We have seen a very busy spring season in the rare colored diamond market. From trade show activity in Hong Kong and Basel to strong auction sales in the major diamond centers around the globe, the growth and development of the rare colored diamond market has been very impressive over the last three months and as tax season in most countries around the globe has finished, we are seeing an increase in investors looking to re-evaluate their portfolios going forward.
As the rare colored diamond market goes more mainstream, we have a lot of potential new money coming into the market and as supply gets tighter at major mines, this creates a very interesting scenario for higher prices going forward.
In this issue, we will discuss some of the important auction sales, we will look at some of the global jewelry trends, as well as explore important investment fundamentals in the market, before discussing trade show and mining activity in the rare colored diamond market.
Auction Sales – New York
A 3.09-carat blue diamond smashed its pre-sale estimate at Christie’s Magnificent Jewels auction in New York last week.
The rectangular-cut, fancy intense blue diamond ring, surrounded by tapered baguette-cut diamonds on either side, sold for $5.4 million. Its original estimate was $2 million to $3 million. A similar 3.47-carat ring sold at Sotheby’s New York Magnificent Jewels auction the previous week, garnering $6.7 million, well above the $2 million to $2.5 million original estimated price.
Other top lots at the Christie’s sale included an 8.42-carat, rare fancy intense pink, potentially internally flawless diamond ring, which sold for $5 million. A Cartier twin-stone ring, featuring a 2.42-carat, fancy vivid blue diamond and a 2.85-carat, fancy intense pink stone, fetched $4.5 million, and a similar twin-stone ring with a white, D-color stone and a fancy vivid blue diamond went for $3.5 million.
Signed period and modern jewels by Boucheron, Cartier, David Webb, and Van Cleef & Arpels were also popular, and an oval-cut, 22.76-carat diamond “thread” ring from designer JAR sold for $2.8 million.
Overall, 88% of lots sold for a total of $45.7 million. Christie’s next auction is the Geneva Magnificent Jewels auction, which will take place on May 16.
The historic Farnese Blue diamond smashed its pre-sale estimate at Sotheby’s auction in Geneva on Tuesday.
The 6.16-carat, pear-shaped, fancy dark grey-blue, SI1-clarity diamond, which Queen Elisabeth Farnese of Spain received on her wedding day, passed through four prominent European royal families. The stone fetched $6.7 million, or $1.1 million per carat, well above its pre-sale estimate of $3.6 million to $5.2 million.
“The Farnese Blue is quite simply an unforgettable diamond, and everyone who set their eyes on it was mesmerized by its extraordinary color — the rich blue of the deepest ocean,” said Daniela Mascetti, deputy chairman of Sotheby’s Europe and its senior international jewelry specialist. “As was evidenced by the competition between bidders this evening, the response from collectors has matched our own excitement for this diamond.”
Other top lots at the sale included two D-color, flawless, type Ila white diamond rings. A round brilliant-cut, 51.71-carat ring went for $9.3 million, surpassing its $7.3 million to $8 million estimate, while an oval-cut, 50.39-carat garnered $8.1 million, exceeding its initial price tag of $7.3 million to $8 million.
Pinks achieved record prices at the auction, with a 9.70-carat, fancy light purplish-pink diamond ring selling for $2.6 million, setting two records for its color category — for price per carat, and for total price. A 2.63-carat fancy vivid purplish-pink diamond ring also earned the highest price at an auction for its color category at $2.4 million, while a 95.45-carat pink sapphire and diamond pendant set a record price of $2.3 million for a pink sapphire.
The Magnificent Jewels and Noble Jewels auction yielded $85.6 million in sales. In total, 82% of lots sold, with 70% of those achieving more than their high pre-sale estimates, Sotheby’s said.
Jewelry Forbes – Apr 2018
For as long as we have existed, jewelry has coexisted with us. Since the dawn of time, jewelry has been worn as a symbol. Like the most expensive diamond in the world, which we’ll get to in a minute, the oldest piece of jewelry was likely worn for the same reason. Discovered by researchers in 2006, the 100,000 year old shell bead necklace was likely worn for the same reason we still wear jewelry today: to convey status and power.
“When we wear items like this, we are sending a message,” said Chris Stringer, Professor at London’s Natural History Museum, in 2006 to BBC News. “The message may be that we are powerful, or wealthy, or sexy, that we’re part of a particular group, or to ward off evil. They’re not just decorative; we think they had a social meaning.”
A 2014 McKinsey report echoes this. From the report, “One consumer segment helping to drive growth in the jewelry sector is the ‘new money’ consumer, who wears branded jewelry to show off newly acquired wealth”.
