Who buys fancy color diamonds? Not only jewelry lovers, but also luxury investors and other financiers are looking for a new investment route which is less complex than forex trading and more beautiful than penny stocks. Are you one someone who values beauty, rarity, and value but are not sure where to invest? In a world where the global market is constantly shifting and nothing is certain, we have the answer for you. We understand your uneasiness with the present market and your wishes to find an enduring investment of reliable and stable value.
Like owning a Picasso painting or Stradivarius violin, a diamond as a high end investment has the potential to increase in financial value, but will be in your hands for you to admire its rarity and beauty. Fancy color diamonds (FCD) are traditionally a luxury item, a beautiful crown jewel in a lady’s jewelry box, a work of art, a source of pride and a symbol of prestige and status. However, with the instability of the market, as can be observed from the last decade, the role of Fancy Color Diamonds has shifted from a mere luxury good to an amazing and exciting asset worth serious investment.
We at DICE offer the finest in FCD quality and will be there to assist you in making the ideal investment choices. We have in-depth understanding of the FCD market and years of experience in Alternative Investments. Our location in the perfect place, near the diamond district, meaning that we have access to a huge inventory which you will have access to and which guarantees the best quality and satisfaction in your investment. Imagine the luxury of such an investment at your fingertips: rare, exciting and beautiful.
Our credibility in helping you choose an FCD investment is backed by the breadth and depth of the knowledge that we possess about the FCD market. Our site offer diamond education if you wish to gain knowledge on this rare and exciting investment opportunity: Fancy Color Diamond Education.
Please consider the following facts and assessments of the FCD investment forecast. This white paper/portfolio covers all the financial bases for your fine and exquisite diamond investment, the rationale and reliability of your investment choice. If you have specific questions feel free to contact us.
The Resurgence of Fancy Color Diamonds
As an investment, FCDs are a long term asset without the uncertain fluctuations of a “fast turnaround.” They are not subject to the vacillations of traditional market investments. These diamonds are kept and held for long periods of time as per their long term investment acclaimed strategy. There has been an increase in demand in the last decade for outstanding FCDs, and these investments are now worth many times their original price that their owners paid for them. In fact, lately many “secret diamonds” have resurfaced onto the market with handsome rewards and superb ROI, astounding newcomers to the field and proving what many alternative investment professionals have been saying for quite some time.
Some Key Facts:
The surge of fancy color diamonds as an investment was fueled by the sharp economic downfall of the 2008 global catastrophe, with the following major catalysts:
• The collapse of the Lehman Brothers Investment House, which widely affected other giant companies associated with it and most investors’ traditional assets in the United States.
• The case of Euro Debt Issues, which brought Greece in the brink of bankruptcy and other Euro countries like Italy, Spain and Ireland also at threat of a free fall, and the most recent controversies involving top banks manipulation of Forex and Libor.
• The UK experienced extreme economic turbulence during 2011, causing the property investment market to slump.
• China was looking strong, but has now started suffering from the economic collapse as well.
• In the meantime, Dubai, Russia, and India were looking steady and hardly affected by the world financial crisis.
How have wealthy investors responded to this?
• The prominent 1% of America’s wealthiest (according to a survey by the Harrison Group and American Express Publishing) stopped investing in stocks as a primary investment, a drop from 76% to 46%.
• Another study by Spectrem Group has also found that the rich’s confidence on stocks dropped significantly since the U.S. debt affair and the Euro crisis started affecting the markets. The study found that investors with at least $1 million of investible assets pulled out a noteworthy portion of their investment. Their major concerns are due to the extended economic collapse, the gloomy political environment, and the national debt.
• Further observation from the Spectrem survey revealed that most of the $25 Million Plus investors had chosen to also invest in “alternatives” along with their traditional investments.
The global economic turmoil seems to have made many investors think twice before putting all their assets into one basket. Barclays’ recent report observed that as a result of the state of the economy, investors had swiftly moved their interest from traditional stocks and bonds to collectables. The behavior indicates that investors are looking into more tangible assets for significant parts of their investment portfolio to protect a proportion of their wealth in case their traditional assets fail. Included in these tangible assets are precious metals, gemstones, works of art, and wine collections.
The nature of collectables is that they are significantly more valuable when they are rare. In the case of the world of diamonds, it is the Natural Fancy Color Diamonds that are the rare pieces amongst what is available on the market. Most gem quality diamonds (as opposed to the majority of rough diamonds, which are considered industrial quality and used for industrial purposes) are found in colorless (D-Z colors). Out of every 10,000 diamonds that are mined, a mere 1 carat can actually be called fancy color. When we narrow these down further to FCD that have an ‘Intense’ color grading, we will get only one carat amongst 25,000 diamonds. Pure single colors (without secondary or tertiary color tones) are even harder to find. That is how these stones become extremely priceless.
