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Diamond Grading: Understanding the Four C’s

Most people have heard about the four C’s of diamonds through advertisements or direct contact with jewelry salespeople. However, while familiar with the concept, most individuals are a little sketchy on the details. The four C’s include diamond carat weight, clarity, color, and cut.

Diamond Carat Weight

Carat weight is pretty black and white. Diamonds are weighed in carats, which are composed of 100 points. Basically, a half-carat stone is 0.50 carats or 50 points. Carat is abbreviated as “ct.” Special diamond scales calibrated to one thousandth of a carat are generally used in the jewelry trade, so diamonds are weighed to the thousandth and rounded to the hundredth of a carat. Occasionally you may hear the term “four grainer” referring to a 1-carat stone. Each grain is equal to 0.25 carat or 25 points. If you think in terms of grams, 1 gram is equal to 5 carats. This metric equivalency provides a level of uniformity anywhere in the world.

Due to the limited supply of larger diamonds, the value of a diamond rises disproportionally as the weight of the stone increases. For example, four 0.25-carat diamonds of the equivalent quality will not equal the value of a single 1-carat stone of identical quality. The disparity becomes more noticeable as the size and quality of the diamond increases.

Diamond Buying Tip: Note that “carat” describes the weight of a stone, not the size. Carat weight and size are fairly uniform from diamond to diamond so a 1-carat round diamond will consistently measure around 6.5 mm. (Colored stones, however, are a different story. Since density varies from one gemstone to the next, shape and dimensions must be specified. If you are ordering a colored stone for your favorite 1-carat round diamond semi-mount, then you also need to specify 6.5 mm for the size. Standardized calibrations were created for gemstone and jewelry manufacturing.)
Diamond Carat Weights and Tolerance Range

The chart below outlines the tolerance range of true carat weights (right column) that can be represented by the posted carat weights (left column) for Jewelry Television® jewelry that contains diamonds.

Diamond Clarity

Clarity is determined by the type, size, number, position, and contrast of inclusions. Contrast is important, because dark inclusions in a diamond are more visible and therefore more distracting from a diamond’s beauty than white or gray inclusions. Plus, if an inclusion is positioned in just the wrong spot, it can be reflected within the stone multiple times, making the diamond appear even less attractive and negatively affecting its clarity even more. Inclusions occur within the stone, while blemishes are external in nature. There are many grading scales used to describe diamond clarity however, the diamond grading scale used by the Gemological Institute of America (GIA) is probably the most well known. The scale can be broken down as follows:

Flawless (no inclusions under 10x loupe)
IF (internally flawless, surface blemishes exist)
VVS 1, 2 (very, very slightly included: minute inclusions)
VS 1, 2 (very slightly included: minor inclusions)
SI 1, 2 (slightly included: noticeable inclusions)
I 1, 2, 3 (included: observable inclusions)

Diamond grading should always be performed with a 10-power (10x) loupe or microscope under proper lighting by a trained gemologist. Inclusions in stones graded I1, I2, and I3 can be seen by the unaided eye.

 

Note: In some cases the term “imperfect” will be substituted for “included” when describing VVS, VS, and SI stones. Diamonds in the I range are also sometimes referred to as imperfect 1, 2, or 3.

Diamond Buying Tip: Clarity makes a significant impact on the price of the stone, but when shopping for diamonds, you should remember that clarity does not always significantly affect a diamond’s brilliance, and better clarity does not always ensure a more brilliant stone. While clarity does affect a diamond’s brilliance, the stone’s cutting largely determines its brilliance. In fact, most people cannot discern the visible difference between diamond clarity grades “flawless” through “slightly included.”

Diamond Color

Color grades, using the GIA scale, ranges from D to Z, with D being colorless and Z being heavily (usually yellow) colored. Colorless stones (designated D, E, or F) command the highest prices. Diamond colors rank in the following groups:

Colorless : D, E, or F
Near Colorless : G, H, I, or J
Faint Yellow Tint* : K, L, or M
Very Light Yellow Tint* : N, O, P, Q, or R
Tinted Light Yellow* : S, T, U, V, W, X, Y, or Z

* The tint viewed may actually be yellowish, brownish, or gray.

