Clarity is one of the four value factors (Four Cs) that describe and determine the value of a finished diamond. Its classic definition is "a gemstone\'s relative freedom from inclusions and blemishes."

The difference between inclusions and blemishes is based on their locations. Inclusions enclosed within a gemstone, but they might also extend into the diamond from the surface. Blemishes are confined to the gemstone\'s surface. Together, inclusions and blemishes are called clarity characteristics.

Many characteristics are introduced during or after formation of the diamond, but they can also be caused by the cutting or setting process, or even occur when the diamond is being worn.

In relation to diamond clarity we need to emphasize that rarity and value are closely related. The less of something, the more valuable it is. Diamonds with no clarity characteristics are more rare — and more valuable — than diamonds that have just a few. A small, seemingly insignificant clarity characteristic can make a difference of thousands of dollars in the value of a diamond.

Clarity characteristics do more than tell how rare and valuable a diamond is. As it's extremely unlikely that two people have identical fingerprints, or that two snowflakes are exactly alike, it's just as unlikely that two diamonds have the same clarity characteristics in identical locations. For this reason, the clarity characteristics of a diamond can be viewed as a kind of unique identification mark of each single diamond.

Five factors determine the overall effect of characteristics on a clarity grade. Most of them have to do with how readily the grader can see the characteristics. The factors are following: size, number, position, nature, and relief.

Upon assessment and evaluation of all above factors, each diamond is classified with one of 11 clarity grades. According to the GIA (Gemmological Institute of America) system the grades are following:

FL - Flawless
IF - Internaly flawless
VVS₁ - Very very slightly included 1
VVS₂ - Very very slightly included 2
VS₁ - Very slightly included 1
VS₂ - Very slightly included 2
SI₁ - Slightly included 1
SI₂ - Slightly included 2
I₁ - Included 1
I₂ - Included 2
I₃ - Included 3

Diamonds in nature come in many colours. The diamonds that range from colourless to light yellow and brown fall within the normal colour range.

Within the normal colour range, colourless diamonds are the most rare, so they're the most valuable. Subtle differences in colour can dramatically affect the value of a diamond. Two diamonds of the same clarity, weight, and cut can differ in value based on colour alone. Even the slightest hint of colour can make a dramatic difference in diamond value.

The normal colour grading scale, developed by Richard T. Liddicoat at GIA (Gemmological Institute of America) in the 1950s, describes the normal colour range from D (colourless) to Z (light yellow or brown). Today, the GIA Colour Scale is the most widely used diamond colour-grading system in the world.

The letters in the D-to-Z scale don't describe actual colours, or hues. Each letter actually represents a range of colour that's based on a combination of tone (darkness or lightness) and saturation (intensity).

Diamonds are colour graded under controlled conditions by comparing them to round brilliant diamonds of known colour, called masterstones. Each masterstone represents the least amount of colour in its colour range.

Consistent colour grading depends on three factors: masterstones, environment, and the grader's experience. Because each colour grade represents a range, stones that fall on the borderline between two colour grades can be challenging. For this reason, each diamond is colour graded by at least two experienced graders in renowned gemmological laboratories.

Diamonds outside the normal colour range are called fancy-coloured diamonds or just „fancies“. This group includes all diamonds that are yellow or brown and have more colour than a Z masterstone, as well as all diamonds that exhibit a colour other than yellow or brown.

Unlike the diamonds in the D-to-Z range, for fancy-coloured diamonds the value usually increases as the colour deepens. Fancy-coloured diamonds come in almost any colour you can imagine. Red, green, purple, and orange are generally the most rare, followed by pink and blue. Yellows and browns are the most common fancy colours. Many fancy colours, however, are not strong and pure. They're often blended with other colours and muted by grayishness or brownishness. Large, vivid fancy-coloured diamonds are extremely rare and valuable.

Spectacular prices in high-profile auctions are another factor in the increased awareness of fancy-coloured diamonds. In May 2009, at Sotheby's, Geneva, a 7.03-ct. Fancy Intense blue diamond was sold for almost $9.5 million, a price that amounted to about $1.3 million per carat.

Some diamonds emit a visible light called fluorescence when they're exposed to ultraviolet (UV) radiation. Under the right conditions, you can see fluorescence in about one of three gem diamonds. Blue is the most common fluorescent colour, but other possible fluorescent colours include white, yellow, and orange.

