February 04, 2020 - Jewelry & Luxury Items
Before PawnGuru, almost no data existed on the pawn market at all. Identifying the value and local market demand of your diamond ring meant visiting multiple pawnshops to compare offers. After PawnGuru launched, millions of people were able to connect with pawnshops across the country. The site provided integral key metrics to understand the pawn shop market.
Identifying the exact statistics on the diamond ring market is still arduous. Sellers will have to consider both the global & local demand, the quality of the diamond, and the disparity between offers in a local pawn shop market. Using these 3 variables can provide diamond sellers with an approximation of the market gap for diamond rings.
PawnGuru is the best way to get these variables. Instead of listing your diamond across multiple platforms and digging heavily into market research and surveys—you can list your diamond ring on PawnGuru! This gives you an accurate glimpse of how much you can realistically sell your diamond ring and how many dealers are interested. This takes the unnecessary homework out of the equation. After creating a listing, you can quickly get the highest possible amount of money in your hands!
Knowing the metrics of global diamond mining industry helps provide perspective to your own piece. Since the 1960’s, global diamond prices have increased tenfold. The most obvious reason mined diamonds demand has skyrocketed is because of the proliferation of lab-grown diamonds. Huge advances in synthetic diamonds and simulants increases the value of natural diamonds.
For example, a single carat cubic zirconium—a common diamond simulant—is worth around $20 on the market. A synthetic diamond with the same Gemological Institute of America (GIA) grading is typically valued at around $5,000 while a flawless natural diamond’s market value is around $26, 590 per carat.
The last time data was collected in 2016, 47% of the global diamond market demand came from the United States. Polished diamonds used for jewelry was an $80 billion-dollar industry. Projections show evidence that this industry will continue to swell for two reasons.
First, the majority of mined diamonds with too many inclusions (flaws) are used in the industrial sector. Since diamonds are the hardest material on Earth the gemstones make valuable assets for industrial tools. Synthetic diamonds are also used to meet this demand for tools. Also, the threshold of available diamonds keeps both value and demand high. It takes 3 billion years for a natural diamond to grow and there are only so many that can be feasibly and ethically mined.
Another huge data point to factor is disparity within the local pawnshop market. In our article Don’t Lowball Me: The Hidden World of Pawn Shops we set the groundwork for preliminary data metrics on the pawnshop market. In 2015, we approached eight different pawnshops in Detroit with a series of items to pawn. The goal of the experiment was to compare offers on collateral loans.
We found a huge range of offers from all stores. This was during ‘Wild Wild West’ days of pawning where dealers had the upper hand. Without PawnGuru, you could either could take a shop’s word that they were giving you the best deal or comparison-shop all over the city.
We found that a diamond ring’s pawn offer price had a range from $65 to $1,060. That is a 1,500% price difference! Evidence from the data also found that the jewelry sector has the largest disparity for pawn loans at 475%. This means that you could visit a pawnshop and be offered $100 collateral loan while another pawnshop 15-minutes away will offer you $475.
The pawnshops all offered the same interest rates and loan length. (These are usually determined by state law but can differ between dealers). The reason for the disparity was mostly like store specialization. Pawnshops that deal solely in diamond rings can sell inventory much quicker. Not to mention they have the tools & equipment to accurately appraise diamonds, precious gemstones, and metals. Dealing with a specialized pawnshop typically means higher offers.
Providing an empirical statistic to answer: how big is the pawnshop market for diamond rings is subject to your region. We know that there is a huge disparity in Detroit and most likely the same case is true for every city. The good news is that global diamond market demand is continuing to rise making the diamond you would like to a pawn a worthy investment.
The only way to know exactly how much your diamond is worth and how many offers you can get is to make a free listing on PawnGuru. Using this tool, you can accurately gauge the local pawnshop market for diamond rings.
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.More Articles