rare itself). Gemologists grade diamonds by evaluating four properties, the Four Cs of carat, color, clarity, and cut. Let's look at each of these and see what rare features may influence diamond price.
In colorless diamonds, carat or weight plays the biggest role in determining prices.
Finding a large, gem-quality diamond in nature isn't common. Although you can always cut smaller pieces from large diamonds, you can't glue together small diamonds to make a bigger one.
Simply put, the larger the diamond, the rarer it is. Of course, pricing reflects this. Diamond prices climb steeply with increased carat weight. In fact, diamond prices are set per carat, and these per-carat prices themselves increase with carat weight. That means that larger diamonds are exponentially more expensive.
For example, let's say a stone of a particular color, clarity, and cut costs $660 per carat, for stones between 0.01 and 0.09 carats. For stones between 0.10 and .19 carats, the price per carat increases to $780. The price per carat increases to $875 at 0.20. At 0.25 carats, it jumps to $1,035. At 0.33 carats, it's $1,650. By the time we reach a full carat, the price per carat is $4,400.
Thus, a 0.08-ct stone would cost $59.40 ($660 x 0.08), but a 0.12-ct stone would cost $93.60 ($780 x 0.12). A 0.35-ct stone would cost $577.50 ($1,650 x 0.35), while a 1-ct stone would cost $4.400.
You can expect the price per carat to keep increasing as the diamonds get larger. The benchmarks where the per-carat prices increase significantly are known as "magic numbers." For diamonds, these are 0.90 carats, 1 carat, 1.5 carats, 2 carats, 3 carats, 4 carats, and 5 carats.
Only diamond color can have a greater impact than carat on pricing. Specifically, fancy colors. Most diamonds are considered colorless or "white." (We'll discuss those later). However, diamonds with more than just a slight shade of yellow or brown, or any other type of color at all, are considered fancy colored diamonds. These are much rarer than colorless diamonds and far more expensive.
Pink and red diamonds are well-known for commanding exorbitant prices, since these hues are extremely rare and highly prized.
This 0.30-ct, round, Fancy Intense pink diamond has a Fair cut, an I1 clarity, and costs $13,440. Compare that to a 0.30-ct, round, white D color diamond with a Good cut, an I1 clarity, and a cost of $500. What if you choose a higher clarity and cut? Here's a 0.30-ct, round, white D color, IF clarity, Excellent-cut diamond that costs just $1,330.
Blue and green diamonds are also extremely rare and quite expensive. Orange diamonds are just as rare but usually cost less than blues and pinks, because there's less demand for them. Other rare and valuable diamond colors include purple, violet, and color-changing "chameleons."
Depending on the intensity of the hues, yellow, brown, gray, and black diamonds might actually sell for less than their colorless diamond counterparts. That's because they're a little more common and don't enjoy high demand.
Fancy Color Saturation and Diamond Rarity
In fancy colors, the tiniest differences in hue and saturation can make a big difference in price. Pure hues with strong saturation are the rarest and fetch the highest prices.
Fancy color diamond saturation grades go from "Faint," the lowest, to "Fancy Deep," the highest. "Fancy" and "Fancy Intense" are mid-level grades, and "Fancy Intense" is just one step above "Fancy." Nevertheless, even that slight difference can make a significant impact on price. The 1.02-ct Fancy yellow diamond shown here costs $9,110. Compare that to the 1.02-ct Fancy Intense yellow diamond, which costs $13,150. Both have Fair cuts, and the Fancy yellow even has a slightly higher clarity than the Fancy Intense yellow.
Rarity affects price in colorless diamonds, too. For these diamonds, color grades actually indicate how close they come to colorless. The highest color grade, "D," means the stone has no color. D color diamonds are rarer than colorless diamonds with slight hints of yellow or brown. Since there's great consumer demand for the highest color grade, even when compared to slightly lower color grades of E and F, D color diamonds have particularly high prices. (This demand exists even though it's almost impossible for consumers to tell the difference between close diamond color grades).
Diamond clarity covers anything that affects the free passage of light through the stone. Diamonds with high clarity grades will look clear and bright. Those with lower grades contain inclusions that affect not only appearance but possibly the structural integrity of the stone.
Diamonds with the highest clarity grades — "Flawless" (F) to "Internally Flawless" (IF) — are rare. These stones have only the smallest and fewest imperfections. It's much more common to find stones with larger and more numerous flaws. As you might guess, clarity grades impact price. The rarer diamonds with the highest clarity grades cost more. (Despite this, even stones with mid-range clarity grades can appear eye-clean, flawless to the naked eye, when set in a ring and viewed from a normal distance).
We generally recommend a clarity of VS2, a mid-range grade, for an engagement ring because it will likely look eye-clean in a setting. You'll also save quite a bit with a VS2, compared to a stone with a high clarity. Both these 1.09-ct diamonds have G color and Excellent round cuts. However, the F clarity stone costs $8,770. The VS2 clarity stone costs $6,290.
Although the cut is perhaps the most important factor in diamond quality, it's actually a poor indicator of rarity. A common stone with low clarity and color grades may look amazing with an expert cut. On the other hand, a rare, perfect specimen with Flawless clarity and D color may be ruined with a bad cut.
That said, relatively few diamonds are cut to what the Gemological Institute of America (GIA) considers "Excellent" proportions. Why? It all goes back to the carat.
Rough diamonds — the actual pieces mined from the Earth — come in a variety of shapes and sizes. Diamond cutters have to determine how to cut each rough piece to make the most profit. Remember those "magic number" benchmarks? If diamond cutters have a choice between turning a piece of rough into a 0.96-ct stone or a 1.04-ct stone, more often than not, they'll go with the 1.04-ct stone. Even if it means cutting the diamond to less than ideal proportions, the extra weight will bump up the stone to a higher per-carat price range.
As a result, Excellent cut diamonds are rare, but that has more to do with economics than diamond rarity.
(You can learn more about diamond proportions and cut grading here).
Should I Buy a Rare Diamond?
Most likely, diamond rarity isn't going to factor into your buying decisions. That's OK. In fact, unless you want a fancy colored diamond or a particularly large one, you're not buying a rare diamond. Even if you opt for the top color and clarity grades for colorless diamonds, at a standard carat weight, those stones just aren't all that rare. Of course, they're rarer than diamonds with lower grades, but they're still not that rare.
As we've noted, most consumers can't distinguish high color grades anyway, and even mid-range clarity stones can look flawless when set in jewelry. Diamonds with the rarest, highest grades won't necessarily offer greater beauty, but they will command higher prices.
A diamond doesn't need to be rare to be special to you. So, buy a diamond that will look great in your ring, at a fair price.
If you're thinking of buying a diamond online, we recommend vendors like James Allen and Blue Nile. Their magnified videos and viewing tools will help you really see what you're paying for. You can also use a custom jeweler like CustomMade. Their experts can help you find the best diamond within your budget and set it in a ring that's completely unique.
A geologist, environmental engineer and Caltech graduate, Addison’s interest in the mesmerizing and beautiful results of earth’s geological processes began in her elementary school’s environmental club. When she isn’t writing about gems and minerals, Addison spends winters studying ancient climates in Iceland and summers hiking the Colorado Rockies.
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