The Studio – Jewelry Blog by Rio Grande

Demand & Supply

Nov 11, 2010
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I admire Rio’s customers. I meet all sorts of creative people who make objects of breathtaking beauty. The role I get to take in their creations is to help them find the beautiful materials they want to use.

Finding beautiful materials is a rush. Finding them at a good price is even better! Take a look at a chart I hatched for this post:

As you know, diamonds are sold by weight. I think we've all been trained to want a 1-carat diamond. But nature doesn’t care about our desires. Diamond crystals form independent of any market demand. The supply of diamonds tends to be plentiful for small stones, but extremely tight on really big diamonds. Nature is going to produce that exceptionally large crystal only once in a while.

In my chart I'm showing how supply is vast at the 0.01 ct. size, but it steadily declines as we approach 5 ct diamonds. What happens on the demand side? The bars show the relative increases in price for a similarly graded stone of various sizes. It’s easy to see that the trajectories are very different.

Nature doesn’t care: it steadily produces fewer and fewer stones of the next size up. We humans are fixated on particular target numbers on the carat scale. We all create a demand for that 1 carat diamond, or maybe that 3 carat diamond, so prices spike once that magic weight threshold is crossed.

So why care? Well, if money is no object, you won’t care. But for the rest of us, a bargain is usually welcome. A diamond that weighs 0.85 ct is going to have 95% of the apparent size of a 1.00 carat diamond, but it is going to cost perhaps 40% less!  My advice for diamond buyers is to consider slightly off sizes.  Here’s another example: Dreaming of a 3 ct. diamond?  Consider buying a 2.90 ct. It may cost as much as 25% less.

Rio helps you find these bargains. You can always give Chris or Shannon (our gemologists) a call for direct service at 1-800-257-7026. We also recently opened our Rio Grande Diamond Marketplace where you can search for your bargain among the many diamonds we can provide to you.

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