Today, the gem market is divided into two separate domains -- diamonds and colored stones. Even this distinction is arbitrary and misleading, as many diamonds are colored and many "colored stones" are not. However, the same basic principles are involved in grading gemstones of both types.

There are "4 C's" in diamonds namely, color, clarity, cut, and carat weight. Organizations such as the Gemological Institute of America (GIA) and CIBJO (Confederation Internationale de la Bijouterie, Joaillerie, Orfevrerie, des diamants, perles, et pierres precieuses) have well established these standards for judging qualities in diamonds. However, there are no similarly accepted standards for judging other stones, although several systems enjoy limited success.

One major difference between the diamond and colored stone markets is that the diamond market is largely controlled by one organization -- De Beers Consolidated Mines. Through their near-monolithic control of diamond mining and distribution, this company has done much to create a fairly stable market for diamonds, and relatively small diamonds are readily available in a wide variety of qualities. In contrast, most colored stones are mined with more primitive methods, by much smaller companies, and supplies are much more variable. Many colored stones are much rarer than diamonds of comparable size and quality and are often unavailable. A sizeable deposit of a stone may be discovered and quickly distributed to the market, only to become scarce again in a couple of years. Such uneven supply and less regulated distribution often contribute to wide price variations. 

The following general rules apply to all gemstones: 

Vivid, saturated colors are more highly prized than subdued or grayed-out colors. Deeper colors are more highly prized than lighter ones, unless the depth of color is so great as to make the stone appear blackish. The best color for any gemstone should be obvious from several feet or even several yards away. For example, a ruby should be intensely red from across a room, and a blue sapphire should be obviously blue, not black. The exception to the rule occurs when the extremes are desired -- truly colorless diamonds are valued more highly than those with pale colors, and a truly black diamond would be worth more than one that is merely dark gray. 

Larger stones are more highly prized than small ones, although stones too large for use in jewelry tend to have lower per carat prices. 
Gems with fewer and smaller inclusions are more highly prized than those with more numerous and larger inclusions, unless the inclusions contribute in a positive manner to the appearance of the stone. For example, insect inclusions increase the value of amber. Fine inclusions that cause star or cat's eye effects increase the value of stones such as corundum or chrysoberyl. Quartz containing large included crystals of rutile or tourmaline is often more valuable than quartz without. Characteristic "horsetail" inclusions are preferred in demantoid. 
More durable stones are generally more prized than those of lesser durability. 

Rarer stones are more highly prized than more common varieties. However, if the stone is so rare that it is essentially unknown to the general public, its value suffers and it is relegated to the status of a "collector stone." Stones such as boracite, childrenite, ekanite, eosphorite, painite, and simpsonite are extremely rare, attractive, and durable, but they are unlikely to command prices appropriate to their rarity, because there are fewer persons aware of them and eager to buy them. 

Well cut stones of good symmetry, attractive design, and fine polish are more prized than poorly cut stones. Unfortunately, many higher priced stones, such as ruby and emerald, are often poorly cut in order to maximize weight at the expense of appearance. 
Stones of famous provenance are more prized than those lacking in personal history. 

Pairs or suites of stones matched for color, clarity, and cut are more highly valued per carat than single stones, especially if the stones are rare on an individual basis. 
Stones that have been enhanced in color or clarity by artificial means are worth considerably less than unaltered stones of the same appearance. 

Some gemstones are occasionally more in demand due to their use by well known personalities or due to intensive marketing, such as the various television shopping networks. Such increases in demand are faddish in nature and tend to be fairly short-lived.