Wednesday, June 23, 2010

Engagement ring selection follow up

Marketing Gimmicks Overview

I have realized that I needed to go into more detail on one aspect of selecting a diamond for your engagement ring.  The "Cut" of a diamond.  I have heard many girls both on forums as well as in person throw out the term "Hearts on Fire" as a representation of quality.  I hate to break it to you guys (and gals), but Hearts on Fire is just a marketing gimmick.  In some ways it's a lot like calling all tissues Kleenex.

Because diamonds and engagement rings are such a big (and lucrative) business, like wedding photography, companies right and left have come up with creative ways to market their diamond as unique and a step above the rest.  Some of these gimmicks include "conflict free diamonds", "Hearts on Fire" and "De Beers".

Do you want to know the big secret why Tiffany's, Cartier, and Harry Winston have much prettier rocks and demand much higher pricing?  The reason is because they only select a certain quality of diamond to include in their products!   They source their diamonds from the same mines that any other diamond mongers would be shopping at.  In other words, if a company only limits the quality of their diamond to be above a H color grade, excellent cut, and VS2 and above, they would naturally have much higher quality products regardless of the brand.

Cut of a diamond

The goal of cutting a diamond is to make sure as much of the ambient light that goes into the diamond is reflected back to the source as possible.  In fact, the goal of cutting a diamond is the same as someone who designs a bicycle reflector.  It is completely irrelevant (again, just marketing) whether the cut has "hearts and arrows" or any other design when viewed from above.  Remember, the main goal for the diamond is how the diamond sparkles.  Using GIA as a guideline, any cut that is excellent or ideal will be fine.

Many diamond stores will try to convince you to look at diamonds through a purple scope to gauge the quality of the cut.  That 50 cent scope doesn't do anything.  In fact, it is again, another marketing gimmick that allows people to brand diamonds and try to justify the premium they place on the rock.  If most gemologists don't use it when they are rating the diamond, why should you?

Do not skimp out on the price by getting a diamond with less than excellent or ideal cut.  The cut of the diamond is a reflection of the skill of the individual that cut the rock.  A good cut sparkles in such a way where a diamond can look significantly bigger than it really is just solely because of the "spark". In other words, this is probably the one area where you will be getting the biggest bang for your buck.

Even diamonds with the same cut ratings my sparkle differently.  This is because all grading are done by humans, and there is a level of judgment involved during the grading process that will always cause inconsistencies.  Personally, I doubt I can judge a rock consistently day in and day out, never mind that there are hundreds of unique individuals judge thousands of rocks. Whenever possible, find several diamonds you like in the same rating scale (including cut) and look at all of them under the same light conditions.  Pick the one that sparkles the most when compared side-by-side.

Why are Princess Cut cheaper?

This is because with all the advanced methods of judging the cut and sparkle of a round diamond, there is no "ideal" cut for a diamond that isn't cut round (e.g. Princess, Emerald, Asscher, Marquise, Oval, Pear, Heart, Cushon).  Because of this, and the "pizza" factor I talked about in the previous article, cuts that are not round end up being cheaper.  Uncertainty of quality causes downward pricing pressure on those diamonds.

If your lady favors those types of cut, it pays to be able to go somewhere that will allow you to see all of the rocks side-by-side.  For stones of the same price, I would much rather pay for a diamond that sparkles more, even though they all have the same "official" GIA rating.

Back up plan

Hopefully, when you are at this stage of the process, there won't be any backup plans.  Returning a diamond ring could be costly, with up to a 20% restocking fee depending on the merchant.  This especially applies to wholesalers like Derco.  Best advice is to be certain before you take the plunge.

Don't ever buy a salesmen's story of a diamond being an investment.  It is not.   You are buying the diamond solely because your future fiance wants something sparkly on her finger to show off to her friends.  Although diamond prices are set on the primary market, that price plunges significantly on the secondary market.  You wouldn't believe a car salesman telling you a car is an investment, you probably shouldn't believe a salesman telling you a diamond is as well.

Even on the off chance your diamond is an investment, like real estate, it will take a lot of positive market conditions for you to make your investment back.  One always has to keep in mind that even with real estate, there are significant commissions taken out by all parties involved, and you will need additional appreciation to be able to recoup your initial investment.  Unless you are a baller looking to purchase the "Heart of Africa" diamond, I would suggest passing on buying diamonds a form of investment.

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