How enigma of diamond prices is ripping off consumers

Diamond Prices aren’t Consumers’ Best Friend anymore!

Diamond Price
[Image Courtesy: Naturally Colored Diamonds]

Yes, you read that right, the famous maxim about diamonds to be the best friend has lost some sparkle, at least when it comes to diamond prices. In February 1982, Edward Jay Epstein had published an elaborate article in The Atlantic – “Have You Ever Tried to Sell a Diamond”, which revealed that not just the diamond prices dropped while reselling them but also most of the jewelers would not buy them back for cash. It’s been more than 3 decades since then and until recently the situation had largely remained the same. However, an interesting development is shaping up – diamond producers/ jewelers rolling out diamond buy-back programs.

Earlier last year, De Beers officially entered the second-hand diamond business. Recently, Blue Nile, a leading online jewelry retailer, also launched a diamond buyback program, by tying up with NY-based Mondiamo. Such moves aimed to address the opaque nature of diamond valuations and solve consumer issues, definitely seems a right step forward. However, when we probed these programs a startling revelation emerged – diamonds bought and tried to be resold immediately, fetched as low as 49% of the original purchase price.


Diamond prices evaluation remain a mystery in the first place

Diamonds are not fungible, unlike gold, and the evaluation of diamond prices is a complicated and subjective process. 4Cs and other characteristics of a diamond generate over 16,000 permutations and combinations. A 2012 Bain & Co. and AWDC report mentioned that “Indeed, two appraisers can differ in their valuation of the diamond by as much as 30%”.

Price of one-carat diamond is not a standard factor that can be used to evaluate the price of other sizes even when the rest of the 4Cs remain constant. The general thumb rule is as the carat size increases, diamond prices increase disproportionately, in a non-linear manner. Cases of a same diamond with 46% variance in prices is not uncommon. Lack of uniformity of grading, benchmark prices etc. makes it a frustrating experience for many diamond buyers.

A reason for this is, for decades diamond miners led by De Beers have attributed diamonds for their ‘intrinsic value’ and discouraged jewelers to sell diamonds as an investment avenue, thus controlling the diamond prices through their arbitrary decisions.


Reselling diamonds the traditional way

It’s not that diamonds were not resold before the De Beers and Blue Nile’s buyback programs came along, but the avenues were very limited and resale prices were low. If a local jeweler appraises a piece of diamond for say USD 10,000, it is not the price at which he or anyone else would be willing to buy.

Rapaport price (one of the benchmark prices for diamonds, which are indicative only and meant more for the traders) for the same diamond grade may be around USD 4,000 – 5,000, and any dealer would be willing to buy a diamond for at most 60% of the Rapaport price. So, a diamond appraised at USD 10,000 would go for sale for only USD 3,000 to a jeweler/ trader – a whopping 70% depreciation in value of diamonds for the consumers.


The diamond buyback programs

De Beers launched the International Institute of Diamond Valuation (IIDV) for its pre-owned diamond valuation and buy-back program, which is currently available only for Forevermark diamond jewelry and at IIDV affiliated participating jewelers.

In the second-hand diamond jewelry market, apparently estimated at around USD 1 trillion, Blue Nile partnered with Mondiamo, a New York based firm that invests, operates and develops businesses in jewellery and gemstone market, to launch its diamond buyback offering, after running a 7 months pilot. Mondiamo uses Blue Nile’s live pricing data for Gemological Institute of America (GIA)-graded diamond to create guaranteed cash offer range for diamond jewellery. The data is said to be accurate and transparent compared to the traditional methods of re-selling diamonds.

“The consumers either directly come to the Mondiamo website or are directed through the Blue Nile website. They then have to enter their GIA report number and the diamond’s carat weight. Diamonds without a GIA report have to enter the name of the grading lab and their report number and the 4Cs of the stone. For diamonds that do not have a grading report, they have to be sent to Mondiamo to be evaluated and then receive the cash offer.”

If the consumer accepts the offer, Mondiamo sends them a free shipping kit through which the consumer can send her stone to company’s office for authentication and final evaluation. The diamond is then graded by Mondiamo’s gemologists. The final offer value is paid to the consumer within one business day after the stone is received.


Buyback programs fetching low valuations

Though we could not get diamonds appraised at De Beers buyback program, through various sources we tried getting some diamonds valued with Blue Nile’s buyback offering. To check the differences in original purchase price and resale value, we selected diamonds listed on various online sources (not bought by us) and immediately tried to get them appraised by Blue Nile, to avoid any time value changes in diamond prices.

Few months back, we submitted some diamond entries and were told by Mondiamo that they will value online only those diamonds that have valid GIA certificates. We then selected diamond listings with valid GIA reports.

