Naturally Colored Diamond Blog

The Keys to Buying Loose Colored Diamonds

Posted by Tony Cathaway on 4/7/16 8:00 AM

When looking to purchase loose colored diamonds, whether to set in an engagement ring, as part of a new necklace to expand your jewelry collection, or for an investment, the task at hand can be overwhelming. There are a large selection of diamonds that vary in size, color, cut and grading. To the untrained eye, these different variables can seem insignificant. As the interest in purchasing loose colored diamonds as alternative investments increases, it is vital to keep the following guidelines in mind when making a high-dollar purchase. 

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Things to Know About Loose Colored Diamonds

A big concern of diamond investing is how to evaluate a stone’s worth. Since this task can be challenging even for experts, The Gemological Institute of America (GIA) put in place a universal pricing guideline. This tool is used to describe the quality of a diamond, which speaks the language of both sellers and buyers

The four C’s of diamonds are a method used to evaluate a stone’s color, clarity, cut, and carat weight, however these elements vary slightly for fancy color diamonds.

When buying loose colored diamonds, the color is the defining factor in determining value; the richer the color, the higher the price.  This is contrary to what is known about colorless diamonds where any visible tint of color deters the stone’s value. The GIA grades colored diamonds on the depth of their color, ranging from fancy light, fancy, fancy intense to fancy vivid.

Clarity in diamonds refers to the presence of flaws that affect the passage of light. These inclusions can affect the  brilliance and intensity of color in the diamond,  thus affecting its worth. However, in fancy colored diamonds, clarity is a factor that can often be overseen if the intensity and rarity of the color is on the high side of the spectrum.

The cut of a diamond is graded between fair, good, very good, and excellent, depending on the angles of facets, number of facets, symmetry, and how well light reflects back to your eyes.

Carat weight in fancy color diamonds is as important as with colorless diamonds, since these gems are priced per carat. Large fancy colored diamonds are less frequently discovered, which skyrockets the price of the larger stones when found. 

Due to the shortage in availability for fancy colored diamonds and the increase in popularity, prices can be exceedingly high. However, if you are looking for a quality gem that can result in a high return on investment, naturally colored diamonds may be a strong bet.

Only one in every ten thousand carats mined are a naturally colored diamond, therefore increasing the presence of treated diamonds in the market. Treated diamonds are modified through a color enhancing process involving high levels of temperature and pressure. Essentially, these are low quality stones that are enhanced for more vivid shades and desirable colors.

When purchasing loose colored diamonds, it is best practice to request a diamond certificate, often referred to as the fifth C. The most commonly used diamond-grading laboratory in the USA is Gemological Institute of America, however diamond wholesalers and retailers globally use different diamond-grading laboratories.

Loose colored diamonds have become a leading way to diversify and grow an investor’s holdings, as these precious gems have outperformed other alternative investments for several years.


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Topics: Alternative Investments

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