(MONEY Magazine) – GO TO THE JEWELRY STORE THESE DAYS, and you'd better be prepared for the bling to sting. Increased demand for diamonds in the past few years has pushed the price of some quality natural stones up more than 30%. Likewise, precious-metals prices have skyrocketed--and more than 80% of jewelers plan to pass some of these higher costs on to consumers, according to Jewelers' Circular Keystone, a trade publication. Since retailers typically order their stock six months in advance, those pricier pieces are only now beginning to show up in stores. Just in time for the holidays. (Bad news for the 29% of respondents in a recent MONEY/ICR poll who said they maybe or definitely would buy for Christmas or Hanukkah.) But don't let sticker shock deprive you of baubles and baguettes. As with any investment, understanding the market can help you shop wisely and save. The first lesson: Ask about items that have been in stock for a while, since many retailers are raising prices only on new orders. But you'll need to know much more than that...

Platinum

• CURRENT MARKET PRICE: $1,222 an ounce. Increased investor enthusiasm pushed up the price of this most precious of metals more than 25% in the first five months of 2006 and nearly threefold in the past five years. Although platinum jewelry prices haven't tripled (total costs include factors like design and manufacturing), expect to pay 10% to 20% more by year's end.

HOW TO SHOP Much of a platinum piece's price is due to weight--so thick, chunky designs will see the largest increases. Read: not the time to buy a big solid bangle. To save, opt for jewelry that includes less platinum. Because this metal is so strong, says Renée Newman, author of the Diamond Ring Buying Guide, slimmer pieces are perfectly sturdy--and can cost markedly less. For example, you'll pay about $950 for a 6mm- wide platinum band, $825 for 5mm, $480 for 2.5mm. Other ways to reduce the platinum: Work gemstones into the design; go for multiple lighter chains instead of one heavy one; combine it with a less expensive metal. Or consider new 14K platinum, which contains only 58.5% platinum. It can save you as much as 50%. But understand that platinum earned its reputation for strength and durability from 95% pieces, and those qualities may not carry over.

AS AN ALTERNATIVE Consider palladium. Historically, consumers who want the look of platinum without the price have turned to white gold, which costs the same as yellow gold. White gold, however, gets its color when alloyed with white metals such as nickel. But many people are allergic to nickel. Another drawback: White gold eventually tarnishes. Palladium doesn't have these problems. This naturally white member of the platinum family is lighter weight but still durable. And palladium jewelry can cost up to 60% less than platinum.

Gold

• CURRENT MARKET PRICE: $615 an ounce. The price surged more than 60% in two years, hitting its highest level since 1980 in May. Why? An uncertain economy and gold's fashion resurgence have pushed up worldwide investment and jewelry demand. Expect price increases of up to 20% on gold jewelry this holiday season, warns John Calnon, U.S. managing director for the World Gold Council.

HOW TO SHOP Most high-end gold jewelry in the U.S. is 18K. You can cut costs more than 25% if you buy 14K. Choosing hollow gold may cut the price 50%, but you run the risk of the gold wearing away. "A hollow gold bracelet or ring usually won't be durable," says Newman. It's better for necklaces and earrings, which get less wear. If you prefer not to sacrifice quality, focus on reducing the amount of gold. As with platinum, include gems, combine with less expensive metals or go for slimmer designs (but not too slim, as gold is less strong).

AS AN ALTERNATIVE Alas, no other metal gives the look of yellow gold. But as a substitute for white gold, consider gray-silver-hued titanium, at half the cost.

Silver

• CURRENT MARKET PRICE: $12 an ounce. The market price of silver has nearly doubled since January 2005, primarily due to the reawakening of investor demand. But this shift has barely changed the price of silver jewelry, says Philip Klapwijk, chairman of U.K.-based precious-metals consultancy GFMS. As a raw material, silver costs only a fraction of platinum or gold, so when its market price fluctuates, the finished product isn't affected as much.

HOW TO SHOP It may be time to reconsider sterling silver, previously dismissed by some as poor man's gold. Because prices have skyrocketed on the other metals, designers are increasingly pairing this 92.5% silver with other precious metals and gemstones--even diamonds. Plus, new formulations are helping maintain the whiteness and prevent tarnishing.

AS AN ALTERNATIVE Stainless steel can sometimes be cheaper, and it doesn't tarnish. This rugged and durable metal is gaining appeal, especially in men's categories. "Also, it's beginning to be mixed and matched with precious gems--and diamonds even," says Amanda Gizzi of the Jewelry Information Center.

Diamonds

• ASKING PRICE: $18,100 for the best-quality one-carat round diamond. In America the tradition of the diamond as the No. 1 gem of romance dates back only to the early 1900s. But it is now all but universal. Prices of good-quality diamonds have risen as high as 40% in the past three years and will likely stay high, according to industry publication the Rapaport Diamond Report. Too few quality diamonds exist to keep up with demand, so "improved" lower-quality stones are becoming more common.

HOW TO SHOP Technology now allows companies to add color to, remove brownish tints from or fill in cracks on the abundant supply of lower-quality diamonds. Sure, these treated stones may save you 20% or even 90% in the case of artificially colored ones. But beware. Such diamonds--which may be marked as "clarity enhanced"--offer little in the way of resale value, and some chip more easily.

To save without sacrificing quality, focus on size, clarity and shape. First, size: Prices jump when diamonds increase from 0.9 to one carat. So you may pay $7,000 for a one-carat ring but up to $2,000 less for 0.9 carats. And you can't see the difference, says Antoinette Matlins, author of a self-titled diamond buying guide. You can also drop up to seven clarity grades in a well-cut stone without it being noticeable, she advises. This savings allows you to purchase a whiter or larger diamond than you could otherwise afford. If size is important, pear, oval and marquise shapes generally appear bigger than round. Avoid princess and radiant shapes, which appear smaller for their weight.

AS AN ALTERNATIVE Lab-grown diamonds, made available to consumers only recently, are chemically and physically identical to natural stones; the Gemological Institute of America recently decided to start issuing grading reports on these "cultured" stones. The colorless ones can sell for 15% less than the naturally mined ones, and the colored sell for a fraction of the cost. Their future prices and resale values, however, are uncertain. As for imitations, moissanite can save you up to 90% and looks more real than the cheaper cubic zirconia.

One Ring, Seven Metals

How do precious-metals prices stack up in stores? In late August, we found these rates for a standard 6mm-wide wedding band:

Platinum $950

Platinum and 18K gold $650

Palladium $400

18K gold (yellow or white) $325

Titanium $150

Stainless steel $80

Silver $65

Good Time to Be a Seller

Unload unwanted jewelry today, and you may get more than double what you would have five years ago

• Is your drawer filled with old jewels, single earrings and class rings? You can get lots of green for your gold, says Richard Tilles, president of CIRCA, which buys jewelry from consumers. Start by taking your jewelry to an appraiser to find out which hold value as finished pieces. (Bring the rest to a refiner or precious-metals dealer, who will have the pieces melted and pay you the intrinsic value of the metal.)

Understand that the appraised value is usually the retail cost to replace the item. Ask for the liquidation value (30% to 50% less), since that's what you're more likely to sell it for, advises Arthur Anderson, co-founder of Jewelryexpert.com. But offers vary, so you must comparison shop. You may get the most money selling pieces on consignment at a jewelry store, though you'll be charged a 20% to 50% commission and the pieces may sit for months.

For faster cash, sell the item directly to the jeweler. Ebay is generally the quickest yet least lucrative route, as people are unlikely to bid high for jewelry they haven't seen. You can also take the pieces to a local auction house--many have jewelry sales and charge 15% to 20% fees.

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