How to value Fancy Yellow Diamonds?

[JohnAC]

Hi all, I'm trying to sell a couple of loose fancy diamonds and wanted a second opinion on valuation.

I've been offered 5200 for the round and 5600 for the radiant, both per carat. Are these fair prices? Should I be looking to secure something slightly higher?

Thanks!! I've attached pictures of grading reports and photos of the stones.

 

[Rockdiamond]

The offers sound way too good to be true if they’re coming from a dealer.
Be careful

 

[lovedogs]

The offers sound way too good to be true if they’re coming from a dealer.
Be careful

I came here to say that. Those numbers don't make sense

 

[lovedogs]

https://www.jamesallen.com/loose-diamonds/fancy-color/yellow/round-cut/1.02-carat-si1-clarity-sku-22199877

For a new stone,from a huge seller, with return policy, etc. So there's no way a dealer can offer you 5200/ct for this.

 

[freddyboston]

also they are Strong / Med Blue - isn't Blue FL discounted in Yellow Fancy since can wash out the color ?

 

[Rockdiamond]

also they are Strong / Med Blue - isn't Blue FL discounted in Yellow Fancy since can wash out the color ?

In many cases fl has a negative impact on the appearance of a yellow diamond. Not all cases….. but the predominance of issues means virtually all Fancy Yellow diamonds with Medium or Strong Blue are pretty heavily discounted

 

[JohnAC]

The offers sound way too good to be true if they’re coming from a dealer.
Be careful

Thanks for the heads up. The guy is a wholesaler in the diamond district in NYC - I was introduced to him by the friend of a friend.

Haven't got much information on him yet but I'll proceed with caution.

Any ideas on what a more normal price would be?

Editing to add that I'd be aiming to sell around 10-20 carats per month - mostly clear diamonds - to this individual (or another reputable wholesaler if this guy ends up being shady), in case that influences the price he would offer!

 

[Rockdiamond]

This is getting shadier and shadier sounding !
Will dealers in NYC buy diamonds from consumers? Absolutely!
Will they pay about 50% below current wholesale price? If you’re lucky. More likely 25% of the wholesale value or about 10% of retail.
If I might ask…. Where are you getting these diamonds you’re hoping to profitably sell?

 

[JohnAC]

Of course - we would aiming to become a wholesaler and sell at wholesale prices rather than as consumers, although I'm not 100% sure how much volume wholesalers are moving per month.

Price wise we were aiming to sell for roughly half of retail which would make us a solid margin - is that feasible?

We have links to a diamond mine in Latin America which can supply us rough diamonds which we would then have cut in country. My partners father has been buying from them for a long time and used to work with them so they are a reliable source of good quality stones.

 

[lovedogs]

Of course - we would aiming to become a wholesaler and sell at wholesale prices rather than as consumers, although I'm not 100% sure how much volume wholesalers are moving per month.

Price wise we were aiming to sell for roughly half of retail which would make us a solid margin - is that feasible?

We have links to a diamond mine in Latin America which can supply us rough diamonds which we would then have cut in country. My partners father has been buying from them for a long time and used to work with them so they are a reliable source of good quality stones.

You won't sell for half retail. Because if you sell *to* retailers, they need profit too. So you'd sell at like 15% of retail to a dealer/retailer (as Rockdiamond said).

 

[Rockdiamond]

It’s much worse than just the margins or price of the diamonds for people trying to break in. The larger cutters dominate the market. The motivation to actually purchase diamonds for stock is pretty much gone- we can get anything we need on memo ( consignment) and since we’re well established larger cutters are very willing to work with us.
If we were willing to buy diamonds for “stock” we could get very favorable terms. With at least 90 days to pay for the goods.
If you wanted to sell to dealers with bad reputations…. Probably easy to “sell”. Getting paid??? Not so much.
To top it all off, lab diamonds are decimating the prices of naturals and greatly lessened demand for natural diamonds.
Hate to be a downer. But this is the current reality.

 

[Ibrakeforpossums]

On the edge of my seat with this.

 

[JohnAC]

You won't sell for half retail. Because if you sell *to* retailers, they need profit too. So you'd sell at like 15% of retail to a dealer/retailer (as Rockdiamond said).

Interesting, so retailers are marking up the other 85% of the price?

In that case how do the wholesalers make any money? The margins sound razor thin.

 

[Karl_K]

Honestly, if someone came to me with this offer I am calling the FBI.
Anything outside the usual market I would be very strongly suspicious that it was something that could get me in a lot of trouble.
Diamonds are one of the most closely watched items by the feds and not just the US but around the world.
That said...
The question you have to ask yourself.
If someone has a legit source of rough, why do they need you?
They can send them to India and have them contract cut and sold on the global market just like everyone else.

 

[JohnAC]

It’s much worse than just the margins or price of the diamonds for people trying to break in. The larger cutters dominate the market. The motivation to actually purchase diamonds for stock is pretty much gone- we can get anything we need on memo ( consignment) and since we’re well established larger cutters are very willing to work with us.
If we were willing to buy diamonds for “stock” we could get very favorable terms. With at least 90 days to pay for the goods.
If you wanted to sell to dealers with bad reputations…. Probably easy to “sell”. Getting paid??? Not so much.
To top it all off, lab diamonds are decimating the prices of naturals and greatly lessened demand for natural diamonds.
Hate to be a downer. But this is the current reality.