A lot has changed in the past 100,000 years. A lot except the simple fact that we, as people, love to sparkle, shine and show off. And nothing sparkles quite like a diamond, especially the blue diamond, likely the most expensive diamond in the world.
The Most Expensive Diamond In The World: The Blue Diamond
Sapphire stones get their blue color from a mix of titanium, iron, magnesium, copper and chromium, while blue diamonds get their color from a high boron concentration.
The most expensive sapphire on record, the Padparadscha Sapphire, cost $20,000 per carat. But, if you even find a blue diamond on the market, expect to pay at least $3.8 million percarat.
Blue diamonds have been a curiosity for centuries, but popularity peaked after Joseph Lau, a real estate developer turned collector of fine art and wine, bought a 9.75 carat blue diamond for $32.6 million at a Sotheby’s auction. It broke two world auction records.
But Lau was just getting started.
In 2015 he purchased another blue diamond at a Sotheby’s auction in Geneva that set the most expensive diamond record again. This time he spent $48.4 million on a 12.03 carat blue diamond. Although Lau is the owner of the most expensive diamond in the world, the most popular blue diamond is the Hope Diamond, a 45.52 carat walnut-sized blue diamond with ownership records stretching back four hundred years.
Asian Jewelry Sales
In China, retail sales of gold, silver and jewelry increased 8% year on year to $11.74 billion (CNY 74.7 billion) during the January-to-March period, the National Bureau of Statistics of China reported recently. March sales jumped 20% to $3.71 billion (CNY 23.6 billion).
Meanwhile, Hong Kong recorded a 22% jump in sales of jewelry, watches, clocks and other valuable gifts to $2.93 billion (HKD 22.96 billion) for the quarter, according to data from the Census and Statistics Department. For March, sales in the municipality climbed 23% to $871.6 million (HKD 6.84 billion).
“Hong Kong’s retail sales sustained a double-digit year-on-year increase in March, [driven] by upbeat local consumer sentiment under generally favorable economic conditions, and the continued appreciable increase in visitor arrivals,” a Hong Kong government spokesperson said.
Total retail sales in all sectors for China increased 10% to $1.42 trillion (CNY 9.03 trillion) in the first quarter. In Hong Kong, combined sales grew 14% to $16.55 billion (HKD 129.92 billion) for the period.
The retail outlook for Hong Kong remains optimistic given the improved rate of employment and earnings and the rise in tourism levels, the spokesperson added.
In the first quarter, the total number of tourists arriving in Hong Kong rose 10% year on year to 15.6 million, according to the Hong Kong Tourism Board. Of those visitors, 12.2 million came from mainland China.
Diamond World News Service – Raging Demand for Fancy Coloured Diamonds
Last week, history was made at the Sotheby’s auction house in Hong Kong. A massive 59.60 carat, flawless Pink Diamond going by the name “Pink Star” was sold to a Hong Kong-based jewelry company Chow Tai Fook for a whopping $71.2 million! This is not the first time a colossal sum of money has been spent on a fancy coloured diamond, however, this is the first time in the history of diamond auctions, such an expensive transaction has taken place.
Before this it was the elusive 14.62-carat “Oppenheimer Blue” which was sold for $57.5 million. Fancy coloured diamonds (FCD) are rare, priceless and more importantly, resistant to any kind of recession. So it is not a wonder why people have always taken a fancy towards fancy coloured diamonds. However, their demand has considerably increased over the last few years, and the High Networth Individuals (especially in Asia, according to reports) are willing to pay anything, just about anything, to get their hands on one of these precious gems.
Increasing prices of FCDs
When chemical elements such as Boron or Nitrogen are trapped during the process of a diamond formation, coloured diamonds are formed. Only 1 carat of coloured diamond is found in a total of 10000 mined diamonds and when these are further scrutinized for “intense” colour grading, a measly one carat may be found in a total of 25,000 diamonds. So it is this rarity factor that makes these FCDs inestimable. In 2008, when the economy took a heavy beating, investors were looking at alternatives or tangible forms of investments rather than stocks and shares. The wealthiest 1 per cent began investing in wines, paintings, precious metals and gemstones. According to Fancy Color Research Foundation, as of September 30, 2016, pink diamonds price has increased by 180 per cent, the highest thus far, followed by blue and yellow diamonds which are up by 70 per cent and 90 per cent respectively. Market fluctuations have no effect on FCDs. They are long term assets which have proven to fetch great ROI – any investor who has made his bid over a FCD will tell you that it is now worth multiple times its original price.
