Sunday, August 30, 2009

Life - How To Buy A Diamond

Forgive the smudgy fingerprints but I was too amped to take my time. This was two days after I proposed to the missus. I struggled to get the ring away from her for even a minute. Okay, just kidding on that one. Note how sparkly it is, even in the shadow of the lid?

We're not jewelry folks in general - in fact, we only have our wedding bands and her engagement ring. But after that funny comment on the "rock" in the bandaging post, I realized I have a strong opinion on how to buy a diamond, just like I do on bike set up, equipment, and racing tactics and etiquette.

So, for a nice Sunday post, I'll describe what I'd recommend, based on my limited experience and some knowledge passed on by some folks in the biz. For those of you in a diamond buying part of your life, it's pretty straightforward, just seriously expensive. I hope this helps.

FIRST: Figure out a budget for a ring. Then add a bunch to it, because they're expensive. If you're fortunate, you may be able to pass on a family heirloom diamond. That's a great way of paying homage to your family while saving money for other things.

If there is less than $1000 holding you from your ideal stone (in 2006 anyway), get a white gold engagement and wedding bands, not platinum ones, that'll save you a bunch of that $1000. At some point though $1000 does not buy you that much more diamond, and you can go with the platinum ring (and wedding bands) because it won't make a difference in the diamond.

There is a relatively standard way of pricing diamonds - you get the diamond's characteristics and price it by the carat. It's based on size as well, so a 2-2.99 carat diamond is more expensive per carat for the same characteristics as a 1.00-1.99 carat diamond. Come to think of it, I think the increments are in quarter carats. I forget, it's been a while. Whatever. You get the point - going up to the "next size" costs a bucketload of money.The national diamond association folks (I don't know who they are, but they have a trade magazine) publish the average $/carat in the US. This sets a typical retail price.

A lot of folks, and I mean a lot, go online to buy diamonds. If you know what you want, it's a good way to do it. After learning that pretty much all my close friends that got married went there, I went to Blue Nile. I wish I could get commission on that link but I'm not.

SECOND: Decide how big or small you want. Luckily I chose someone with dainty fingers :) So even a 1.5 or 2 carat stone looked simply ostentatious on her finger. However, choose a minimum acceptable size, because that's where you'll probably end up, once you start looking at the features I set out below. I ended up looking to buy something above .85 and dreamed about 1.25. I can't remember the exact spec but I was looking for as close to 1.00 as possible, but in the .9s (like 0.97 or something). If a 1.xx stone popped up in my radar, I'd look at it.

Hint on size: going a touch below a full decimal (.9 vs 1.0, or 1.4 vs 1.5, or 1.9 vs 2.0, etc) saves a ton of money because you are one step down in the $/carat chart mentioned above. And no one will know - who can tell if you're missing 1-5% of 1 or 2 carats? Use that difference to buy the following diamond properties I lay out below. Therefore subtract 0.01 from the numbers above for my real goals. I recommend you do the same.

Hint (yet another): A GIA/AGSL certified diamond, although more expensive, will allow you to prove without a doubt exactly what you have. The certificate will describe the color, clarity, and mention a burble on the cut. If the diamond is etched with a serial number, that is noted. And, of course, your diamond now falls immediately into the VVS1 grade because it has a flaw - the etched serial number. Okay, I don't know if that's true, but the serial number is definitely an external flaw visible under a loupe.

However, one of the important things it does is it will map out the flaws in the diamond on a map. Since your diamond is unique, that is a help identifying your diamond. This will help if you have to file a claim or something. It'll also assure you that you really did get a D color diamond (like how can you tell if it's not detectable to the human eye?). Or at least reassure you that, "Well, I think I got the wrong diamond because look, there's a black speck there, and we bought a VVS1." A VVS1 would be one that is flawless to the naked eye and little things are barely visible only under a magnifying glass. This is good if you ever need the diamond serviced and someone pulls a stunt on you and swaps diamonds (extremely rare, but when it happens, it's good to know what you're supposed to have).

Another Hint: Diamonds are not mass produced. You can't say "Oh, I want a 0.99 diamond". You can't say, "Yeah, remember that diamond you had here last week but you sold it? I want one just like it." It doesn't work that way. They're unique stones, all different. Even within the same grades you'll see differences. I spent time comparing the spec sheets on two diamonds and chose the one with the (extremely slight) flaws that I felt were "less 'flawfull'."

What's that mean? If you are good with budget and what you want and you see a diamond that you like, GET IT. I had to put off my proposal for a while because I didn't grab the first one that fit my world. I had to wait for weeks for another one to show up. It wasn't bad though - at least I knew I was getting what I wanted.

Finally, the diamond specs you should focus on, after setting budget and minimum size:

1. Color (how colorless it is). That means more light gets reflected back with no filtering. If you have a lot of color, the light returning is filtered and not as bright. Because I'm a sucker, I wanted to get a colorless diamond, a D. E would be fine.

2. Cut (how bright it is). An ideal cut reflects virtually all light back out the top. A poorer cut diamond will look darker in the middle because a significant portion of light is directed out the bottom or the sides, into the ring. I believe cut is determined by the diamond's "grain", so you cannot cut a diamond better than it was created in the first place. Hers is extremely well cut (ideal or very good, I forget which), and it makes it very nice. I like saying "sparkly". I would not recommend a diamond below "good", and try and get "very good" or "ideal".