Firstly, thanks for the in depth replies. This info is seriously valuable, so thanks (and also to the others who've weighed in).

The way I was thinking about it we could purchase the roughs and get them cut for a good price (low labour costs in country) and hence get some value out of reselling to wholesalers or to retailers. But we'd be too small fry to compete with the larger cutters until we got established. It sounds like a tough game to break into!

Our price to get 5 carats of rough diamonds cut, polished and ready to sell is about $4k USD (that's 5 carats of roughs, obviously it's hard to tell exactly how much they'll end up weighing). Do you see any possible margin to be made there?

If not I guess we will just have to make a jewellery shop and sell to punters ourselves! (Joking on that front )

 

[JohnAC]

Honestly, if someone came to me with this offer I am calling the FBI.
Anything outside the usual market I would be very strongly suspicious that it was something that could get me in a lot of trouble.
Diamonds are one of the most closely watched items by the feds and not just the US but around the world.
That said...
The question you have to ask yourself.
If someone has a legit source of rough, why do they need you?
They can send them to India and have them contract cut and sold on the global market just like everyone else.

From what I know he has a stall in the diamond district. I've requested a video call before even booking a flight to NYC to get a feel for things. I'm being extremely cautious after the feedback I've got here.

Regarding the rough source - this is not a developed country, they don't have access to capital or the means to arrange this sort of thing.

 

[Rockdiamond]

Our price to get 5 carats of rough diamonds cut, polished and ready to sell is about $4k USD (that's 5 carats of roughs, obviously it's hard to tell exactly how much they'll end up weighing). Do you see any possible margin to be made there?

My pleasure to discuss!
Regarding your question….
Say I told you I have a house for sale… $100k.
Is it a good deal???
If it’s in Beverly Hills is a steal. In other places you’d be throwing $100k in the trash.
Rough traders are incredibly smart, in my experience.
Whatever they’d sell for $5k isn’t worth the effort for them to cut.
Don’t make the mistake of thinking you’ll outsmart them.

 

[lovedogs]

Honestly, if someone came to me with this offer I am calling the FBI.
Anything outside the usual market I would be very strongly suspicious that it was something that could get me in a lot of trouble.
Diamonds are one of the most closely watched items by the feds and not just the US but around the world.
That said...
The question you have to ask yourself.
If someone has a legit source of rough, why do they need you?
They can send them to India and have them contract cut and sold on the global market just like everyone else.

Exactly. If someone told me I could get 5ct of rough cut and polished for 4k AND that the process was legal id be convinced they were lying. Why would they want to do that? It makes no sense

 

[JohnAC]

My pleasure to discuss!
Regarding your question….
Say I told you I have a house for sale… $100k.
Is it a good deal???
If it’s in Beverly Hills is a steal. In other places you’d be throwing $100k in the trash.
Rough traders are incredibly smart, in my experience.
Whatever they’d sell for $5k isn’t worth the effort for them to cut.
Don’t make the mistake of thinking you’ll outsmart them.

So the guy we'd be buying off is not a rough trader, he's the actual miner. He's also a childhood friend of my partners father. That said, it's a dog eat dog world out there so undue trust is not warranted.

I'm doing some more research with my partner's father to get a read on this guy. From what I know he's a salt of the earth kind of guy, not well off, doesn't own a car or expensive property. Doesn't have the resources to get things cut and sold globally.

That said there are a few unknowns. We already have the first 5 cts of roughs anyway so we will know more on quality once they're cut.

However, if they ARE good quality diamonds, is a yield of 2.5-3cts of D-G, SI1 and up stones for $4k something that could lead to a decent potential profit margin? Purely talking hypothetical at this point of course.

 

[lovedogs]

So the guy we'd be buying off is not a rough trader, he's the actual miner. He's also a childhood friend of my partners father. That said, it's a dog eat dog world out there so undue trust is not warranted.

I'm doing some more research with my partner's father to get a read on this guy. From what I know he's a salt of the earth kind of guy, not well off, doesn't own a car or expensive property. Doesn't have the resources to get things cut and sold globally.

That said there are a few unknowns. We already have the first 5 cts of roughs anyway so we will know more on quality once they're cut.

However, if they ARE good quality diamonds, is a yield of 2.5-3cts of D-G, SI1 and up stones for $4k something that could lead to a decent potential profit margin? Purely talking hypothetical at this point of course.

Honestly? My guess is that this entire thing is illegal. There are incredibly strict rules about mining diamonds, cutting, selling, etc. All have to be ethnically sourced and have known origin, etc etc. This seems like a very very bad idea

 

[oldminer]

The diamond business is generally conducted by folks with a large yet subtle knowledge of the diamond business. This is not knowledge easily obtained. Sellers can be very honest and ethical or far less so. One can't judge without the needed knowledge and experience. Find similar diamonds already for sale and compare. Don't buy blindly.

 

[Rockdiamond]

That said there are a few unknowns. We already have the first 5 cts of roughs anyway so we will know more on quality once they're cut.

This might sound....silly??? But how do you know they are actually diamonds?

In terms of the resultant diamonds, which are polished from rough......
The planning of the cut is a super complex procedure.
I learned the hard way many years ago when having stones cut for us- many aspects of the polished diamond are not recognizable in the rough- even things like fluorescence..... to ay nothing of the precise color and clarity.