Diamond price changes vary greatly by carat weight, color and clarity. This is especially true for the price increases we have seen in recent years.
The chart below (click chart for larger view) shows the total percentage increase from the start of 2005 to the start of 2008 for round diamonds with various color, clarity and carat weight combinations. I have focused on colorless (D, E and F) diamonds but similar trends are true for G, H and I color diamonds.
The following observations reflect the information in the chart.
1) Four and five carat diamonds have significantly increased in price more than lower carat weights. The one and two carat weight diamonds have increased relatively little over the three-year period and in some cases have exhibited no price increase.
2) The VVS2 clarity grade has experienced the highest price increase across almost every carat weight and color grade combination.
3) Diamonds with SI1 and SI2 clarity have shown considerably lower price increases, especially for the three, four and five-carat weight diamonds.
4) Diamonds with Internally Flawless clarity have lower price increases than diamonds with VVS and VS clarity grades.
5) Diamonds with F color have experienced higher price increases than E color, which are higher than D color.
For consumers who have purchased colorless diamonds with VS2 or higher clarity in the past, the price increases indicated that the value of their diamonds has increased significantly. As a result, they should consider getting their insurance appraisals updated to reflect the current values of their diamonds.
For consumers ready to purchase and wondering about the “investment value” of their purchase, the colorless, diamonds with VVS and VS2 clarity would appear to have the greatest opportunity for future appreciation, assuming that recent history is indicative of future performance.
As the number of affluent diamond buyers worldwide increases and the production of large diamonds (3 carats and above) decreases, the price of larger cart weight, high clarity diamonds is projected to explode. This trend is especially true in the case where the diamond is unique in the marketplace and consumers are bidding up prices. When cutters and wholesalers have waiting lists for particular types of diamonds, they can ask and get almost any price they want for the diamond when it comes on the market.