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7 posts from October 2007

Diamond Prices Going Up

Loosediamondsrough There are sure signs in the diamond industry that diamond prices at the consumer level will be raising for the next several years.  When the price of rough diamonds goes up, the price for finished (cut and polished) diamonds at the consumer level are not far behind in increasing.

Average prices of rough diamonds are up ten percent from this time last year.  There is about a 12 to 18 month time from when rough diamonds are purchased until they are cut and available on the retail market but price increases are often passed on even faster because wholesalers and retailers know the cost of new inventory will be higher than what they are selling today.  The demand for diamonds over one carat is growing faster than the demand for average diamonds.

At some diamond mines like Gem Diamonds’ Letseng mine, the average price of diamonds is 35 percent greater than a year ago.  This mine is known for producing larger sized diamonds, which indicates larger carat weight stones will be increasing much faster than smaller stones.  If the average price of all diamonds goes up 10% a year, the price of larger diamonds (over a carat) will increase even greater than the average and finished diamonds over 4 carats in weight could 30% or higher annual increases.

As I have mentioned in many previous blog articles, the reason for the price increases is simple supply and demand.  Global demand for diamonds is growing well in excess of five percent a year due in part by increasing consumer wealth in Russia, China, and India.  At the same time, supply of diamonds is starting to decrease as older mines are coming to the end of their lives and not enough new mines opening to replace that production.  There have been no major diamond kimberlites discovered in 15 years, since the deposits in numerous areas in Canada (Saskatchewan, the Northwest Territories, and Quebec).  Exploration continues in Canada and new Canadian mines are scheduled to come on line for the next ten years but there are no new kimberlites ready for opening mines 10-20 years out to take up the slack in decreased production from the older mines.

Botswanajwanengmine Diamond exploration companies are spending hundreds of millions of dollars in search for the next new kimberlite discoveries but any new finds have lacked the world-class size necessary to meet the growing demand for diamonds.  The bottom line is that diamond prices, especially for larger sizes, will be growing significantly for the next 5 to 7 years.  Consumers will find prices higher than they were a year ago but should expect even greater increases in the next several years, especially for diamonds over one carat in weight.

Competitive Argyle Pink Diamond Tender

Pink_tender_2007_174 The 2007 Rio Tinto Diamonds Argyle Pink Diamond Tender has concluded with great success.  Some of the rarest and most beautiful diamonds in the world were for sale and examined by a select group of invited buyers in Perth (September 11-14), Hong Kong (September 18-28) and New York (October 1-12).  About 100 prospective buyers were invited to examine the diamonds in secret locations, and then submitted bids for one or more of the 65 specially selected pink diamonds.

The rules of the tender prohibit announcement of the 17 successful bidders, the winning bids, or even the sales total for the tender.  The special Rio Tinto tender pink diamonds have been know to get prices of as much as $400,000 per carat, forty times that of white diamonds.  Recent projections that pink diamonds from the Argyle mine are expected to run out by 2018 have increased the public and industry’s awareness of their rarity and perceived value.

Pink_tender_2007_202 This year’s tender was exceptional due to the range of vivid and deep colors with deep pinks, purplish reds, and a rare gray-violet colored diamond.

Rio Tinto Diamonds Argyle mine started production in 1985 and the open pit mine operates 24 hours a day, 265 days a year.  The open pit’s normal life ends in 2008 but Rio Tinto has extended its life to 2018 with low-grade production expansion in the pit and new underground operations.  Historically, 60 to 80 million tons of material are extracted from the open pit operations, resulting in about 9 million tons of diamond-bearing ore and between 25 and 30 million carats of diamonds.  Moving beyond 2008, production is projected fall to about half of current operations.

Only about 5% Argyle’s production is gem quality diamonds and only an extremely small portion of those are pink diamonds.  It is certainly no exaggeration to say that the annual Rio Tinto Diamonds Pink Tenders contain exceptionally rare diamonds.

Busy Week At Crater of Diamonds

Crater392_ct_eric_blake_diamond Some visitors go days and even weeks at Crater of Diamonds State Park and never find a diamond but Eric Blake, of Appleton, Wisconsin, found two this week.  On Monday, Eric discovered a 1.49-carat and Tuesday he 3.92-carat white diamond.  His fiancée, Susan, also found 1.47-carat this week so it has been a productive time for diamond seekers.

