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Published in U.S. 1 Newspaper on February 9, 2000. All rights

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Diamonds or Dotcom Stocks?

Diamonds may be a girl’s best friend, but they are a

whopping good investment for anybody, says B.J. Tadena, master

diamond cutter and author of "Diamonds: Know What You are Buying

& Selling," ($19.95, Rough Stones Inc., Box 32, New York NY

10185-0032).

As an asset, says Tadena, diamonds can be turned into cash at any

time. "Real estate is difficult to liquidate. Cars and automobiles

depreciate from the moment that they leave the dealership. Money is

subject to the various elements that move the economy. But a high

quality diamond bought at the right price will not depreciate and

is not subject to economic change."

Tadena has chapters ranging from the art of cutting a diamond to the

worth of synthetic diamonds, but the real value comes from its 90-page

appendix and its many charts and diagrams, including a page that shows

what different size diamonds look like (so you can eyeball someone’s

new solitaire and guess how many carats it is) and detailed charts

(so you can mentally estimate what it cost).

His consumer tips: Expect to receive a detailed receipt including

the price, tax amount, legal name of the seller, description of the

article, and its composition. In the case of diamonds, the receipt

must also include accurate diamond grading and carat weight

information

and any treatments, such as "fracture filled," that have been

given to the stone.

The four Cs of diamond shopping are cut, clarity, and color, and

carats.

Of the seven major shapes, each has its own charm, but for investment

purposes choose only the 58-facet round brilliant cut — the most

popular and most saleable. Other cuts: The heart shape is the most

difficult to cut; the oval is the least expensive; and the pear or

teardrop is the next least expensive. Other popular cuts are the

marquise

(like the shape of a rice grain), emerald (rectangular with more

facets

applied), and the princess (a squarish shape, often used as a center

stone).

Invest in a loupe (a special magnifying glass) when inspecting

diamonds,

but use it correctly:

"Hold the loupe one inch away from the left eye (because the left

eye is assumed more powerful than the right). Peer into the loupe

with both eyes open and adjust the distance of the stone to get the

correct focus. Practice focusing first on any item that you want to

see up close — the pores of the skin, a strand of hair, or a glass

marble. Rotate the item slowly. Hold the loupe at varying distances

until focusing becomes easy. When you become comfortable with the

loupe, you are now ready to focus on the diamond or gemstone."

Even with a loupe you will not be able to detect the first three

grades

on the clarity scale: Internally Flawless (IF) or Very Very Slight

Inclusions (VVS1 and VVS2), minute inclusions detectable only through

a binocular microscope. A practiced loupe user may be able to detect

the next grade, Very Slight Inclusions (VS1 and VS2), minor inclusions

ranging from difficult to somewhat easy to see face up, under 10X

magnification. The next grades, Slight Inclusions (S11 and S12) are

noticeable inclusions that are easy to see under 10X magnification.

Some sample prices: a round cut diamond, 1 to 1.49 carats, could cost

as little as $2,500 (with a clarity grade of SI12 for inclusions very

easy to see under the naked eye and the least desirable color grade,

M, for faint yellow) and as much as $16,400 (for a clarity grade of

IF, internally flawless, and a color grade of D, for colorless).

Buy what you can afford for jewelry, says Tadena, but for investment

purposes buy a round cut diamond that is at least one carat in size,

of such clarity that imperfections cannot be seen by the naked eye,

and with a color grade of H (near colorless) or higher. His price

guide would put that diamond at about $6,000.


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