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Gemstones Colors and Prices



         


   

      Gemewizard archive daily article








  Can we discount color saturation as a price indicator?

by Guy Borenstein FGA and Menahem Sevdermish FGA D.Litt.
Database Management by Shmuel Chocron
October 14, 2012


The loose diamond market has a very specific way of stating prices during the course of a business negotiation. Around the world, diamonds are offered for sale at discount below the rate published by a mutually accepted pricelist. In some special cases, such as 5 ct. D-Flawless diamond, a premium may be added to the price instead. Indeed, more often than not, the sellers do not even mention the price, but rather the percentage change.

However, with fancy colored diamonds, the situation is slightly different. Historically, because there is no widely accepted price for each color grade, the actual amounts paid for the same grade vary greatly in a rather wide range of goods.

There are initial signs that prices are beginning to stabilize in the fancy colored diamonds market, but there is still insufficient data regarding the difference between the published asking price and the actual transaction price, which is the real amount paid by buyers. "7% below" would have little meaning in this sector of the trade.

But is the situation changing? Is the colored diamond market beginning to resemble the colorless diamond market? To better understand what is happening, this month we decided to look at whether the market has adopted, unknowingly, specific price differences for different color grades.

To perform the task, we scanned our vast database, containing actual sales activity, to obtain average selling prices. Next, we compared the resultant numbers with the prices quoted by GemePrice™, which are calculated using as a reference the prices offered for thousands of diamonds for sale online. To make the comparison, we selected yellow colored diamonds, weighing 1.00 to 1.49 cts.

As shown in Figure 1, Fancy Light, Fancy and Fancy Intense results showed very small discrepancies between the average purchase price and the pricelist, ranging from -3.3 to +3.9%. But when it came to Fancy Vivid stones, a premium of +27.8% was paid above the published price. In the darker tone grades, Fancy Deep and Fancy Dark, the displayed average discount from the published price was between 7.5% and 33.7% respectively.

The insignificant changes in the Fancy Light, Fancy and Fancy Intense grades point to no discounts or premiums for these diamonds. The buyers accept the sellers' asking prices and are willing to pay them. However, for Fancy Vivid diamonds, they are willing to pay even much more.

This is not the first time that we have seen significant differences in pricing behavior with Fancy Vivid grade. In our
May 2012 newsletter, Fancy Vivid yellow prices dipped, while rises were reported for Fancy Light, Fancy and Fancy Intense grades.

Right now, the price reductions in Fancy Deep and Fancy Dark grades indicate that the sellers may be struggling to sell these darker colors, offering them at discounts. While the Fancy Deep grade is offered at a relatively low discount, the Fancy Dark grade prices are dramatically reduced, by one third, to allow the transaction to occur.

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