When grading diamonds, a nonreflective white background should be used. Diamond graders have to be careful about the surrounding environment. Clothing color, lighting, and the color of their instruments may affect the outcome.

Fancy Colored Diamonds

Diamonds of certain colors are called fancies. These colored diamonds have intense natural colors that in some cases are very rare and command exceptional values. These stones are not color graded using the scale above. Brown and yellow diamonds are the most common members of the fancy diamond group and have a distinct beauty of their own. Naturally red, blue, purple, and green diamonds are extremely rare and highly sought after by designers and collectors.

Diamond Buying Tip: Color is one of the most noticeable characteristics of a diamond. Most people can notice whether or not a diamond is colorless (the most desired). The setting of the diamond can affect the appearance of color. If the diamond is colorless, a white gold or platinum setting will enhance the diamond’s whiteness. But if the diamond has a yellowish tint, a yellow gold setting may help mask the yellow tint, making the diamond appear whiter.

 

Diamond Cut

The breathtaking beauty of a diamond comes from a combination of fire (that flash of rainbow colors that comes from within) and brilliance (the burst of sparkling light). This dazzling beauty is a direct result of the diamond’s cut. The last of the four C’s, cut is a little more complicated than just the shape or visible outline of the diamond. Cut also refers to a diamond’s faceting as well as the diamond’s symmetry, proportion, and finish (known in the trade as the “make”).

There are three basic styles of diamond faceting: brilliant cut, step cut, and mixed cut.

Brilliant : Designed for maximum diamond sparkle, the brilliant cut uses many triangular and kite-shaped facets.
Step : Instead of sparkle, a step cut aims to increase a diamond’s elegance with fewer facets and more trapezoids and rectangles.
Mixed : A mixed cut combines the step and brilliant cut styles for a uniquely beautiful diamond.

All diamonds are cut to certain tolerances designed to maximize the play of light within the stone. If the stone varies too greatly from the accepted standards, light is lost through bottom or sides, reducing the diamond’s liveliness and overall beauty. As a general note, most full-cut round brilliant diamonds have either 57 or 58 facets, depending on the absence or presence of a culet (the bottom-most facet or “point” of a stone).

Diamond Buying Tip: The main point to remember when shopping for diamonds is to choose a stone that looks beautiful to you. Different people have different preferences for styles, shapes, colors, and sizes.

Most people have heard about the four C’s of diamonds through advertisements or direct contact with jewelry salespeople. However, while familiar with the concept, most individuals are a little sketchy on the details. The four C’s include diamond carat weight, clarity, color, and cut. Diamond Carat Weight Carat weight is pretty black and white. Diamonds are weighed in carats, which are composed of 100 points. Basically, a half-carat stone is 0.50 carats or 50 points. Carat is abbreviated as “ct.”…

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What is diamond ?

Diamond is a native crystalline carbon that is the hardest known mineral. It is usually nearly colorless.

When transparent and free from flaws it is highly valued as a precious stone.

It is also used industrially, especially as an abrasive. Crystallized carbon produced artificially is also called diamond.

The name diamond is derived from the ancient Greek adamas (“invincible”).

Their hardness and high dispersion of light make diamonds useful for industrial applications and jewelry.

Diamonds make excellent abrasives, because they can be scratched only by other diamonds, or man-made materials, which also means that they hold a polish extremely well and retain their lustre.

They have been treasured as gemstones since their use as religious icons in ancient India. Thier usage in engraving tools also dates to early human history.

The popularity of diamonds has risen since the 19th century because of increased supply, improved cutting and polishing techniques, growth in the world economy, and innovative and successful marketing campaigns.

Gem diamonds are commonly judged by the “four Cs”: carat weight, clarity, color, and Cut.

Approximately 130 million carats (26,000 kg) are mined annually, with a total value of nearly USD $9 billion, and about 100,000 kg of synthetic diamonds are manufactured annually.