  • For a 0.2 carat E, VVS2 diamond with GIA certificate, listed on CaratLane, priced at INR 13,353 (~ USD 205), we were told that Blue Nile does not offer buyback for diamonds below 0.3 carat
  • For a 0.32 carat G, SI2, Oval cut diamond, listed on Blue Nile itself, priced at USD 314, we were recommended to sell the same in local market since the “International shipping and duty costs are quite high, therefore the price we would be able to offer is very low.”
  • For a 0.9 carat F, VS2, Ideal cut diamond with GIA certificate, listed on Ritani, priced at USD 4,639, we received an ‘sight unseen guaranteed cash offer range’ of USD 2,274 – 2,852 – a 51% markdown in the original price.
Diamond Price
[Image Courtesy: GIA] Blacked-out screenshot of a GIA certificate of a diamond listed on Ritani

Here’s the breakdown of the offer:

A – Wholesale value range: $3,202 – $3,883

B – Setting value range: $0

C – Mondiamo fee range: $480 – $583

D – Shipping and duty: $448

E – Guaranteed offer range: $2,274 – $2,852

(A + B – C – D = E)

Even if we ignore the shipping and duty costs and assume that the owner of the diamond was in US itself, the offer range would be USD 2,722 – 3,300 – still a 41% depreciation in value, even before it was bought!! 

Diamond Price
[Image Courtesy: Mondiamo] Blacked-out screenshot of Offer received from Mondiamo
Diamond Price
[Image Courtesy: Mondiamo] Blacked-out screenshot of Offer received from Mondiamo
Diamond Price
[Image Courtesy: Mondiamo] Blacked-out screenshot of Offer received from Mondiamo

  • For a 0.37 carat J, SI1, Very Good cut diamond with GIA certificate, listed on Zoara, priced at USD 377, we didn’t receive an offer till the time of going to press, despite receiving an initial acknowledgement and several follow-ups and reminders later.
  • For a 2 carat H, SI1, Excellent cut diamond, with GIA certificate, listed on Lumera, priced at USD 15,148, we didn’t receive an offer till the time of going to press.

This goes on to indicate that existing diamond buyback programs need lot of strengthening and diamonds as an investment avenue have a long way to go.


Luxury retail stores overcharge diamonds by up to 336%

The low resale value that are being fetched for diamonds also has to do with the high markups and overcharging by jewelry retail stores. Diamond expert and jewelry restorer – Jacob Worth, founder of ‘I Want What It’s Worth’ went undercover in New York’s Fifth Avenue to 4 luxury jewelry retail chains and found that identical diamonds as sold in Costco, are being overcharged between 253% to 336% in brands like Tiffany, Cartier, Van Cleef and Harry Wisnton.

Not only that, Jacob found that the advice given by the ‘jewelry specialists’ at each store was questionable and they clearly indulged in mis-selling and misguiding consumers. A specialist at Tiffany “confidently claimed that the store used diamonds mined in the US”!!! Jacob made hidden videos and images of his undercover visits to these stores, though none of the store allowed him to take images of either the jewelry or the tags.

Jacob found that unlike the 50% average markups in jewelry stores, for a basic round solitaire ring, Tiffany’s had a markup of 253%, Cartier marked up by 276%, Van Cleef by 314% and Harry Winston by 336%.


Till the time diamonds will be considered only for their intrinsic value, transparency missing and diamond prices remaining an enigma, consumers will continue to being ripped off.


  1. I’m sending a 4.28ct brilliant cut to Mondiamo for evaluation. I have a 1979 GIA cert, which I also sent to them. They want to see the stone.

    Do you find Mondiamo to be among the best and most transparent for a reasonable price, or can you suggest another house to put eyes on the stone?

  2. The facts in this article may be accurate however, the stance is shallow and faulty. Even reading between the lines would tell you “getting ripped off” is a little strong. i.e. You buy a diamond worth $1,000 at 100% markup for $2,000, you sell it back at a 50% loss for $1,000. You got what it’s worth. They will turn around and sell it again for $2,000. That’s business. If people would stop paying these premiums they would go down. You’re not really getting “ripped off”. If that were the case almost anything bought and sold is a ripoff, which could be the case.

  3. Thanks a lot to you for sharing enigma diamond prices ripping off consumers here, these kind of ideas are were much needed. I really appreciate that you have provided the data too, really appreciative and useful blog for us. Looking for more!!

  4. Thank you for sharing this information about enigma diamond prices ripping off consumers. It was useful and interesting. You indeed have written it in a layman way so that anyone can understand and work accordingly. You have done a great job.

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