Diamond Clarity: Light Refraction and Inclusions

What exactly is clarity? How does clarity influence a diamond's price?

How does Clarity Influence Diamond Prices?

Below is a chart of diamond prices where only the clarity grade varies.  All the diamonds were round, 1-carat, H-color, "very good" cut grade diamonds. 

The flawless (F) category was not included as they are rare and difficult to find.  Also, VVS1 was not included for lack of data.  However, from the given information, it is apparent clarity is a large factor in pricing diamonds for these four retailers. 

While VS2 is only the sixth clarity grade from the top, about 36% of the loose diamonds available online and through retailers are graded VS2 or the slightly higher grade VS-1. This grade range is very popular—an untrained observer with a 10x loupe might not see anything wrong with these diamonds, and for two of the merchants noted above, the VS2 prices were 30% less than the IF graded diamond prices.

The data also reveals an interesting fact.  While some merchants label their diamonds in a less precise manner, lumping similar-term clarity grades together (VVS1 with VVS2; VS1 with VS2; SI1 with SI2; and all the I grades in one group), the prices within each of these groupings can vary considerably.  For example, the step from VS2 to VS1 costs $197 to $865, depending on the merchant.  When diamonds are labeled "VS2/VS1," the buyer doesn't know which is the correct grade--or what is a fair price.

What is Clarity?

Clarity grading rates how well light reflects from a diamond.  Imperfections obstruct reflection of the light, making diamonds less brilliant. The larger the imperfections, the worse the diamond’s ability to reflect the light.

Flawless diamonds show no inclusions or blemishes of any sort under 10X magnification when observed by an experienced grader; internally flawless diamonds will only show minor surface blemishes.  Diamonds graded VVS1 and VVS2 have very, very small inclusions that are difficult for trained experts to spot with 10X magnification; the inclusions in VS1 and VS2 are not as difficult to find with effort.  The inclusions in SI1 and SI2 stones are easy to find without effort, and all the I (included) ratings indicate the inclusions are obvious without effort. 

In 1992 the European Gem Laboratory (EGL) introduced another grade of clarity: SI3. Ostensibly, many industry craftsmen complained there was too wide a gap between the GIA standard grades SI2 (slightly included) and the I1 (included). Hence, why not offer a SI3 grade to bridge the gap? GIA did not recognize this new grade and a lot of jewelers believed it was just a veiled attempt to price gouge the most gullible consumers by selling them I1 grade diamonds at SI2 prices.

How to Test Diamond Clarity