49% of natural diamonds originate from central and southern Africa, although significant sources of the mineral have been discovered in Canada, India, Russia, Brazil, and Australia. They are mined from kimberlite and lamproite volcanic pipes, which brought to the surface the diamond crystals from deep in the Earth where the high pressure and temperature enables the formation of the crystals. The mining and distribution of natural diamonds are subjects of frequent controversy such as with concerns over the sale of conflict diamonds (aka “blood diamonds”) by African paramilitary groups.

Diamond is a native crystalline carbon that is the hardest known mineral. It is usually nearly colorless. When transparent and free from flaws it is highly valued as a precious stone. It is also used industrially, especially as an abrasive. Crystallized carbon produced artificially is also called diamond. The name diamond is derived from the ancient Greek adamas (“invincible”). Their hardness and high dispersion of light make diamonds useful for industrial applications and jewelry. Diamonds make excellent abrasives, because they…

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A report from De Beers’s new diamond mine

GAHCHO KUÉ is too far north for trees. In the few snowless months, its surroundings in Canada’s Northwest Territories resemble a sprawling archipelago, as much lake as land, dark ponds stretching flat to the horizon. Wolverines roam, as well as bears, foxes, hares and caribou, though the herds have dwindled. There are no roads, no pipes, no electricity cables. So it seems strange when, flying over the tundra, a giant truck appears, then another, then a steel factory, rows of trailers and a big grey pit, deepening by the day.

De Beers, the world’s biggest diamond company, marked the opening of its Gahcho Kué mine in September. Local indigenous leaders prayed for the mine, beating drums. Bruce Cleaver, the firm’s chief executive, and Mark Cutifani, the boss of its parent company, Anglo American, stood by a ceremonial fire, flames tilting in the wind.

Now the hard work is under way. The area is so sodden that staff bring in heavy supplies just once a year, in the depths of winter, when they can build a thick road of ice (pictured above). A caravan bearing fuel and equipment is slowly crossing the tundra. At the mine, their colleagues are working day and night to ramp up to full production, with the aim of extracting more than 12,000 carats (2.4kg) of diamonds each day. Gahcho Kué is an astonishing endeavour, the biggest new mine in the world in over a decade. De Beers has no plans for another.

It is a turning-point for one of the world’s oddest industries. The diamond business gained its sparkle around 1866, when a farmer’s son picked up a glistening pebble on the bank of the Orange river in South Africa. For most of the next 150 years, De Beers would dominate the global market. Success depended on manipulated supply and skilfully cultivated demand.

Square-cut or pear-shaped

Much has changed since then. De Beers can no longer control the market. Though it is the biggest producer by value, it accounts for only a third of global sales, down from 45% in 2007. It faces many uncertainties, from synthetic diamonds to changing relationships with polishers and cutters. Its loosening grip is reflected in increased volatility: its sales fell 34% in 2015, before bouncing back by 30% last year. Meanwhile the source of the demand that drives sales—the link between diamonds and love—looks weaker than it used to.

But one forecast seems solid: there will be fewer new diamonds. De Beers continues to seek new places to mine, but has slashed its exploration budget. Another big find is unlikely. The supply of new diamonds is expected to peak in the next few years, before beginning a slow decline.

Natural diamonds—as opposed to the synthetic ones mostly used in industry—were formed more than 1bn years ago deep below cratons, the oldest part of continents. There, between Earth’s core and its crust, the pressure was high enough and the temperature low enough for carbon to crystallise into its hardest form. There diamonds would have remained were it not for molten rock rushing through the mantle and drawing diamonds, garnets and other minerals with it, like a furious river pulling dirt from its banks, before erupting through Earth’s surface faster than the speed of sound.

Some of the gems settled in river beds, as in Brazil, or were swept to the coast, as in Namibia. Others remained encased in extinct volcanoes, or pipes, and ended up buried under soil or lakes. De Beers’s richest diamond mine was found beneath sand in Botswana in 1972, within the Kaapvaal craton that spans southern Africa.

