Market Overview

With several of the most important auctions completed in New York, Geneva and Hong Kong, we have seen a strong trend towards increased demand for high-end, mid level colored diamonds in rare and valuable categories of the market. From pink and blue to orange and yellow diamonds, their has been a good cross-spread of sales activity from the auctions carried over to the major dealers and diamond centers around the globe.

From Tel Aviv and Antwerp to New York, Hong Kong and some of the important secondary diamond centers of Dubai and Mumbai, dealers are reporting solid sales in the rarest categories of the market.

There is a common misconception from major auction sales that buying large diamonds is the only way to be successful.  However, if you look at dealer sales, where over 50 % of colored diamond sales take place, there is a strong demand for high-quality, compact colored diamonds of as little as a quarter to a third of a carat in the rarest and most valuable segments of the market.

Likewise, the tremendous auction sales for the mid-level colored diamonds in rare and valuable categories of the market continue to be the bedrock for activity and provide the inherent stability and value the market has to offer.

Diamond Investment

De Beers has partnered with the Singapore Diamond Mint Company (SDM) to provide verification services that confirm the natural origins of diamonds being used for a new investment-grade product.

Under the agreement, the International Institute of Diamond Grading & Research (IIDGR), a subsidiary of De Beers, will inscribe a unique identification number on the tables of each diamond used in the SDM Diamond Bullion, which is listed on the Singapore Diamond Investment Exchange (SDiX).

Once inscribed, the diamond is transferred to the bullion where the IIDGR verifies that it meets the necessary product specifications. Only then is the diamond traded on the exchange.

“The unique inscription that IIDGR places on every diamond inside the diamond bullion allows all of the diamonds to be tracked and verified, providing investors with the highest level of confidence in this revolutionary new diamond investment product,” said Alain Vandenborre, founder and executive chairman of SDiX, and director of SDM.

Auction Activity

Colored diamonds, gems and signed pieces dominate the auction Circuit for 2017.  

By Anthony DeMarco

It’s been going on for so long now, it has practically become a given on the auction markets: Fancy-colored diamonds, colored gemstones and signed jewels are attracting the most interest and generating the biggest sales at major auction houses throughout the world.

“It’s less of a trend and more of a shifting of the market for jewelry,” says Tom Burstein, Christie’s head of jewelry for the Americas.

Just a cursory look at auction results from Christie’s and Sotheby’s will show that fancy blue and pink diamonds are commanding the highest prices, regularly setting new world records. Pink and blue diamonds achieved the top five jewelry auction sales of all time and four of the top five sales for the first half of 2017. Competition for the best colored diamonds is quite fierce, Burstein adds.

“Buyers have really well-trained eyes,” he says. “To get top dollar, you need the top color.”

The rare and the storied Gary Schuler, chairman of Sotheby’s jewelry division for the Americas, says the auction house has experienced widespread growth in all of its jewelry categories.

“There has certainly been a ravenous desire for the best of the best. People recognize more and more great pieces of jewelry and gemstones and their true rarity. It’s really driving the competition,” he says. “At the other end of the spectrum, there is still this great desire to own fun, wearable jewelry that women are able to dress up and down as they choose.”

Sotheby’s will offer the Donnersmarck Diamonds, once owned by La Païva, one of the most famous 19th-century courtesans in Paris, at its Magnificent and Noble Jewels auction in Geneva next month.

With a pre-sale estimate of $9 million (CHF 8.8 million) to $14 million (CHF 13.7 million), the pair of fancy intense yellow diamonds consists of a cushion-shaped diamond weighing 102.54 carats, and a pear-shaped, 82.47-carat diamond. The stones will be offered as a single lot at the sale taking place at the Mandarin Oriental on November 15, the auction house said.

The diamonds’ one-time owner La Païva, Countess Henckel von Donnersmarck, rose from modest circumstances in her native Russia to the European aristocracy. Born Esther Lachmann in 1819, she arrived in Paris at age 18 and was introduced to cultural and artistic circles by her lover, composer and pianist, Henri Herz.

In the late 1840s, she met the Portuguese Marquis Albino Francisco de Araújo de Païva. After their marriage in 1851, which lasted only one day, she became known as La Païva. She met Count Guido Henckel von Donnersmarck, a Prussian industrialist and mining magnate, shortly afterward. Their relationship was the talk of Paris high society and they were married in 1871.