Crater392_ct_eric_blake_diamond2 Like many of the visitors at this unique Arkansas state park, Eric returns several times a year to try his luck sorting through the dirt in search of diamonds and other gemstones.  He was carrying a bucket of mud on his way to a washbasin when he set the bucket down to switch hands and spied the 3.92-carat diamond.  While most diamonds at the park are found by washing the dirt away from the rocks and stones in a washbasin, many of the larger stones have been discovered while simply walking along the paths.

The Crater of Diamonds State Park gets is name from the 83-acre funnel-shaped crater that was formed by an explosion of volcanic gases.  Much of the material from the explosion fell back in the crater where years of erosion have increased the concentration of heavy minerals, including diamonds, in the crater area.  Today, most of the diamonds at the Crater of Diamonds State Park are found loose in the soil as they are released from the surrounding rocks from by weather and erosion.

The State Park does what it can to help the diamond production by regularly cultivating the soil to provide “fresh” sources of diamonds for visitors.  Prior to 1949, there were numerous commercial mining efforts in the area of the Crater.  In 1951, the a portion of the land was leased and open to the public as the Diamond Preserve of the United States and another section opened as The Big Mine.  For years, the areas competed for the public’s admission fees until the State of Arkansas purchased both properties in 1972 for $750,000 and created Crater of Diamonds State Park.

2.28-carat Diamond Discovered at State Park

Bill Tryhall, from Albuquerque, was the latest visitor at Crater of Diamonds State Park in Arkansas to find a diamond weighing over two carats.  Tryall was vacationing with his two brothers October 10 when he found the diamond.

The 2.28-carat diamond was the 725th diamond discovered at the park this year.  Crater of Diamonds is the world’s only diamond “mine” open to the public and where visitors can keep the gems they find.  In addition to diamonds, visitors can prospect for garnet, quartz, lamproite, jasper, amethyst, and many other minerals.

Discover where you can order the authoritative book on Crater of Diamonds State Park and where you can purchase diamonds found at the park…

Synthetic Diamonds or Diamond Simulants: Why the Confusion?

Syntheticdiamondyellow There seems to be a great deal of confusion about the words man-made, synthetic, simulated, and simulant as they related to diamonds.  I get regular questions about the differences from clients and visitors to my blog and website.  In addition, I see many articles written online that have added further confusion by incorrectly using the various terminologies.

One of the reasons for this confusion is that many of the companies that are selling fake diamonds purposely use misleading terminology in the descriptions of their products.  Many marketers work very hard to not say what their product really is (cubic zirconia for example) while making every effort to imply their product is just a different form of diamond.

The distinction starts with a basic fact:  Diamonds are diamonds and all other materials are not diamonds.  Diamond is one of the three natural forms (amorphous carbon, graphite, diamond) of the element carbon and has the following physical properties:

  • Hardness of 10 as measured on the Mohs hardness scale
  • Density averages 3.51
  • Cleavage in 4 directions
  • Refractive index is 2.4
  • Dispersion is 0.044
  • Luster index is 17.2%

There are two types of diamonds: natural diamonds and synthetic diamonds.

Other terms used to describe synthetic diamonds include cultivated, cultured, man-made, Some of the brands of synthetic diamond include Apollo, Genesis, Adia Diamonds, New Age Diamonds, Tairus, and LifeGem, and Chatham

While natural diamond is typically used for jewelry, the lower quality stones are used for industrial purposes such as saw blades and drill tips.  Most synthetic diamonds are used for industrial purposes but as the brand name synthetics improve their products, increasing numbers of synthetic diamonds are now used for jewelry.

Diamond simulants are materials that look like diamonds but do not have the physical properties of diamonds.  These diamond simulants, also known as simulated diamonds, can be made by nature (white sapphire, quartz) or man-made (cubic zirconia, moissanite, glass, yttrium aluminum garnet).

The manufacturer and retailers of moissanite typically market it as a unique material, not to be confused with diamond.  While they often compare moissanite’s characteristics with diamond, the advertising is very specific that the material is moissanite.  That is not often the case with cubic zirconia.

Cubiczirconia Much of the confusion in recent years stems from the marketing of the various brands of cubic zirconia.  Every brand touts itself as the best diamond simulant while usually avoiding admitting the material is cubic zirconia.  As a result, the shopper who reads the advertising about these brands is not sure what material they are considering and often confuses them with synthetic diamond.  Just because cubic zirconia is man-made and therefore synthetic, does not make it synthetic diamond.  However, when you read the marketing literature on the various brands of cubic zirconia, it is obvious that those companies try to confuse shoppers into thinking they are some form of diamond.