Speculation that diamonds might be found in Canada dates from the 19th century, when gems were found studded through the American Midwest. In 1888, the year Cecil Rhodes founded De Beers in South Africa, a 22-carat stone was unearthed near Milwaukee. Glaciers, it was posited in 1899, might have carried the diamonds south. It was decades before exploration took off. De Beers began quietly scouring Canada in the 1960s, but it was not until 1991 that BHP, one of its rivals, found kimberlite, an igneous rock, with enough diamonds to merit a mine. Within three years more than 100 companies had fanned out across the wilderness, rushing to claim some 200,000 square kilometres. At Gahcho Kué, geologists used aerial surveys and soil sampling to follow trails of minerals back to their kimberlite pipes.

The objects of these frenzied searches have intrinsic value for scientists. Gems deemed flawed by jewellers interest them most: inclusions in diamonds can carry samples from hundreds of kilometres below the surface. Evan Smith, a scientist at the Gemological Institute of America, recently studied inclusions in shards cut from diamonds of unusual size and quality. His findings, reported in Science, a journal, are the first proof that the deep mantle is peppered with metallic iron—a clue to the long-ago chemical reactions that shaped Earth.

But diamonds’ principal value has nothing to do with science. They have long been revered for their beauty—in September Mr Cutifani reminded Gahcho Kué’s visitors that the ancient Greeks regarded diamonds as the tears of the gods. Their modern status, though, is a corporate creation, a story inextricably linked with that of De Beers itself.

Diamonds had been rare before 1866; the South African finds threatened to send prices plunging. Rhodes founded De Beers to consolidate the area’s mines and to restrict sales. By his death in 1902, the firm accounted for 90% of the world market. More discoveries were made in the 20th century, notably in Siberia in the 1950s, Botswana in the 1960s and Australia in the 1970s. But De Beers kept tight control of supply, both by owning mines and by buying diamonds from others.

All I need to please me

That alone would not have turned De Beers into an empire. As essential was its scheme for conjuring up demand. In 1938 the company, then led by the Oppenheimer family, hired N.W. Ayer, an advertising agency in New York, to coax Americans to buy more rocks. It dreamed up the notion that a diamond ring should be an essential display of love and status, its gift a rite of passage. In the ensuing decades De Beers and its marketers penned slogans—memorably, “a diamond is forever”—and invented social rules, urging men to spend two months’ pay on a gift for their affianced. That benchmark not only permitted high margins, but suppressed the second-hand market—to the benefit of both the firm and its customers, who could be reassured their investment would hold its value.

The marketing worked. In 1939, 10% of American brides received a diamond engagement ring. By the end of the century 80% did. The result was a unique industry, controlled by a single company that was both marketer and miner, a capital-intensive business built on an ephemeral link to love, its success due to strangled supply and inflated demand.

But by the 1990s De Beers’s grip had started to loosen. The Argyle mine in Australia left the De Beers cartel in 1996, fed up with the giant’s terms. New discoveries in Canada, a civil war in Angola and the collapse of the Soviet Union all made supply harder to manage, meaning that more diamonds were sold outside the cartel. Concern that diamond sales were financing African conflicts threatened the gem’s image. In 2000 De Beers said it would no longer control the market so strictly, but sell instead to vetted buyers. Legal settlements in America and Europe followed, barring the company from monopolistic behaviour.

De Beers is adjusting to the new era. Its first challenge is an unfamiliar one: to grapple with competitors. ALROSA, Russia’s state-owned diamond company, produces more stones than De Beers, though it earns less (see chart). New firms have cropped up, too, some buying mines from De Beers as it sought to shore up its balance-sheet.

De Beers’s partners, meanwhile, have become more demanding. Botswana’s government owns 15% of the firm; South Africa’s state investment fund owns 14.5% of Anglo American. De Beers’s mining operations in Botswana and Namibia are joint ventures with the governments there. Both countries share the proceeds from sales of diamonds mined within their borders, and can also sell some diamonds independently, enabling them to test the prices that De Beers is getting and further loosening the firm’s control over supply.

