THE POLISHED TRADE PRICE (PTP) — HOW IT WORKS

What is the PTP? The PTP is the Polished Trade Price, the price a retailer will pay a polisher or dealer for each diamond based on its specific qualities.

Where does the PTP come from? All polished diamonds are sold based on the globally accepted Rapaport price list. The Rapaport list is a matrix grid of prices that lists each diamond type by size/weight, color and clarity — but not cut. Using this grid, a polisher, dealer, or retailer can determine the value of a specific diamond.

Each diamond’s value is determined in relation to the grid by understanding that diamond’s qualities and market conditions. Because the qualities of Defined Value Diamonds (DVDs) are objectively defined in all relevant parameters including cut, their value is primarily a function of market conditions.

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At a retail store you might pay the Rapaport list price, or significantly more, as dependent upon market conditions and the retailer’s business model. At wholesale level, various sizes, different colors, and cut quality offer discounts to the Rapaport list for each type of diamond. Polishers keenly understand the discounts for specific diamonds to the Rapaport list. DVD grade Triple Excellent cut diamonds are the most objective value to determine. This rating inherently removes subjective interpretation when it comes time to buy or re-sell. Because of their cut, qualities, and selected specifications, Defined Value Diamonds (DVDs) are always in demand.

With polishing experience that goes back three generations, it is our business to understand the Polished Trade Price (PTP). Like diamond polishers and traders everywhere, our profits are small and based on the slight differential between factory-finished cost and the PTP. The price you pay for DVD Disc diamonds is the PTP price for Triple Excellent diamonds. In other words, at the same price a retailer would buy from us.

 

Our core business is supplying Triple Excellent grade polished diamonds to high-end retailers. However, selling DVD discs as a secure, portable compact store of wealth diversification, opens a channel directly to you for the same diamonds at the same price. Because we are not selling these diamonds in jewelry, we are not in conflict with our retailers.

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Why you always pay the Polished Trade Price (PTP) for Defined Value Diamonds (DVDs)

The following is a detailed description of how the polished diamond market functions and how the Polished Trade Price (PTP) for diamonds is derived, specifically for a Defined Value Diamond (DVD).

In general, diamond manufacturing — polishing as it is also known — is a low-margin high-turnover business. Like commercial airlines, which make their margins on volume, a diamond polisher is lucky to make 5%. More often, the margin is lower. This means that when buying rough diamonds, the polisher has to very accurately understand the price a rough diamond will yield once it is polished.

On the wholesale market, the finished polished price is called the Polished Trade Price (PTP). To calculate the value of the polished diamonds from rough stones, a polisher must first calculate what each rough diamond will yield, or become, once cut and polished. Understanding the Polished Trade Price (PTP) for each diamond type enables polishers to value every rough diamond to determine the price of the miners’ parcel. Since margins are small, they must get this figure exactly right.

Globally, the PTP for each diamond of the quality and type used for a DVD is the same. That’s because DVD diamonds are defined and polished to a standard that removes variables for interpretation, specifically color, clarity and cut, as explained in greater detail below.

In determining the value of a diamond, polishers not only need to understand its Polished Trade Price, they must calculate all the factors that the PTP is based upon. These include the diamond’s finished weight, its color and purity, but most importantly, its cut — the only variable where human technical proficiency and artistry is involved. Color can be determined accurately with a spectrographic machine and the human eye. Purity is based on the characteristics of the rough diamond. The last variable is cut, the standard and specifications of polish.

Polishers often make a tradeoff between the finished cut quality of the diamond and the finished weight (carat size). The more precise the cut, the lower the total weight and the smaller the finished diamond will be. For example: the polisher may cut away 57% or more of the original rough diamond to get a Triple Excellent cut grade (the highest level), or cut away only 52% to get a larger diamond of a lower cut grade. Often times, a rough diamond is polished to a lower cut grade standard to achieve a higher finished weight than a Triple Excellent cut grade would yield for the same diamond.

Diamond Cut Comparison

A Triple Excellent cut grade of the same weight would require starting with a larger rough diamond in order to yield the perfection within. The characteristics of color and purity do not change with polishing. A lower cut grade often yields more margin for a polisher but it is less beautiful, and therefore, less desirable. Its cut characteristics are not well defined and it is more difficult to resell in the future. The higher cut grade is more beautiful, more desirable, is definable and has a superior resale value. A Triple Excellent cut grade requires the polisher to lose more of the rough diamond to achieve this highest level of quality.

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This explains why two similarly described diamonds — except for cut grade — will sell for different prices. The best example of this tradeoff between quality of cut and price is seen in the difference between a diamond weighing .95 ct and one weighing 1.01 ct. On its face, there is a 6% weight difference. However, size breaks count for a lot. The two diamonds of these different weights have a 35% difference in price, because diamonds in the .90 ct size range are priced 30% less per carat weight than the same color purity diamond in the 1 ct size range. The inclination of a polisher would then be to polish a rough diamond to a lower cut standard and finish at 1 ct instead of a higher Triple Excellent cut and finish at .96 ct.

It’s not surprising that two diamonds of 1 ct size with similar color and purity can be worth different amounts. The one with the lower cut grade would have weighed less than 1 ct if it would have been finished to a Triple Excellent cut quality.

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Because the business sees only a 3-5% margin, the best value for the polisher is not necessarily the best value for the customer at purchase or resale. Fortunately, a percentage of each polisher’s production naturally lends itself to the best cut resulting in a diamond the GIA will grade Triple Excellent.

Triple Excellent diamonds are the only ones that can become Defined Value Diamonds (DVDs). The reason Triple Excellent Grade is critical to DVDs, is not only because it makes the most beautiful and desirable diamonds, but more importantly, because it eliminates the variable of quality of cut, its precision, light refraction, and variances used for valuation and resale.

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GIA grades for color and clarity are specifications. Weight is completely objective. Now cut is also a specification with the highest grade awarded as Triple Excellent. Therefore, anything less than Triple Excellent Grade lends itself to value interpretation because of its variables that are difficult to define for buyers and sellers.

The best retailers sell GIA Triple Excellent cut grade diamonds, not only because their reputation is about the highest quality, but also because the Triple Excellent cut grade rating solidifies the resale value of their clients’ diamonds — years or decades later.

Therefore, each DVD not only has a GIA certificate, which details all of the characteristics of that diamond, but each DVD is always a Triple Excellent cut. These certificates and specifications allow for precise definition of its value anywhere in the world by anyone with current Polished Trade Price (PTP) information. Because this specification is so precise the value definition can be easily calculated.

Resale has always presented a challenge for diamond purchasers. With Defined Value Diamonds — not any more. A DVD customer pays the PTP for Triple Excellent diamonds. When you want to sell your DVD disc diamonds, the price we will offer you will be the then-current PTP for Triple Excellent DVD diamonds that match your diamonds’ description.

Based on your GIA certificate and DVD documentation, your DVD Disc’s value for sale is so definable, we can even quote its price to you over the phone. Because DVD diamonds are not subject to interpretation or variables of description we don’t have to see them or interpret their value. If or when the time comes to sell your diamonds, we can tell you the expected PTP value at the then current market price. That is why we can, as a part of your DVD offer, enable you to resell at the PTP price through us. You are of course welcome to sell your diamonds wherever you wish. However, some non-DVD dealers may offer you less than the PTP expecting to make a higher profit on unsuspecting customers.

When we sell your DVD diamond(s) for you, the price you will get is always the then current PTP.

 

 

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