In 1855, La Païva purchased a plot on the Champs Elysées: L’Hôtel de La Païva became one of the most lavish mansions ever built on the avenue. Among its features is a central staircase made of Algerian yellow marble, which matched the yellow of the Donnersmarck diamonds.

“These stunning diamonds carry with them a fascinating story, full of romance and determination over adversity, which could have inspired some of the greatest novels and operas,” said David Bennett, chairman of Sotheby’s international jewelry division.

The diamonds were the top lot at Sotheby’s first Noble Jewels auction in 2007, when the pear-shaped stone sold for $4.7 million (CHF 5.7 million) and the cushion-shape diamond sold for $3.3 million (CHF 3.9 million), both above their pre-sale estimates at the time. The diamonds are now part of a private collection.

“Jewels of royal and aristocratic provenance carry with them a special sense of history and these are no exception,” Bennett said.

DeBeers Activity

Rough-diamond sales grew 21% to 6.9 million carats in the three months to September 30, parent company Anglo American said Tuesday.

The improvement came as demand for lower-value goods returned to normal this year, the company explained. Indian consumer demand improved compared to last year, resulting in higher sales of small rough diamonds destined for the local Indian market, a De Beers spokesperson added. Anglo did not disclose De Beers’ sales value for the period, but results from its sights in July and August suggest a 7% drop in the sales amount for the quarter, according to Rapaport records.

Auction Analysis

The busy fall auctions have been underway and although the headline stones have failed to sell for some of the exorbitant prices they have been expecting, which is to be expected given the tremendous expected selling prices relative to five years ago, the reality is the rare and valuable prices in the $25,000 to $250,000 range have been performing extremely well at this season’s fall auctions. From blue and green to pink, purple and orange, there has been an important sale for virtually every rare color this season.

We are also seeing an uptick in the better quality yellow and cognac diamonds, where a selection of strong sales have shown the strength of the market at the top end.

Auction Sales

The high-end market is “not just okay, but very good,” Rachminov added. “Look at what happened at Christie’s,” he pointed out, referring to Tuesday’s Geneva auction in which the 163.41-carat Art of de Grisogono, Creation 1, fetched $33.7 million, a record for a D-color, flawless diamond.

The Sotheby’s Magnificent Jewels and Noble Jewels auction was 87% sold by lot, with total proceeds amounting to $78.7 million (CHF 78 million). The top lot was a 33.63-carat, fancy light pink, VVS1-clarity diamond ring by Harry Winston that sold for $12.8 million, or $381,154 per carat — a world auction record for that color. An 18.86-carat ruby and diamond ring fetched $5 million, translating to $263,510 per carat, the auction house said.

Diamond Mining

De Beers’ joint venture in Namibia will shut four diamond mines in the country by 2022 due to dwindling resources, Reuters reported last week.

Namdeb, a 50:50 project with the nation’s government, will close the Elizabeth Bay mine at the end of 2018, the Daberas deposit at the end of 2019, Sendelingsdrif in 2020 and the main asset, Southern Coastal, in 2022, Reuters said, citing a statement in the local media by a senior union figure.

The Elizabeth Bay and Daberas mines are “well beyond their original planned life of mine,” Namdeb corporate-affairs manager Pauline Thomas said in a statement to Rapaport News.

“The next few years will remain challenging, mainly due to subdued world economic growth, which negatively impacts forecast exchange rates and other indices,” Thomas explained. “We are constantly investigating new mining opportunities, however it is equally important that we plan responsibly for the possible closure of operations that reach the end of their economic life span.”

Namdeb’s operations include land-based mines, as well as Debmarine Namibia, which searches for diamonds offshore. Land-based production amounted to 404,000 carats in 2016, while output at Debmarine — which includes five vessels that mine diamonds from the ocean floor — stood at 1.2 million carats.

Production in the country saw a shift toward the offshore assets this year. In the first nine months of 2017, Debmarine’s production surged 22% to 1.1 million carats, while land-based output declined 7% to 267,000 carats.

Alrosa Finds 34 Carat Unpolished Yellow Diamond

Alrosa has recovered a 34.17-carat fancy vivid yellow rough diamond in northeastern Russia, the miner’s largest fancy-colored stone this year.