We have witnessed auction prices like never before in the last few years. 2015 May, a 14.62 blue diamond was auctioned at $57.5 million and in November the same year, the elusive 12.03 carat Blue Moon was sold $50 million. It was the only diamond that was sold at $4 million per carat. The Pink Star has joined this league of extraordinary coloured diamonds, breaking all records in total value.
Mixed hues are hot selling
With coloured diamonds, colour trumps other factors such as clarity and cut. Brown diamonds are the most common coloured diamonds. The more intense the brown, the higher the price. Once only used for industrial purposes, these diamonds were so smartly packaged as “Champagne”, “Cognac” and “Chocolate” these diamonds are worth thousands of dollars per carat today. This is followed by yellow diamonds also known as Canary diamonds – these diamonds are available in the market and come in large sizes up to 10 carats. Green, blue, orange, purple, violet, red and pink are the rarest (not in the same order), with red being the rarest of rare. While lighter shades of yellow, pink and blue diamonds in large sizes are in great demand, according to reports, combination colours like pinkish-purple or yellowish-brown is hot selling nowadays.
Rock solid investment
Very few fancy coloured diamonds are auctioned at famous auction houses and most of them are sold privately. This doesn’t give too much of a window for investors to study the prices. Also, the supply is not as prolific as colourless diamonds. Rio Tinto’s Argyle produces about 90% of these coloured diamonds and the ambiguity surrounding the mine’s future, have made these diamonds even more priceless.
Pink Diamonds Sold in the last 2 Decades
JCK Show – Las Vegas 2018
The Natural Color Diamond Association (NCDIA) will hold a seminar during the upcoming JCK Las Vegas show, to be moderated by Rapaport Editor in Chief Sonia Esther Soltani.
The series, which will discuss the benefits of natural diamonds and natural colored diamonds, will feature a variety of panelists, including Andrew Coxon, president of the De Beers Institute of Diamonds; Andrew Bone, executive director of the Responsible Jewellery Council (RJC); Alethea Inns, director of gemology and education for the American Gem Society (AGS); Nilesh Sheth, president of the Indian Diamond and Colored Stone Association; and Thomas Gelb, director of education for the NCDIA.
The panel will evaluate and discuss the positive attributes of diamonds, as well as the benefits of transparency to the industry.
The seminar will take place on June 1 from 1:15 p.m. to 2:00 p.m., with a reception to be held on June 2.
The stone beat out the 43-carat yellow gem the company found in January, which previously held first place.
Lucapa removed the diamond from Block 4, a new mining project, along with several other “special-size stones” — those above 10.8 carats.
The Australia-headquartered miner has recovered a number of large stones from its Lulo asset, including 10 over 100 carats. The mine has yielded two white type IIa diamonds, weighing 404 carats and 227 carats, the largest recorded in Angola.
Lucapa also owns 70% of the Mothae mine in Lesotho, as well as the Brooking lamproite asset in Australia and a new project in the Orapa diamond field in Botswana.
Reuters – Russia’s Alrosa sees rosy prospects from colorful diamonds
MOSCOW (Reuters) – Russia’s Alrosa, the world’s largest diamond producer by output, plans to boost revenue from selling rare, colored stones where demand is stable, although it is a niche business. Nature gives fancy colors to about one in every 10,000 rough diamonds of gem quality that are mined around the world.
The stones that can be blue, pink or green form a special asset class, relying on a consumer passion for something exotic and unusual. This also means they are less affected by other factors driving supply and demand in the main diamond market.
Till now, its diamond polishing business of clear and colored stones has been modest, generating just 2 percent of its total $4.6 billion revenue in 2017.
Agureev said that, starting from 2018, Alrosa would sort its diamonds into 19 categories of stones and would aim to polish most of these to secure higher prices.
“The polished diamond should be more expensive because it is a ready-made final product for which there is a demand, and we have taken all the production risks on ourselves,” said Pavel Vinikhin, the head of Alrosa’s polishing division.
Those risks include the challenge of cutting and polishing colored gems, which can crack more easily than clear stones.
Alrosa plans to process colored diamonds that are mined from its remote Russian regions in its Moscow cutting and polishing facility. It also has another facility in Siberia. Last year, the company mined a 27.85-carat pink diamond and a 34.17-carat yellow one. The number, size and shape of polished gems to be produced from these stones has yet to be determined.
Prices for diamonds depend on their color, size and cut quality. In 2017, a huge 59.6-carat pink polished diamond, the “Pink Star”, was sold for a record $71.2 million in Hong Kong.
“Selling fancy diamonds through a separate channel could allow for more price efficiency as it would attract a more competitive niche group of industry buyers,” he added.