Gems & Jewelry: Diamonds, Color, and Treatment
Gems & Jewelry valuation tests how you value diamonds, colored stones, and finished jewelry using trade evidence rather than a single price list. The exam emphasizes the four Cs, laboratory reports, treatment disclosure, metal and setting value, and the difference between retail replacement and liquidation value.
Core rules
- Diamonds: value depends on carat weight, color, clarity, and cut, plus fluorescence, polish, symmetry, and certificate. Rapaport is a price indication for defined categories, not a transaction price; trade discounts off Rap are normal.
- Colored stones: no single accepted price list. Use comparables adjusted for hue, tone, saturation, clarity, size, origin, and treatment.
- Treatments and synthetics: heat treatment, fracture filling, irradiation, and lab-grown stones must be disclosed and reflected in value. An untreated stone can carry a premium.
- Jewelry: add metal value (weight × purity × spot price) and fabrication or workmanship, then reconcile to market evidence.
- Premise: retail replacement value includes retail markup; fair market value and liquidation value use different levels and exposure periods.
Worked example
A 1.00 ct round brilliant, G color, VS1 clarity, has a Rapaport indication of $8,000 per carat. A 20% trade discount gives $6,400 for the stone. The setting uses 5 g of 18k gold at $55/g = $275, plus $150 fabrication, or $425. Wholesale jewelry value is $6,825. For retail replacement, a supported 25% markup gives $8,531, rounded to $8,500. The Rapaport figure was only a starting benchmark, and the markup reflects the retail premise.
Traps that cost marks
- Treating the Rapaport price as the value of the stone.
- Ignoring fluorescence, certificate differences, or fancy-shape discounts.
- Failing to disclose treatment or synthesis.
- Extrapolating a per-carat price linearly across carat weights.
- Omitting setting, metal, or fabrication value.
- Using retail replacement value for a liquidation engagement.