In some diamonds in grades J to Z of the normal colour grade, fluorescence can make a light yellow diamond look closer to colourless in sunlight. In this case, it has a positive impact on the stone value. However, if the fluorescence in diamonds close to colourless is too strong, it might make the stone look cloudy or "oily", and that can lower the value of the diamond.

In the moment when a light ray strikes a diamond, two optical phenomena occur. Part of the light reflects off the surface and the other part enters the diamond. If the ray reflects off the surface, you see it as a flash of white light, which is part of the diamond's brightness.

If the ray enters the diamond from outside, it slows and at an angle it also bends: This is called refraction. The light ray, now moving more slowly and at a different angle, travels through the diamond and strikes an interior surface (facet). One of the following two possibilities occur then – the light either continues reflecting from the interior diamond surfaces to finally come out, or comes out of the diamond immediately. Some of the light that leaves the diamond is bright white light, which adds to the diamond's brightness.

Other white light rays divide into coloured flashes that are commonly called fire. Fire is the result of an optical effect called dispersion. It is the separation of white light into its spectral colours, which are the colours of the rainbow from red through orange, yellow, green, blue, and violet.

When the diamond, the light source, or the observer moves and the diamond catches the light around it, it sparkles with flashes of white and spectral-coloured light. The sparkle is called scintillation.

Combination of all above optical phenomena with some other parameters determines the diamond cut grade. Since the brilliant (round brilliant cut) is the most common and optically the most effective diamond cut, GIA (Gemmological Institute of America) but also all of the other significant gemmological institutes have developed detailed procedures for round brilliant cut grading. While for all other cuts the grading rests particularly in symmetry or polish analysis, for round brilliant cut a sophisticated and detailed analysis procedure is in place, based on assessment of individual proportions and their interaction to determine the eventual and overall diamond cut grade.

GIA round brilliant cut grading system has five grades that are used for analysis of symmetry and polish as well as overall cut quality. Each of the specified criteria can be classified with one of the following grades:
Excellent (EXC)
Very Good (VG)
Good (G)
Fair (F)
Poor (P)

The diamond polish refers to the overall quality of the diamond facets surface. Because of its hardness, diamond will take and keep the best polish of any gem. Good polish is essential for maximum brilliance, fire, and scintillation.

Symmetry means precision and balance of a finished gem's cut. In a symmetric diamond, brilliance, fire and scintillation are evenly spaced.

Diamond make is individual assessment of components like individual diamond proportions, its brilliance, fire, polish or symmetry, as well as assessment of their interaction. The most important proportions include table percentage, crown angle or pavilion angle, but there are also other proportions like crown height percentage, pavilion depth percentage, total depth percentage, girdle thickness or culet size. Most proportions are expressed as percentage of the longest dimension of the round brilliant cut, which is the girdle diameter.

Only much precisely cut round brilliant diamonds with perfect optical symmetry can show effect called Hearts & Arrows when viewed under special optical equipment. It is an optical effect when viewing through the crown, you can see eight symmetrical arrows, and viewing through the pavilion, you can see eight symmetrical hearts in a diamond.

Diamond weight is expressed in metric units called carats. When written, carat is usually abbreviated "ct." One carat is equal to 200 milligrams, 1/5 of a gram, or 0.200 gram. That means that carat is a relatively small weight unit. Great majority of gem diamonds weigh less than 1 carat.

It's diamond industry practice to weigh diamonds to a thousandth of a carat (three decimal places), then round the weight to a hundredth of a carat. However, the international practice to round the diamond weight set by the World Federation of Diamond Bourses and followed by the majority of renowned gemmological labs is different from standard arithmetic rounding. According to these guidelines, a diamond's weight can be rounded up to the next higher hundredth only if there's a nine in the thousandths place.

Bigger is better—and costs more. As far as diamonds go, that's often the case. If all other value factors are equal, a 1.50-ct. diamond is much more valuable than a 0.50-ct. diamond. But if you compare a D-colour Flawless 0.50-ct. diamond and a P-colour I3 clarity 1.50-ct. diamond, it would certainly be the other way.

Another important fact is the relation between diamond dimensions and its weight. As there are special requirements for round brilliant cut proportions, we can determine the weight of a specific diamond based on its dimensions with quite fair accuracy. Ant the other way around, if the specific proportions are kept with the round brilliant diamond, we can state its essential dimensions like the diameter or total depth, based on the diamond weight.