Use the 4Cs to Find Bargains

July 1999

Diamonds:News

Use the 4Cs to Find Bargains

Good-deal diamonds have been overlooked in the frenzy to find the "best"

The most popular diamond category, the 1-ct. G VS1, could be compared with the most desirable dates for the high school prom. Everyone wants them. And once you've found them, you've got to pony up serious bucks.

Shortages in this category have resulted in prices inching up 2% to 5% since January. De Beers' tight control on supply for over a year indicates the trend will continue in the near future.

Diamond prices in most other categories have reflected a "buyer's market," but many believe a reality check is in the offing; shortages have already been seen in a series of midrange categories. Still, bargains exist for every category in each of the 4Cs: color, clarity, carat and cut. Let's take a look at each category to find the hidden bargains.

Color
At Jewelers of America's Diamond Day during the JA International Jewelry Show in January, dealer Jeff Fischer of Fischer Diamonds, New York City, said price lists have made whiter goods more well-known and more popular. Supply and demand dictates they're also more expensive. "Retailers should try to cultivate lower colors among consumers," he says. But the cut must be good in order to persuade consumers to take a lower color grade.

"There is more merchandise in the J-K-L range versus a scarcity of F-G-H-I colors, which are so desirable," says Richard Drucker of The Guide,a pricing publication based in Northbrook, IL. "If consumers are willing to sacrifice one or two color grades and accept more color, there could be some savings. The very top stones, such as D-E colors combined with VVS clarities, are negotiable, so there is some bargain-hunting in the high-end categories as well, he says.

A recent Rapaport Diamond Reportreflected a 60% price differential between a 1-1.49-ct. round G VVS2 at $7,000 per carat wholesale and a 1-1.49-ct. round K VVS2 at $4,400 per carat.

Clarity
This category is a little more dicey. However, Sheldon Kwiat, Kwiat, New York City, says the biggest shortages are in the SI through VS categories. Therefore, opportunities are available in the VVS range on the high end and the I category on the lower end. Drucker agrees: "Right now the SI category, especially combined with good color, is the easiest to sell and the hardest to get." On occasion, if he is checking lists of diamonds available for sale, Drucker notices the difference in price between an SI1 and a VVS1 is often negligible. "There are some bargains for better stones, just because the market demand for a slightly lower quality is so high," he says.

Carat Weight
Larger diamonds sell briskly in the United States because of the healthy economy, dealers say. The demand has created shortages, with diamonds in the 1.5-1.75-ct. range the most difficult to find, which then causes the prices to rise.

For dealers, owning a large stock of good-quality diamonds is a positive move right now. "Larger and better stones in any shape are a good buy because they sell – those are stones I can turn quickly," says Eli Haas, president of the Diamond Dealers Club of New York City and of his own business, ENH, New York City. Haas sees shortages starting because the market is firming up substantially. "It's an ironic force of nature that buying irresistibly gravitates toward those items that cannot be found easily," he says.

What's truly available on the retail side of the market? Remain open to diamonds under a carat and away from quarter-size markers, such as diamonds in the 0.85-0.9-ct. range. A few points of weight lower than a standard such as 1 carat can mean a 70% difference in price per carat.

Cut
"It really is a situation of demand and supply," says Brian Gavin, president of Alpha Diamonds, Houston, TX. "Right now, H VVS goods are plentiful in average and reasonably good makes." However, Gavin, whose company sells Ideal cuts or what he calls "super Ideals," with Hearts and Arrows symmetry, says the advantage lies in being able to sell a branded item of excellent cut quality. Still, for jewelers seeking bargains to pass on to customers, unbranded near-Ideals are definitely the cheaper buy.

– by Robert Weldon, G.G.



Copyright © 1999 by Bond Communications.


 

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