Even in countries where De Beers does not have a joint venture with the government, it depends on local co-operation. Winning government approval for Gahcho Kué required more than 15,000 pages of environmental reviews. The firm wanted to expand a mine in Ontario, but a nearby indigenous group withheld its consent.

The limits of De Beers’s power have been revealed in the past two years. Demand slumped in China in late 2014, prompting retailers to buy fewer polished diamonds. Companies that cut and polish stones became weighed down by excess inventory. But the tools De Beers once used to use to prop up prices were no longer at hand. There are legal restrictions on the share of excess diamonds it may buy. Because it controls just one-third of the market, any production cuts have limited effect on total supply. In fact, the firm may even have made matters worse. Contracts with its customers sometimes encourage them to overpurchase—if they turn down too many of the stones De Beers offers them, they risk being allocated a smaller share in future.

There are signs of recovery. Bain, a consultancy, estimates that rough-diamond sales rose by 20% in 2016. De Beers is becoming more flexible, easing rules for buyers of its stones. More frequent reporting of its sales should help investors understand the business. It also signals to competitors—without engaging in collusion—when the market is deteriorating, enabling them to adjust accordingly. “The value of transparency will come to exceed the value of secrecy,” argues Fraser Jamieson of J.P. Morgan, a bank. Even so, excess inventory may yet drag down the market. Some jewellers have recently reported slack sales.

Mr Cleaver, an Anglo American veteran, became the boss of De Beers in July. “The fundamentals of the industry remain very good,” he says. In the coming years, he thinks, De Beers will benefit from rising incomes, particularly in China and India. Its own research shows that diamonds still capture the imagination: 26% of young American brides say they dreamed about their future engagement rings years before beginning a relationship.

But a long-term risk looms over the industry: one day young couples may no longer want diamonds at all. They are a “Veblen good”, as items that gain their value solely from their ability to signal status are named, after Thorstein Veblen, an economist who wrote about the spending of the rich. For Veblen goods, the normal law of supply and demand does not hold: higher prices support demand, rather than suppressing it. If a big gap opens up between the number of diamonds offered for sale and the number of people willing to buy them at high prices, diamonds could suffer a big, sustained fall in value and the entire business could cease to make sense.

Today’s 20- and 30-somethings grew up as De Beers lost its monopoly and, wary of helping competitors, cut spending on the advertising that had done so much to create demand for diamonds in the first place. In recent years the company’s marketing budget accounted for roughly 1% of sales, down from about 5% in the 1990s, according to Morgan Stanley. At the same time the notion of “conflict diamonds” percolated through the popular consciousness—a movie called “Blood Diamond”, starring Leonardo DiCaprio with a Zimbabwean accent, was released in 2006. Young couples, who earn less than their parents did at their age, may prefer to spend their money elsewhere.

Complicating matters, those who do want a diamond now have an alternative. Synthetic diamonds have been available for decades, but only recently has the process become cheaper and the result more refined. In 2015 a company called New Diamond Technology made a ten-carat polished diamond of excellent quality, an unprecedented feat. Sales of synthetic diamonds are thought to amount to just 1% of the rough-diamond market. But synthetic-diamond sellers are appealing to young shoppers’ concerns for social and environmental causes—Diamond Foundry, backed by Mr DiCaprio, boasts that its products are “as rock-solid as your values”.

So De Beers is trying to boost the allure of natural gems. “Long-term demand is only going to be there if we continue to generate it,” says Mr Cleaver. That means studying consumers; few other firms obsess over both mining-truck depreciation and romance among young Chinese.

It also means new advertisements. Some centre on De Beers’s Forevermark brand, a tiny code etched in a diamond that explains the gem’s provenance. Other spending is for the industry as a whole. In 2015 De Beers and other miners formed a group to pool money for generic diamond advertisements. Its first campaign ran in America before Christmas, with the slogan “Real is rare”. YouTube videos show Nick Cannon, best known as the ex-husband of Mariah Carey, a singer, interviewing couples about their engagements.