Some of the more recognized brands of cubic zirconia are:

It is easy for a gemologist to determine the difference between diamonds (natural or synthetic) and diamonds simulants (fakes) but it is not so easy to determine the true type of material from the marketing ads.  I hope that the discussion above will help to sort through the misleading marketing descriptions.  It is important for consumers to understand the terminology so they can make an informed decision on what stone is correct for their particular requirements.

If you have questions about particular synthetic diamond or diamond simulant products, please leave a comment below.  I will research the produce and respond to your comments with whatever assistance I can provide.  If you have a question, chances are other consumers have the same question and we want to help shoppers avoid making expensive mistakes whether they are buying diamonds or diamond simulants.

Blue Diamond Sells for $7.98 Million

Sotheby’s recent Hong Kong auction was the site of a record-breaking diamond sale.  The 6.04-carat fancy vivid blue diamond, cut in the emerald shape, sold for $7.98 million.  The internally flawless sold for $1.32 million per carat, which is a new price per carat record for any gemstone ever sold.  The combination of the rare blue color, the internally flawless color, and the large carat weight for a blue diamond make this an exceptional stone among world-class diamonds.

The previous owner of the diamond was a private Asian collector and the new buyer is Moussaieff Jewellers, a London based jeweler with a reputation for acquiring some of the world’s most valuable gemstones.

Blue diamonds have always captured attention because of their rarity and beauty.  There are entire books written about the most famous blue diamond, the 45.52-carat Hope Diamond, displayed in the Smithsonian Institute in Washington, DC.  The Hope Diamond started out as the 112.25-carat French Blue discovered in India, which was a source of blue diamonds from 1500-1700.

In recent history, South Africa has been the location of blue diamond discoveries, almost exclusively at the Premier Mine.  Some other famous blue diamond sales include a 1994 Sotheby’s sale of a $9 million for a 20.17-carat blue diamond ($460,000 per carat).  In 1995, a 6.70-carat blue diamond sold for $3.52 million ($525,000 per carat).

Hong Kong was an appropriate location for the record-breaking sale because diamond shoppers there are notorious for their thirst for luxury diamonds.  Hong Kong is the king of glitz in Asia, especially for colored diamonds.  Colored diamond sources are diminishing so the rare pinks and blues are becoming increasing popular with serious collectors in Europe, the United States, and Asia.

Diamond Color Grading Mechanized

IdllogoHistorically, diamond grading laboratories like the Gemological Institute of America (GIA) and American Gem Society (AGS) have graded diamond color by human eyes comparing diamonds with “master stones.”  A new laboratory, the Dubai-based International Diamond Laboratories (IDL), has developed a new device called the Color Meter, which is designed to accurately color grade diamonds.

With human eyes examining diamonds there are many factors that can influence the accuracy of color grading. 

  • Daylight varies from country to country and hour to hour during the day
  • Clouds, pollution and other atmospheric conditions are ever changing
  • Light bulbs producing “daylight” spectrum of light are inconsistent
  • Eyestrain can change perceptions over time
  • Surroundings, including cloths, skin tone, walls, etc. can vary

Human bias is a big factor in judging color.  It is no fluke that certain grading laboratories (EGL and IGI for example) are often off in color grading accuracy.  The training, supervision, and motivation at those laboratories tend to be lenient in color grading, which benefits the retailers that will ultimately sell the diamonds.


Providing accurate, consistent color grading will mean big changes for the diamond industry if widely implemented.  The big difference between the major diamond grading laboratories tends to be in grading color.  While all laboratories claim to adhere to the GIA color grading standards, not all laboratories are accurate in applying those GIA standards to the diamonds they are grading.  For example, we have seen EGL graded diamonds that are 1 to 3 color grades off the GIA color grade. 

What happens when diamond color grading becomes mechanized and accurate?  Consumers are the big winners and jewelry stores who sell EGL or IGI graded diamonds lose one of their big money makers.  Today many consumers assume that color grading is consistent between laboratories and they think they are getting a “deal” with their EGL or IGI graded diamonds.  The reality is they are just paying for a lower color diamond than is represented on the grading report.  If color grading is accurate and consistent in the future, the wholesale price for diamonds will be consistent between the grading laboratories and retailers will no longer be able to use the cheaper EGL or IGI graded diamonds to bolster their profit margins.