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  • Writer's pictureRayah Levy, FCD Invest President

The Importance of Appraisals

Updated: Oct 25, 2023

There are many reasons why it is important to appraise your diamond investments every few years. Below, we outline some points to consider.


Expertise

When getting an appraisal, it is very important to select a professional that has extensive experience with the specific diamonds you need appraised. For instance, someone who is an expert in engagement rings will not be an ideal appraiser for Fancy Color Diamond Investments. Engagement rings are most often colorless, graded somewhere within the D-Z scale, typically with around or princess cut, etc. It is rare that a diamond engagement ring would be a fancy color diamond, though many recent celebrity engagements would have you thinking otherwise.

Ideally, your appraiser should have vast knowledge working with fancies - various colors, cuts, and should know which inclusions matter most. The appraiser should also be independent with no connections to the seller to ensure non-bias in pricing evaluations. Lastly, it is recommended that the appraiser has desired credentials as a GIA Gemologist and other high-level degrees or certifications.


Second Opinions Matter

From our experience, it is a wise investment decision to have more than one appraisal done by different parties. We sometimes recommend this because different appraisers will consider different attributes over others, while some appraisers are intentionally conservative. If you have two appraisals that are valued near in price, it does offer comfort to know that your investment is, in fact, worth that amount. However, if you get two wildly different appraisals, you will know to get a third review to average out the true value. FCD Invest can help with this evaluation.


In any case, any good appraiser will be more than happy to explain how they came to their conclusions. Appraisers not only look at your specific investment but also what the markets are doing and if there are any recent comps on the primary market - not just comps from auctions.


Diamond Values Increase Over Time

Relevant market comps between dealers and direct buyers/sellers can be critical in establishing real value. Essentially, part of the appraisal process would include looking at other diamonds that have similar characteristics that are being sold privately around the world, seeing how much those are being sold for, and how they differ from the diamond being appraised.


It is important to get an appraisal every few years because each auction that takes place offers new opportunities for comps. That being said, there are auctions where the final price is not disclosed. This happens often with Argyle diamonds. Just like in real estate, gathering comps can bring your investment’s value up or down.


In addition to auctions, Fancy Color Diamonds appreciate over time. Pink/Purplish Pink 3ct. diamonds have appreciated 447.5% from 2005-2023. The simple act of buying and holding your diamond investments for 10+ years will dramatically increase its value, assuming your diamond investments have been kept in pristine condition.

Advancements In Technology

As time passes, the one thing we know for sure is that technology will continue to evolve. We are also still learning about diamonds, and the knowledge we build upon will impact the various diamond markets.


An example of this is diamond origin, which is one of the factors that is considered when the value of a diamond is evaluated. Diamond scientists and experts around the globe still do not have a foolproof way to determine a diamond’s origin. The process is tedious and debatable - there is plenty of room for error, and it can get costly and convoluted. It won’t always be like this! One day, we will discover a test we can run, or put an indisputable system in place to track provenance, and diamond origin will be easy to identify.


Also noteworthy is what we will learn about diamonds as we continue to study them. One example is pink diamonds. There are still many origin facts about pink diamonds that we cannot say for certain. Another example would be green diamonds, which are notoriously difficult to grade.

Impact of Scarcity

If you were to purchase an Argyle diamond in the early 2000s, you would have still paid a hefty price, but it would pale in comparison to what that same diamond would cost today. Rio Tinto estimates that Argyle pink diamond prices have appreciated by 500% over the past 20 years - and even more, now that their mine has closed forever, cutting off the supply of 90-95% of the world’s pink diamonds.

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Please email FCD Invest at info@fcdinvest.diamonds to discuss your personalized long-term investment strategy. For more information on Fancy Color Diamonds as an investment, please visit our Fancy Color Diamond informational page linked here.




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