Thursday, February 28, 2013

How to Sort Through Diamond Prices

Diamond pricing is tricky business.  You may have noticed this when you browse different listings and you see two stones that look just about the same, yet their pricing is totally different.  So how can you know what is a good price?

Diamond prices already start out artificially inflated.  Diamond is one of the most abundant gemstone in the world.  But diamond suppliers keep prices high by controlling the market:  most mines are owned or co-owned by the same supplier (de Beers), new mines are bought out and shut down or production slowed, and diamonds are stowed away when prices are too low so that supply is choked off.  Even independently owned mines in Australia and Canada adopt similar strategies because it is not in their interest to lower the retail market value. 

Because diamonds are a controlled market, it is easier for industry to then establish “list” prices, available to wholesalers via trading networks like Rapaport and other diamond exchanges.  These keep track of diamond sales and adjust prices accordingly – despite lists, prices do fluctuate, in other words.  This is how the price lists look:

In industry, gems are then traded at various “discounts” off “list price”.  Common discounts are just a few per cent, however.  Retail pricing is calculated by doubling list prices (or more).

There is also a market in used diamonds.  When old gold is sold (i.e. through pawn shops, or companies that collect old gold and pay out cash to consumers), any gem contained in the jewelry is broken out.  Refineries buy gold, not gems.  Some shops collect them and then resell unsorted parcels of colored stones at pennies.  Or the occasionally valuable gem at more.  Diamonds are sold to dealers and setters for cash, which is anywhere between 20 and 50% off list price. 

Your objective, when you buy a diamond, is to get as close to the Rapaport list price as possible.  For this, you need very exact information: the per ct size down to the last point, color and clarity.  This is because a half ct diamond for instance can cost a couple of thousand dollars if it’s flawless and colorless, and it can cost $50 if it is totally dead.  Many list prices stop at M color, I3 clarity, but there much is worse stuff out there.  When you decide what you want, see what color and clarity grade you can live with before you shop around.  I would be very happy with a G/H color VS2 when buying a fine diamond, but if I wanted a brown or yellow diamond, I might take an SI2 or SI3 – visible inclusions that is.  The most important thing in a diamond, for me, is brilliance.  Even an SI3 can be very brilliant and I then won’t care that it has bubbles in it.  

The next thing you need to find is a price list.  This is the trickiest part.  The above link is very useful, it’s not up to date but that’s ok (and I think it’s not entirely wholesale either).  You can also go to sites like Price Scope to see what their list prices are – or try to look around and get an average, then figure that wholesale is half of that.  Current Rapaport prices are a well kept secret, I don’t have access either but all the diamond dealers I know do, and so do the labs, so I can request a list price at any time.  You can average yours out over several websites.

When you are making a larger diamond purchase, you should definitely get a certificate as well.  Most 1+ carat diamonds are traded by the cert, meaning only the cert is shown around, not the actual stone.  GIA is the most commonly accepted, and the strictest in terms of rating.   EGL is also used (especially for vintage diamonds because they use a different scale for those, whereas GIA uses the same for all white diamonds, regardless if the cut is vintage).  With a non-GIA certificate, smart buyers assume a less stringent rating and can thus expect to get a lower price.  So, if I want a fine diamond and only an EGL is available which rates the stone SI1, I might assume GIA rates it SI2 and try to buy the diamond at the SI2 price.

Two last observations: many diamonds are irradiated for extra color, and white diamonds lazer enhanced to get rid of inclusions.  These treatments need to be disclosed by law.  Still, you should ask.  Someone may have “forgotten” to tell you, but when you ask, they can’t forget to respond.

Second: vintage stones and colored diamonds are often traded at a premium.  Vintage gems cost up to 30% above list, and colored diamonds are all over the place depending on what color and size.  Browns and champagne colored stones cost less than white, but natural yellow, pink, and on the extremely rare end, blue, green and red, can be very expensive.

Tuesday, February 12, 2013

What to Consider When Requesting Custom Jewelry Work

I get requests for custom work every week, and, of course, sometimes there are fiscal surprises on the part of the customer.  I might quote $250 just for labor, not counting silver, gold, or a gem.  Here are some things that help avoid the surprise and let you calculate ahead of time, starting from the least labor intensive to the most.