It is unclear if this will persuade young romantics to spend thousands on diamonds. If synthetics grow in popularity, De Beers may need to become more aggressive. Already, it is suing a synthetic-diamond company in Singapore for infringing its intellectual property. Its own synthetic-diamond operation, for industrial uses, holds more than 450 patents.

As the company works to shore up demand, there is a source of solace. For over a century it has fretted that big new finds would lead to plunging prices. “Our only risk,” Rhodes declared, “is the sudden discovery of new mines, which human nature will work recklessly to the detriment of us all.” But it seems that threat is waning.

In total, explorers have sampled fewer than 7,000 kimberlite pipes. Of these just 15% have held diamonds and just 1% (about 60) have held enough of them to justify building a mine. De Beers continues to explore in Canada, South Africa, Botswana and Namibia—the only thing worse than finding a big new source would be someone else finding it first. Some fancy technology is supposed to help. A “Superconducting Quantum Interference Device”, for example, searches for changes in magnetic fields below Earth’s surface, which might indicate the presence of kimberlite.

But De Beers regards any big discoveries, by itself or anyone else, as unlikely. “The best and easiest deposits are already found,” says Des Kilalea, an analyst. The company’s Canadian exploits are a reminder of just how arduous new mines can be. Mountain Province, a firm that now works with De Beers, discovered Gahcho Kué’s first pipe in 1995. The intervening years brought a separate, failed mine for De Beers in Canada, lengthy negotiations with local officials and, at last, the construction of Gahcho Kué itself.

That required draining part of a lake. To bring in building supplies, the company had to build the winter road. Staff would plough snow off a pond, drill through thin ice, then pump up water to make the ice thicker, laying down a few inches at a time. This was repeated over 120km, at temperatures often plunging to -40°C, until the ice was thick enough to support a 500-tonne mining shovel, broken into dozens of pieces. In total, building Gahcho Kué cost $1bn. That was deemed worthwhile, compared with the costs of finding and opening a mine elsewhere.

Other companies have a few mines planned. De Beers is now focused on expanding existing mines, not building new ones. New technologies may help liberate more diamonds from kimberlite more efficiently. Even so, Bain estimates, production will peak in 2019. Supplies of new diamonds will then start to fall, sinking by 1-2% each year until 2030.

For now, aircraft shuttle staff to Gahcho Kué, dropping off miners to work for two-week stretches. Nearly half the staff are locals, and a fair share are indigenous. “We want jobs, just like everybody else,” says Eddie Erasmus, grand chief of the Tlicho people. Among the mine’s maze of trailers are features typical of any big-company workplace. There is a gym. Signs in the cafeteria remind staff to eat fruits and vegetables, though many prefer heartier fare. Rob Coolen, who oversees the ice road, began work at Gahcho Kué before the mine was built, sleeping in a tent on the tundra. Coffee and bacon, he says, are essential.

The cafeteria sometimes shudders with the reverberations of a blast from the pit. Outside, work goes on day and night. Staff pile kimberlite onto huge trucks, then haul the rocks to the processing plant. There, the ore passes through breakers, crushers and scrubbers until pebbles are sent through a series of X-rays and lasers, jets of air separating diamonds from worthless stones.

When love’s gone, they’ll lustre on

No workers at Gahcho Kué touch the diamonds with bare hands. Only a few see the gems before they are sent off by plane to be valued. In September Mr Coolen stood atop a steel grate in the processing plant, the platform shaking as giant scrubbers churned beneath. “Occasionally you see one,” he shouted above the din, “and it’s just gorgeous.” The mine is expected to reach full production in March. By 2030, its diamonds extracted, it will close.

GAHCHO KUÉ is too far north for trees. In the few snowless months, its surroundings in Canada’s Northwest Territories resemble a sprawling archipelago, as much lake as land, dark ponds stretching flat to the horizon. Wolverines roam, as well as bears, foxes, hares and caribou, though the herds have dwindled. There are no roads, no pipes, no electricity cables. So it seems strange when, flying over the tundra, a giant truck appears, then another, then a steel factory, rows of…

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