The diamond, found by Alrosa affiliate Almazy Anabara at its Ebelyakh alluvial mining deposit in the remote region of Yakutia, is a transparent intense yellow crystal with a small inclusion, the company said.

“This year, we have already recovered several large fancy-colored diamonds, and this 34.17-carat yellow stone is the largest one so far,” said Evgeny Agureev, director of the United Selling Organization Alrosa (USO Alrosa). “This year Alrosa has already hit its record in the number of large fancy-colored stones. We used to extract fancy-colored rough diamonds over 10 carats once a year on average.”

The yellow diamond will be delivered to USO Alrosa in Moscow by the end of the month for a detailed assessment.

Earlier this year, Almazy Anabara extracted a 27.85-carat pink diamond, the largest pink stone in Alrosa’s history.

Global Wealth Analysis

The richest 1 per cent of people in the world now own half of the planet’s wealth, according to a new report that highlights breathtaking levels of global inequality.

The study reveals how the wealthy have seen their proportion of the world’s wealth increase from 42.5 per cent to 50.1 per cent now.

According to the Credit Suisse Global Wealth Report, the top 1 per cent are now worth a total of £106 trillion – around eight times more than the size of the US economy.

The wealthiest 10 per cent of people, meanwhile, own 87.8 per cent of global wealth.

This trend has seen a huge rise in the number of millionaires and ultra-high-net-worth individuals (those worth more than $30m). Since 2000, the number of millionaires in the world has risen by 170 per cent, to 36 million, while the number of ultra-high-net-worth individuals has increased five times over.

This trend indicates it is important to keep a percentage of your wealth in the types of assets that cater towards the growing wealthy classes around the globe. According to Knight Frank, an important wealth analysis firm based out of London, demand for colored diamonds has grown by 89 % over the last decade, as the growth of millionaires has led to a commensurate increase in acquiring rare and beautiful collectibles that hold their value, offer long term growth and stability and are considered the most private and portable forms of wealth in the world.

Jewelry Market

Prospective grooms are spending significantly more money and time on their engagement ring purchase than they did five years ago, research by wedding resource website The Knot showed.

The average amount grooms spend on an engagement ring jumped 25% since 2011 to $6,351 this year, according to The Knot’s 2017 Jewelry & Engagement Study, released last week. Men are also investing more effort in planning their proposals, with the average time spent looking for a ring increasing to 3.5 months from 3.3 months in 2011. Planning a proposal takes an average of 4.4 months, according to the study, which surveyed more than 14,000 engaged or recently married brides and grooms in the US.

The search for the perfect ring is thorough: The average groom-to-be looks at 26 rings before making a purchase. Some 72% of grooms reported facing challenges during the purchase process, mainly because they did not know if they were getting a good deal or did not have a strong knowledge of diamond terminology.

The shock element is declining: the proportion of brides who report being surprised by the proposal has fallen to 35%. And buying the ring is often a joint effort, with one in three couples saying they shopped for it together.

“We’re seeing proposers put more time, thought and effort into creating the perfect proposal, as well as an engagement ring they know their partner will love,” said Kristen Maxwell Cooper, editor in chief of The Knot. “And while proposals are less of a surprise than in years past, there’s an uptick in grooms returning to time-honored traditions, like proposing with the engagement ring in hand and getting down on one knee.”

Predictably, more grooms bought their ring on the internet, though this is still just 14% (versus 10% six years ago), with 63% of those online buyers reporting better prices on the web. This reflects changing relationships: 19% of brides said they met their spouse-to-be through online dating or social media, up from 14% in 2011.

The information in this newsletter is for informational purposes only. The information contained in these quotes is believed to be from reliable sources. AIDC Advantage Corp. “the company” cannot be held liable for any misrepresentations on behalf of the sources we use. The company is not an investment advisor nor are they licensed to give investment advice. The company assumes that all buyers acquire colored diamonds for collectible and jewelry purposes as well as the long-term potential of the market. It is advised to contact a qualified advisor before entering into the colored diamond market. The company cannot guarantee that past performance of colored diamonds will continue in the future and that a colored diamond purchased from the company will provide a net gain. They are not as liquid as some collectibles. They are not necessarily appropriate for every individual. The quotes used only represent part of the article. For full viewing of any article, please contact your advisor. For more information, please refer to the terms & conditions in the AIDC Advantage website.