Spring, one of the strongest sales periods for diamonds, is in full bloom.
The average price paid for a diamond engagement ring in 1992 is just over $1,500, a level that's remained fairly constant the past couple of years. Yet the average size of that diamond is now one to one-and-a-half carats. That's smaller than a stone bought for that same average price several years ago, an indication of a modest rise in cost per carat.
What's really surprising, however, is that the value of diamonds hasn't actually declined during recession, since demand has been low.
"It's true that during a period of low demand such as this we'd normally expect prices to drop, but the DeBeers diamond cartel has succeeded in holding back the supply of rough diamonds to keep that from happening," explained Joseph Schlussel, a diamond dealer and publisher of the Diamond Registry Bulletin, a closely followed publication for the diamond trade and serious buyers.
"As a result, in the past several years there's been little change in the price of polished diamonds."
Diamonds as investments have always been a tricky topic. For example, a record price of $12.8 million was paid at a Sotheby's auction a year and a half ago for a 102-carat modified pear-shaped flawless diamond. But that doesn't mean the prices of all diamonds appreciate dramatically.
"The diamond market goes up and down and we do not recommend buying for investment purposes, since diamonds don't pay dividends and you must insure them," advised John Block, senior vice president and head of the jewelry department at Sotheby's in New York.
"Over a period of time, fine jewelry and stones have certainly done well, but probably not as well as the stock market."
"In the past year, diamond pricing has been quite irregular, with some cheaper examples going down and moving up again, though they've generally wound up level with a year ago," said Philip Hahn, co-chairman of M. Fabrikant & Sons of New York City, the nation's largest diamond wholesaler. "Over the past five years, certain types of diamonds appreciated 25 percent in value, many others rose about 5 percent and virtually none went down in value."
Criteria for diamond quality consists of: cut (angles and proportions calculated to produce brilliance); carat weight (a carat equals 200 milligrams); clarity (the fewer flaws, the better); and color (with emphasis upon the "whitest" diamonds with the least color).
"It is absolutely urgent that individuals shop around, since they'll be shown diamonds cut to different proportions and they must let their eye and heart be the guides," said Lloyd Jaffee, a diamond dealer and chairman of the American Diamond Industry Association in New York City, which represents diamond trading, manufacturing and importing groups.
The round stone remains the most popular cut, while the oval, marquis (oblong with points on both ends) and pear shapes are other established cuts that remain strong, Jaffee said. Newer square cuts such as the princess and radiant haven't quite reached that interest level yet. In color, besides the whitest diamonds retaining their popularity, there's been a trend toward fancy stones in pink, blue, green and intense yellow, said Block.
The American Gem Society and the Gemological Institute of America both grade diamonds on quality and give certification to jewelers who pass a course in gemology. Obtain approval of the grade of your diamond from a gem laboratory that follows the standards of a reputable organization.