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Welcome to the Hull Diamond Blog.

I conceive of this as a place to discuss all things diamond. Since I am in the business of lending people money based on the value of their diamond jewelry in secondary markets, this discussion may focus to some extent on the issues that make a diamond more or less valuable as collateral on a loan. But it can go anywhere that people want to go with it.

So what makes diamond jewelry more or less valuable as collateral? Generally speaking, large, high quality single diamonds have the most value as collateral. Rounds diamonds have more value than other shapes. Forty years ago, marquise shaped diamonds (think football) were the next most valuable but they were supplanted by princess cuts (square) in the 1990s and early 2000s and now the market is moving away from these as ovals and cushion shaped diamonds are more in demand and therefore more valuable. The demand for marquise and heart shaped diamonds is so weak, that when I get presented with one as collateral these days, I estimate the carat weight that would result by recutting the marquise into an oval, and the heart into a pear and then calculate the loan value.

So, a well cut 1.50 carat round diamond with G color and SI1 clarity would have a loan value of $5840. A 1.50 carat oval or cushion of the same G, SI1 quality would have a loan value of $4680. A 1.50 carat marquise diamond with a 2:1 length to width ratio would recut to about (I estimate) a 1.25 carat oval and have a loan value of $2800. Shape matters.

To demonstrate the difference that size makes, a 0.75 carat round diamond of the same quality would have a loan value of $1290 compared to the $5840 for the 1.50 carat: half the size but only 22% of the loan value. And a 3.00 carat round diamond of the same quality would have a loan value of $21,240: only twice as big as the 1.50 carat, but 3.6 times the loan value. Size also matters when it comes to diamonds.

Next time, I will address how difference in color and clarity affect the loan value of the diamond.

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