Guide to buying a diamond

There are many traps for the unwary, such as bogus sales, "blood diamonds", and overpricing.
 
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  • Updated:26 May 2008
 

01 .All that glitters

diamond ring

CHOICE’s investigation has uncovered traps for consumers when purchasing expensive jewellery.

On average, Australian couples spend around $5000 on an engagement ring. But it’s nearly impossible for an ordinary person to judge the real value of a diamond. For example, hard-to-detect artificial treatments and small variations make a huge difference to its value.

  • The ACCC uncovers many bogus 'sales'. For example, in February this year the Federal Court held that discount advertising from Prouds Jewellery Pty Ltd was misleading, and therefore in breach of the Trade Practices Act. A gold bracelet advertised as "Was $249, Now $99" had never been offered for $249 by Prouds.
  • Traders sometimes try to pass off fake goods as genuine material. For example, the SA Office of Consumer and Business Affairs caught a trader who claimed to sell high-quality gold jewellery from a shopping centre stall. In fact, the jewellery was gold-plated with a total gold content of less than 1%.

For advice on how to make sure your jewellery is covered if it gets stolen, see our report on Insuring jewellery.

Did someone die for your diamond?

The 2006 movie Blood Diamond highlighted the role diamonds have played in human rights abuses and wars. So-called 'conflict diamonds' were sold to help fund wars in Sierra Leone, Angola and the Democratic Republic of Congo, which killed an estimated 3.7 million people. Today, conflict diamonds from rebel-held areas in Cote d’Ivoire are thought to still find their way to the international diamond market.

In 2002, an international certification scheme called the Kimberly Process was launched to end the trade in conflict diamonds. Australia participates in this scheme. Ask your jeweller for details and a copy of their company’s policy on conflict diamonds — any jeweller worth their salt can guarantee their diamonds are conflict-free.

Fair trade diamonds

Exploitation in the precious stone industry is also rife — for example, labourers in Sierra Leone can be paid only around US$1 per day. Development of fair trade standards has begun — it’s high time profits from diamonds filtered down to workers in countries they’ve helped devastate.

Please note: this information was current as of May 2008 but is still a useful guide to today's market.


 
 

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The value of a diamond is determined by the four Cs:

  • Carat One carat equals 0.2g and is subdivided into 100 points. However, small weight differences undetectable to the eye (such as between 0.99 carat and 1 carat or 0.74 and 0.75 carat) can make a large difference to the stone’s price. Weight isn’t the only factor, though. Depending on its quality, a smaller high-quality diamond may be worth more than a larger one of lesser quality.
  • Cut Diamonds are available in all kinds of cuts — brilliant, marquise and emerald are just three. Look at examples and decide which you prefer. The better the standard of the cut and quality of the finish, the better the brilliance and fire (brightness and sparkle) of the diamond.
  • Clarity Diamonds were formed millions of years ago through pressure and heat, and most contain imperfections or foreign material such as other stones or minerals, called inclusions. A diamond's clarity grading tells you if inclusions are present. There are different grading systems, usually ranging from flawless (loupe-clear) to a small inclusion only seen through a 10x loupe (VS1), right through to visible with the naked eye (I3 or P3).
  • Colour A perfect diamond is colourless, but most have a hint of yellow or even brown, which results in a lower grading ranging from D (exceptional white+) down to Z (tinted, usually yellow). However, very rare pink diamonds (mainly from the Argyle mine in WA) and 'fancy coloured' diamonds, such as intense yellow, can be very valuable.

Diamonds can be treated to improve their appearance. Treatments include artificial colouring, laser drilling to remove inclusions and fracture filling to conceal cracks. When a diamond is treated it’s considered less rare and is viewed as an inferior product to a natural untreated stone of similar specifications. Consequently it’s much less valuable.

Synthetic and even imitation diamonds are available as well — some are just as beautiful but much less valuable.

The way to make sure you’re getting what you paid for is certification — sometimes called the fifth C. A grading certificate from an independent laboratory exactly describes the characteristics of the stone.

There are independent Australian laboratories, some of them recognised by the World Jewellery Confederation (CIBJO). The best-known labs are GIA in the US and HRD in Europe.

Certification is usually done prior to setting the stone, so if the diamond is already mounted, it’ll need to be taken out.

When choosing a diamond, follow the following steps:

  • Look for jewellers that are members of the Jewellers Association of Australia and/or the Diamond Guild Australia — both have a code of ethics committing members to ethical selling practices.
  • Ask questions — a good jeweller will spend some time with you and help you find a diamond you like and that’s in your price range.
  • Specifically ask if the diamond has been treated and what are the ramifications of the treatment.
  • Make sure you can examine the diamond in good light.
  • If you’re looking for a diamond of 0.5 carat or more, ask for a grading certificate from an independent laboratory.
  • Shop around — different stores sometimes price similar stones very differently.
  • Once you pay a deposit, get a detailed receipt describing the characteristics of the diamond and jewellery.
  • Get a valuation certificate from a valuer registered with the National Council of Jewellery Valuers.

Dodgy deals

Take your business elsewhere if:

  • The salesperson tells you you’re getting a huge discount on the stated value of the stone.
  • Prices are just too cheap to be true and no reliable certification is available.
  • What’s promised in advertising material isn’t available in the shop.