This was the worst characteristic for me because it's the least objective thing when grading a diamond. There is no measure of % of light reflected up for example, instead they rate the diamond on stuff like "scintillation" - like how the heck do you objectively grade that? Blue Nile uses the height of the diamond, also called "depth", and the width of the top flat part of the diamond, also called "table", because geometry should predict, sort of, how much light will pop out the top. Cut affects how the diamond looks as much or more than anything else. It also costs a lot of money to get a better cut diamond.

Cut is NOT a standard grade thing. In fact, even certified diamonds were usually not rated for cut prior to 2006. Most folks ignore it because they focus on size and clarity. However, without cut, the diamond looks dead and dull. Ask to see a few different grades of cut diamonds (from fair to ideal). To the naked eye this is the most obvious feature of the diamond, and to me, much more critical than the attention it (doesn't) get. Because of that, remember: Cut is critical!

3. Then you get as good a grade (Clarity) as you can get. This counts how few flaws there are, and a hint - you don't want flaws visible to the naked eye or even under minor magnification. The ideal diamonds are insanely expensive (IF, or Internally Flawless) and usually reserved for news stories about what necklace a particular model is wearing. Most good diamonds are VVS1, VVS2, VS1, VS2. VV=very,very, V=very, S=slightly included, 1 is less so than 2. Once you go to SI (slightly included) it's possible to see flaws with the naked eye. You can guess which end I aimed for.

And yes, I obsessed over what diamond to get just as much as a bike part. Heck, look at what I just wrote off the top of my head. Unlike bike parts I had to learn all that stuff above before I went and committed to a diamond. Obviously there was a huge wait between the time where I decided I wanted to ask her to marry me and when I actually did. I figure I did 3-4 months of somewhat obsessive research, then another couple building funds, then part of another because I missed that one diamond. If you figure out when I'd have time to do all that research, you'll realize why I proposed to the missus towards the end of the Spring Series - I did my research in the Fall/Winter season.

The missus ended up with a very nice sparkly diamond. I am really proud of my choice and she really likes it too.

Oh, and it photographs well too.


Anonymous said...

And I thought you asked her during the Spring Series because there were some dollars coming in.
Like I said before,
WOW,look at the rock on that finger!
It must be love!

Kim said...

Love the track photos. There was girl taking photos one day when I was up there, but if she posted them on line, I never found them.

I hope you are healing well.

Aki said...

Yeah, okay, I'll admit it, I love the missus.

Spring Series - 2009 was the first year I could take money from the races, so back in 2006, well, whatever was there just sat there.

Kimberly - I've been looking for track photos as I've mentioned, and Craig Roth's link was the only one I could find. I have no idea who that girl is (she races for Cambridge, that I know), but she was there a couple times over the 8 or 10 times I was there. I'll post a link if I find them.

No One Line said...

you seem to have done your research. have you come across anything that evaluates any attempts to make something similar to Fair Trade certification for diamonds? though i'm not in the market i'd be interested in knowing if there are ways to avoid supporting the political and military environments that give rise to the whole 'blood diamond' phenomenon.

Aki said...

NOL - No, I didn't find anything evaluating a diamond's origins. I think once the diamond gets a bit mixed up in the distribution chain, smuggled diamonds will inevitably find their way into the system.

With the money at stake, I think it'll be very difficult to control things. It's like the drug trade in Afghanistan - too much money in a poor environment. Heck, too much money in even not-so-poor environments.

fixedgear said...

Beautiful ring and very helpful guide. I personally think the setting is just as important as the diamond (it needs to hold the diamond securely in place, after all). Platinum is more durable than white gold and is going to hold up better over time, so it might be worth dishing out the extra dough for the setting rather than a few more fractions of a carat.

adventurelover said...

Hey! This is a great guide, but I have to say that I've never heard of a diamond being considered 'flawed' as a result of being certified by GIA - when they inscribe a serial number on a diamond, they do it with a laser, and it shouldn't have any effect on the clarity grading of the stone. GIA diamond grading reports are a good thing to have for the diamond in an engagement ring so that you know exactly what you're getting, as you mentioned... I was really surprised when I learned that the 4C's of a diamond can't be accurately judged outside a lab, especially after all the guides I had read talked so extensively about them! Anyway, gorgeous ring and great post!

Aki said...

fixedgear - true that on the setting (I forgot what it was called when I wrote the post). The point on the setting is some folks will look at a $4000 diamond, and have a $4500 total budget. At this level it's worth it to jump a bit for a slightly nicer diamond (typically to get a slightly larger one). The savings on the setting may be significant, and you could also go less expensive on the wedding bands. I think, though, that ultimately people go over (I kinda did) just because it's a once in a lifetime thing (at least it's supposed to be).

Of course, if you're looking at $10-15+k total cost for a ring, saving a few bucks on the setting won't matter. For a jewelry store $20-30k is not unusual for a ring, and $70k would be a "nice sale", and this is 12-14 years ago. I don't know what it would be now, but back then bikes were $5k tops, and now they're $10k pretty easily.

adventurelover - on the 4Cs, what's interesting about the good diamonds is that you can't see the stuff without having the loupe (the magnifying thing that you hold to your eye). And cut is not really emphasized at all, but that's the most noticeable to the naked eye. You can't tell the difference between 0.9 and 1.0 carats, D and E color, or VVS1 and VS1 clarity, but if the diamond doesn't sparkle, it's painfully obvious.

On the GIA cert, you're right. I thought there was an indication of where the serial number is etched, but I just checked the least expensive FL (flawless internally and externally) diamond. Holy smokes, 1.16 carat, $30k for the stone. No indication of serial number as a flaw. Ideal cut, D, FL, this thing should dazzle.