Using a finished piece and popping in the gem: a number of my jewelry pieces are actually finished as is and hold a specific size stone.  All I have to do is have it set.  My stacking rings are an example, so are many of the gold pendants with a fixed bail.  This is the cheapest you can do in terms of labor, because I just call in the casting or buy the finished piece.  Minor and doable modifications are changing the bail, adding one in a different place, soldering posts onto earring settings, or switching out ear wire.  With these jobs, I can charge very little for labor.  But major modifications, including changing the gem size, are impossible.

Rose Gold and Silver Castings

Basic assembly: many of my other rings use finished stone settings and silver wire, which comes in almost any mm size, square, flat, or half round, and sometimes with patterns (you can also get rings with 2 settings for side stones and an opening in the center for your main gem, so all you do is solder one setting).  Some of my dangly earrings are the same.  I buy settings and components (like ear wire, or basic metal shapes) and solder them together.  I pickle and tumble the piece, pre-polish it to get rid of soldering spots or smooth over seams, then I have the gem set and pay out for a final polish under the large wheels of a professional service (which includes ultrasonic and stem, plus rhodium plating for white gold).  My basic ring charge is $70 (without the stone), in silver this includes the materials unless they’re heavy, it includes all my labor, or hire out for, setting and final polish.  I often don’t have time to do the assembly myself, so then I put the materials needed, i.e. wire clipped to size, setting, stone, and any instructions in a jewelry envelope and drop it off with my jeweler (and then setter and then polisher).  But when I do them at home, figure on an hour to make a piece, not counting other labor (convos, photos, shipping…).  One limit to these designs: it is nearly impossible to solder together several parts.  Adding the gold balls is tough, soldering settings side by side between ring shanks nearly impossible without it looking uneven or the settings being in each other’s way (the setter still has to get in there, too).

Silver Wire and Settings
Wax design: my melted rings and flowers are made from wax, and I usually charge $90 for one of those if I make one from scratch.  My wax work is not precision work, it’s done by hand with sheet wax which is then passed over a candle for a melted look.  The wax then gets cast and pre-polished.  I can then add beads, or prongs, or even a setting.  Then I have the gem set and final polish done.  By contrast, making a gemstone setting in wax requires a different technique, using burrs and wax files, and it takes a lot of practice and time, possibly all day.  (Nowadays all that is done by computer.)  I love wax work, but often no two items come out the same.  The rings have to be made to size, though some of my flowers are now castings (why do the same thing over and over?).

Bezel making: settings for odd shaped rose cuts, pieces of rough or cabochons often have to be made, the commercial settings don’t come in that many sizes and only fit rounds or ovals.  For this, the bezel wire has to be shaped around the gem, soldered, then refitted (to make sure it still fits) or reshaped, then soldered onto back plate, the plate cut and filed down, then a bail or ring soldered on, filed again, pickled, pre-polish, then stone setting, … If I am very fast I can make 2 in an hour, but usually I set aside an afternoon to make 5 or 6.  I usually charge $70 plus materials.  And for gold, I hire out, because periodically I still botch a bezel, and you need to be very precise to cut down on metal waste.

Bezel Set Emerald Ring, Made from Scratch
Advanced metal-smithing: channel setting, and more elaborate ring designs in gold require metal-smithing techniques beyond my expertise.  Also, the channel setting requires lazer soldering, and a lazer machine is about $40,000.  A good channel setting job takes about an hour, but you also pay overhead and machine use, so the jeweler I use charges anywhere from $50 to $120 – my cost, for channel setting, not counting ear wire, jump rings, or other materials.  He charges anywhere between $80 and $200 for a ring. 

Channel Set Diamond Pendants
CAD design: do you like the halo rings that I now have?  Those are made in CAD, computer design software.  You can scan in the gem you want to use, or enter the dimensions, and you can make just about anything.  (Imagine someone carving the tiny prongs for diamonds out of wax, or worse, soldering them all together – it’s just about an impossibility).  For CAD designs, I have to hire a designer.  It can involve a lot of back and forth, but the results are often perfect.  3-D printing gives you a piece of plastic, which then has to be cast.  The cost is $200 minimum for design and plastic.  All the other steps, and costs, still follow (casting, pre polish, setting, etc etc).  But if you want the perfect ring, this is the ideal way to go, of course.

6mm Cushion Halo Ring, in Production