There is a number of grading systems that exist for grading colored diamonds, but the most prevalent is a nine-tiered scale that was developed by the Gemological Institute of America, also known as the GIA.
The first of the five C's of a diamond is the color. When considering a fancy color diamond, it is important to acquire an origin-of-color report from the GIA or one of the other qualified gemological laboratories. This report will indicate whether the diamond's color is natural or the result of human intervention. This report will also indicate the diamond's color grade, but do not buy a diamond solely based on a grading report.
Even within a color grade, diamonds will be found in a variety of shades and with many subtle variations in hue, tone, and saturation. Beauty in a diamond is like beauty anywhere, it is in the eye of the beholder. Always examine and compare fancy color diamonds firsthand before purchasing one.
The second of the five C's of a diamond is the cut. Diamond cutting is a demanding and precise craft requiring a blend of artistry and technical mastery. All diamonds should have a pleasing outline and a beautifully balanced arrangement of facets, but that is where the similarities between well-cut fancy color and colorless diamonds end. When cutting a fancy color diamond, a master diamond cutter strives to enhance the intensity and beauty of the stone's color.
Thus, the angles, proportions and arrangement of the facets are set to lengthen the path of the light passing through the stone. The further a light ray travels through a colored diamond, then the more it picks up and deepens the stone's color. In contrast, for colorless or near-colorless diamonds the goal is to maximize the brilliance of the stone and minimize the effect of any trace colors. This is accomplished by shortening the path of light as it is reflected within the stone.
What are often called ideal cuts for colorless diamonds may not be ideal for a fancy color stone. While round brilliants are the most common cut for colorless diamonds, among fancy color diamonds square radiants and ovals are the most prevalent.
The third of the five C's of a diamond is the clarity, and like cut, the clarity of a fancy color diamond is usually less important than the color. Although large and obvious inclusions can detract from a colored diamond's beauty, they are often masked or partially hidden by the intensity of the diamond's color. Compared to colorless stones, clarity is less of a factor in determining the value of a colored diamond.
The forth of the five C's of a diamond is its carat weight. Fancy color diamonds tend to be smaller stones, usually weighing less than a carat. Larger fancy color diamonds are much rarer than their colorless cousins, and as a result, are significantly more valuable. As the size of fancy color diamonds increases, their costs increase very rapidly. The good news is that even smaller well-cut stones can display beautiful, intense colors.
The fifth C is the cost of a diamond. The value of colored diamonds is largely determined by the color and weight of the stone. In the lower color grades of light and faint, colored diamonds usually trade for no or only a slight premium over near-colorless stones of comparable weight, cut, and clarity. The relatively low premium for these stones reflects the weak, washed out appearance of their color. When set in a jewel, the color in these stones is often masked by the color of the surrounding precious metal.
In the middle color grades, which are fancy through fancy intense, there are many fancy color diamonds that are beautiful and can be found in affordable sizes. These diamonds are wonderful additions to any gemstone collection and striking center stones when set in a custom designed jewel. Then as diamonds approach the top color grades, which are fancy deep and fancy vivid, their rarity and cost increases sharply. However, these diamonds are truly striking and worth acquiring, if they are within your budget.