Is an App the Answer to Successful Diamond Investing?

Wayne D. Prentice, a graduate gemologist and former GIA resident gemology instructor, has deep roots in the diamond industry. He’s been involved in it in various ways since the 1980s, and most recently developed the DiamondMaster app, which he describes as a “global wholesale price list based on reliable market data.”

To find out more about the app and how it can help investors, Diamond Investing News (DIN) sat down and spoke to Prentice. Here’s what he had to say.

DIN: What inspired you to make the DiamondMaster app?

WP: What motivated me to make this app was being involved in the diamond industry, especially post-9/11. At that time, I started to see major shifts in diamond values and trading in the different markets, and a lot of that was stimulated from changes in US policy. From about 2002 to 2007, a five-year period, the US dollar — because of all the spending internationally post 9/11 and the easing on credit — lost close to 48 percent to the euro.

So in my mind, pricing diamonds to the dollar did not seem the best strategy, especially given that they’re an international product. That’s when I debuted the Troy Diamond Report, which was the first diamond pricing guide I did — it was in PDF format.

DIN: How did that guide work?

WP: I wanted people to have a solid benchmark to use as a reference for per-diamond global value, so I ended up using gold’s annual moving average and the International Monetary Fund’s Special Drawing Rights valuation for diamond wholesale values traded on the industry’s exchanges and from cutting factories.

Those two benchmarks are references people follow, so users were able to determine whether diamonds were losing value, gaining value or if the currency was just changing in value. I ultimately added major foreign currencies, which give a lot more depth for understanding the market.

DIN: And eventually you created an app version of the original guide.

WD: In 2010, when the technology became available, I was able to design an app with the ability to instantly calculate all of that data. It basically takes three years of data sets for any given month and it calculates for every classification, showing which diamonds are truly changing in value versus which are staying relatively flat.

That hasn’t ever been done before in the diamond industry — it’s the first diamond reference that gives a change in value on any given diamond shape and color and quality and cut.

DIN: Is it typically buyers or sellers that are using the app?

WD: It’s interesting because I have a mix. Appraisers will use it, while diamond buyers also find it very convenient because it’s quick and easy to adjust and calculate when you’re buying. For diamond professionals, one of the most frustrating things to do when buying multiple diamonds is try to calculate and estimate which ones to select. This makes it very easy to do.

Even retailers can use the app and adjust the settings to show their markup — they can sit there with a client and quickly and easily show an added level of professionalism because they can say, “this diamond changed this percentage of value over the last five years, while this one did not.” If aesthetically it doesn’t make any difference to the buyer and they see that one diamond has appreciated 30 percent over that time frame and the other only appreciated 15 percent, which one are they going to buy?

DIN: Your answer ties into one of my questions. I was wondering how buyers would be able to use the app when it’s hard for them to get diamonds at wholesale prices — but it looks like you’ve accounted for that.

WD: Yes, you can adjust the app’s settings to your purpose. There is no suggested manufacturer’s retail price on diamonds because all diamond classifications will have various markets depending on the conduit. So I made the wholesale asking price the base reference — but with the settings you can do the discount or markup depending on the purpose or your access or where you are with an industry.

DIN: There are a lot of considerations that come into play when valuing diamonds. What other things does the app take into consideration?

WP: It has conversions of all the other established grading systems beyond the GIA. The Russian grading system is very well established, and they’re very solid on maintaining those evaluations. Then there’s the AGS Lab, which is very recognized. It’s got the AGS conversion.

It even has a dimensional reference for every classification — I factored in that you should have certain proportions or dimensions for given weights. It allows for a much tighter breakdown between the weight classifications because you can see, for example, for every two-tenths of a millimeter what weight category or price category the diamond should fall in.

DIN: On a different note, it seems like many people don’t believe white diamonds are a good investment — instead, lots of people are pushing colored diamonds, which the app doesn’t cover. Do you see colored diamonds as a good investment?

WP: I think colored diamonds are good for a very small niche of investors. There’s no way to provide, say, a pink diamond as an investment to every person who wants to be in diamonds. They’re for a small percentage of investors.

White diamonds, on the other hand, are readily traded and a little more tangible than colored diamonds. Some companies are offering precision-cut melee diamonds and field packets for consumers who want to invest a small amount of money. I think you just have to know which classifications to choose – you have to make sure you’re buying at the right value.

DIN: Can you offer any insight regarding where diamond prices may head in the future? I know there’s been some concern about supply.

WP: When I look at Canada, which provides 20 percent of the world’s supply by value, and Russia, which provides 25 percent, I think that the resources in the ground are still pretty limited relative to increasing demand.

Demand for certain classifications will definitely increase. The consumption of diamonds, especially for investment, is rising due to the Chinese and Indian markets and people’s insecurity about traditional banking systems. And diamonds will always be one of the best transportable forms of wealth that you can physically possess — it’s not easy to carry any quantity of gold out there.

DIN: Anything you’d like to add?

WP: I’m trying to make the app readily accessible by offering three subscription options. It’s a free install, and with those options you can subscribe for as little as a week. So it’s inexpensive for those that just need it periodically. But for people who are active and using it on an ongoing basis there’s a six-month option and a one-year option.

DIN: Will you be making an Android version of the app?

WP: I am looking at doing an Android version, and I’m even thinking about doing a computer version. I plan to debut them by the first part of next year.

Securities Disclosure: I, Charlotte McLeod, hold no direct investment interest in any company mentioned in this article. 

Editorial Disclosure: Interviews conducted by the Investing News Network are edited for clarity. The Investing News Network does not guarantee the accuracy or thoroughness of the information reported. The opinions expressed in these interviews do not reflect the opinions of the Investing News Network and do not constitute investment advice. All readers are encouraged to perform their own due diligence.