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Diamond Price: A Guy's Best Friend

By JENNIFER WATERS found at online.wsj.com, DECEMBER 20, 2009

The holidays can be a romantic time and there will be plenty of guys popping the question along with the champagne corks in the next few weeks. And if you'll need a diamond to go along with that proposal, now is the time to buy.

While prices vary widely based on the quality of the cut and the rarity of the stone, diamond costs in general remain about 10% below year-ago levels.

diamond price drawing  Eric Palma

Those prices have started to creep up from their lows in March 2009, though, and the relative bargains won't last long as the effects of the recession wear off and an oversupply of polished gems diminishes, retail diamond sellers say.

"There is a fair amount of inventory still out there because of the weak demand and because of a general aversion to wearing bling during these economic times," says Dione Kenyon, president of the Jewelers Board of Trade, an industry credit bureau.

But don't be blinded by love when diamond shopping. The process can be intimidating because of the lofty prices involved and what to the untrained eye can appear to be minor distinctions between stones. Markups on retail sales can be anywhere from 50% to 100%, jewelers say.

Diamond prices - Minding His Ps and Cs

When Callum Streeter began shopping for a diamond for his fiancée's engagement ring a year ago, he did what most first-time diamond buyers do: He researched pricing, the four Cs of diamond classification -- color, cut, clarity and carat weight -- and set a budget. He searched online and looked at stones at a number of stores.

Mr. Streeter, an engineer for an independent oil and gas company, created a matrix of cuts and clarity compared with prices from a handful of retailers, including some from his native country of New Zealand.

The one thing the 26-year-old did that wasn't conventional: He bought his diamond on the Web, from Blue Nile, an online seller of certified diamonds.

"At first, I was nervous about buying it online until I spoke to" a consultant at Blue Nile, he says. "I did a lot of research and I soon overcame that fear."

Mr. Streeter figures he saved $8,000 to $9,000 on the more than $20,000, 2.06-carat round ideal-cut rock he is having set for his bride-to-be.

Buy diamonds Like a Pro

Most traditional jewelers -- such as Tiffany, Jared and Zales -- that buy diamonds from large suppliers also will showcase stones and settings online and send rings to local stores for pick up.

"Customers should shop around and buy from reputable jewelers with an experienced and educated staff, with certified diamontologists [who] can explain the different qualities of the diamonds available, and from stores with clearly posted returns and exchange policies," says David Bouffard, spokesman for Signet Jewelers, parent of the Jared and Kay retail chains.

There are plenty of independent sources online to learn about diamonds and most major diamond sellers will have tutorials on their sites.

"It's not rocket science," says Blue Nile Chief Executive Diane Irvine. "With a little research, anyone can buy diamonds just like a professional jeweler would buy them."

Mr. Streeter says he chose his stone based on the four Cs on paper first, which is how jewelers buy them. Blue Nile then sent him the stone overnight for him to inspect before it was set. He then sent the diamond back so it could be put in a setting.

"There was a lot of telephone time talking with the consultants about the different options I had with color and cut and then with the particular setting I chose," he says. "When I compared the diamond I bought with the ones I saw in stores, there was a significant cost savings."

What to Look for...

Here are some tips from jewelry experts if you are in the market for a diamond:

Write to Jennifer Waters at jennifer.waters@dowjones.com

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