A New View of Diamonds as Assets, Not Expenditures

(ehudlaniado.com) - We have already reviewed the existing method for buying diamonds, which is based on the 4 Cs (carat weight, color, clarity, and cut), using a magnifying glass (loupe) with 10x magnification and relying on asking prices benchmarks. We developed a new system based on my vision that diamonds should be bought according to a price list based on market transactional prices. This list is supported by some 400 irregularities which have a material impact, beyond the well-known 4 Cs, on regularly updated diamond prices. There can be huge price differences between the two valuation approaches. These differences not only undermine the ability of buyers to set a price when they wish to realize the value of the diamond which they spent good money on (resale), but the discrepancies also make it harder for financial institutions to precisely value diamond stock. A transparent and precise valuation method can serve financial institutions wishing to extend credit to their customers using diamond stock as collateral. Price differences also erode the level of much-needed financial transparency required for licensing, taxation and accounting with various authorities, and even accounting between partners. The goal of our system is to reflect the value of the diamond using all of its unique components (irregularities) and to arrive at precise diamond pricing with a transparency that is not inferior to the pricing of gold bars, for example.