How Does Carat Weight Affect Diamond Prices?

January 13, 2020 - Jewelry & Luxury Items

47% of diamond demand comes from the United States.

The precious gemstones have become synonymous with marriage and affluence. Diamonds constitute an $82 billion-dollar industry. The Global Diamond industry spiked by $2-billion from 2016 to the next year with no signs of that growth stifling. Projections show that demand will continue this rate of growth.

Before stepping into a pawnshop to pawn, buy, or sell diamonds it’s important to know the fundamentals of diamond appraisal. Similar to the precious metal industry, there are a variety of factors that determine a gemstone’s value. The Gemological Institute of America provides scales along four systems to grade and rate a finished diamond that can be held to an industry standard. These standards are known as the 4Cs: color, cut, clarity, and carat.

A diamond’s performance in these four categories decides a diamond’s rarity and as an extension its value. A good rule of thumb for precious gemstones is the rarer the diamond, the more money the diamond is worth. Carat weight is one of the first of the 4Cs a diamond appraiser will look at to determine the price point for a diamond.

Read on for an in-depth understanding of how to identify carat weight and how this affects how much your diamond is worth!

Understanding Diamond Carats

The easiest of the 4Cs to understand is diamond carats. A carat is the unit standard that the industry uses to measure a diamond’s weight. The origin of this weight system derives from carob seeds. These seeds were uniform in weight and could be easily used as counterweights on balance scales along the ancient trade routes. A carat is different from ‘karat’ which measures gold’s purity. Carat should also be distinguished by size. Carat measures the weight of a diamond, not the measuring size.

Generally, the higher the carat, the larger the diamond appears from the circumference to the ‘crown,’ which is the visible surface area when a diamond is set. However, two diamonds with the same circumference can have completely different carat weights. Differences in depth and cut can make a diamond’s size appear larger when the stone could actually weigh less.

Converting Carats

Since carat is its own unit of measurement, diamond appraisers use conversion charts to determine a diamond’s carat weight. You may need to convert metric units like milligrams or grams to decipher a diamond’s carat weight. For instance, a single gram diamond is 5 carats. This is a very large diamond so you’ll more likely encounter jewelers speaking in terms of milligrams to simplify the conversion. A 200-milligram diamond equals a single carat.

Carat weight is then subdivided into one hundred equal parts known as points. Each point is .1 or 1/100 of a carat. So, a 100-point diamond is a full carat while a 50-point diamond is a half carat. The point system follows this conversion all the way up to the heaviest diamonds.

Some jewelers will also express carat weight in fractions and decimals which can get confusing. There is less accuracy when defining a diamond’s weight through fractions and decimals since the units will need to be approximated. For example, a 1/5 carat diamond will convert to a range of 0.18‐0.22 in decimals. Because jewelers will have to approximate, many diamond dealers stick to the point system to remain precise all the way to the hundredth decimal place.

How a Diamond’s Carat Weight Affects Price

When it comes to diamond value it’s all about rarity. As a diamond’s carat weight increases the diamond’s price increases at an increasing rate. This is because higher carat diamonds are rarer than their lower weighted counterparts. Diamond industry statistics show for every million rough stones that are mined, there is usually a single diamond large enough to cut into a complete single carat diamond. This makes a diamond with more than a single carat price increase at a quicker rate because of the price per carat rate.

A single carat diamond will be valued around $6,000 contingent on this diamond’s performance in the other Cs. But a 2-carat diamond will have an increased price per carat rate and will be worth $24,000 total because the price per carat is now valued at $12,000. This same price increase will continue to compound for larger diamonds. A 3-carat diamond’s price per carat will be $18,000, making the total value of the diamond $54,000.

Buying Tip: “Magic Sizes” Can Help Save Money

If you are looking to save money while buying diamonds search for what’s called magic sizes—half carat, three-quarter carat, and full carat. These carat sizes are just short of the popular sizes but on a visual spectrum are almost identical. A .99-carat diamond can appear to be a full carat and can even approximate into a full 100-point diamond but will be significantly less expensive than the full single carat diamond.

Also, using PawnGuru can help steer you toward honest jewelers and pawnshops that you’ll actually want to do business with. Just create a free listing with no obligation to do business and within minutes, you’ll have dealers emailing you whether you want to pawn, buy, or sell diamonds!

David Stiebel
David Stiebel

David Stiebel is one of the cofounders of PawnGuru. David was educated at MIT, where he studied Math. He subsequently worked at Bain as a data scientist before starting PawnGuru in 2015. He started PawnGuru to build a better tool for pawn shops and consumers to connect.

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