While the diamonds with strong hues are always preferred, light yellow, light pink and light blue colored diamonds in larger sizes are also in strong demand. However, what diamond dealers and alternative investment professionals have recently noted is that there is a trend that shows that diamonds with mixed hues such as grayish blue and brownish orange are gaining more popularity these days, which explains their recent increase in price (and subsequently their resale value).
Why the switch of interest in Fancy Color Diamonds?
There is a good reason why fancy color diamonds are being seriously examined by so many savvy people. The last decade has shown a stable record of sales of rare colored diamonds, especially how they have withstood the recession and how they even stay desirable today. In addition, the research outlook for the next ten years concerning Fancy Color Diamonds indicates great promise and potential for the alternative investor.
Fancy Color Diamonds’ prices have been consistently increasing over the last decade.
Sotheby’s sold a 5.04 Fancy Pink VS2 pear-shaped diamond for $442,500 or $87,798 per carat in 1995. Four years later when the recession started to hit, a 5.74 carat Fancy Pink diamond was sold for $115,966 per carat. And just one year after that, Christie’s auctioned a 7.34 Fancy Pink VS2 diamond for $1.5 million or over $200,000 per carat! In 2009 when the economic crisis was at its worst, a 6.63 carat Fancy Pink cushion-shaped diamond was sold for $1.4 million or more than $211,000 per carat. Then in 2012 Sotheby’s auctioned a 5.08 carat Fancy Light Pink VVS diamond for $1.4 million or $280,807 per carat! The following is the illustration of the FCD price increase of Fancy Pink diamond per carat.
Once in a Blue Moon
Now let’s take a look at another rare color. Blue diamonds are one of the rarest and most sought-after diamonds of all the diamond colors. If you were attending an auction at Sotheby’s in 1998, you could have been offered this amazing 7.23 carat Intense Blue diamond in pear shape for $204,000 per carat or $1,494,920. Two years later in 2000, Christie’s sold a 7.23 carat Intense Blue diamond for $2 million dollars or $276,625 per carat. In 2009, Christie’s sold another Fancy Intense Blue diamoand of 7.02 carat (VS1) in modified rectangular cut for $3.89 million or $554,131 per carat. Then one year later, Sotheby’s sold a 7.64 Fancy Intense Blue diamond ring for $8 million or $1.05 million per carat! The graph below illustrates this price increase over the years.
The most expensive blue and pink diamonds ever sold:
In the Fancy Intense Blue category: a 1.74 carat FIB, VVS1 diamond that sold for $1.106 million per carat on December 10, 2015. The media failed to mention it.
1.74 carat FIB, VVS1 diamond
In the Fancy Vivid Blue category: the Blue Moon diamond, a 12.03 carat FVB diamond that sold for $48.4 million total on November 11, 2015
The Blue Moon of Josephine Diamond
In the Fancy Intense Pink category: the Graff Pink diamond, a 24.78 carat FIP diamond that sold for $46,158,674 million on November 16, 2010. Graf later on re-polished the diamond and turned into into a 23.88 carat Fancy Intense Vivid, IF clarity.
The Graff Pink Diamond
In the Fancy Vivid Pink category: the Sweet Josephine diamond, a 16.08 carat FVP diamond that sold for $28.5 million on November 10, 2015
The Sweet Josephine Diamond
What the Graphs Teach Us
Rare Fancy Color Diamonds have proven themselves to be recession-proof. Whether it was a national or global recession that hit, FCDs stayed true to their value regardless of the reality that the stock market suffered from economic hardship, and regardless of when gold prices were going down due to political turmoil in Middle East. The rarity of FCDs is what keeps their value highly appreciated.
Fancy Color Diamonds have no correlation to any other assets. That is why Fancy Color Diamonds are able to retain their prices during economic downturns. In fact, the prices haven’t experienced any significant drops in the last 37 years.
Fancy Color Diamonds are a great hedge against inflation.
Color as the Value Determinant
The rarity of Fancy Color Diamonds makes them highly sought-after and valued.
Diamonds are measured by the 4 ‘C’ elements; namely Carat, Clarity, Cut and Color. In colorless diamonds, each element accounts for relatively an equal measure of the diamond’s overall value, but when Fancy Color Diamonds are concerned, the Color gets the most weight in defining the diamond’s value. When deciding the value of any Fancy Color Diamond, color accounts for at least 50% of the stone’s value. This doesn’t diminish the other 3 C’s, it just means that the hue purity and color intensity of pink, blue, yellow or green diamonds are more significant in the Fancy Color Diamond’s value than their Clarity, Cut and Carat Weight.
Why is the color purity very important in Fancy Color Diamonds?
1) Most Fancy Color Diamonds are found with modifying tones. The chances of finding pure red, pink or blue diamonds are so unlikely that when one such diamond is found, it augments the value due to its scarcity. GIA stone assessment reports contain the color characteristics of each diamond that they analyze. There are 27 standard hue names that the GIA normally uses, but the lab also recognizes the 270 variations that could appear when modifiers are acknowledged.
2) Fancy Color Diamonds’ evaluation works differently from that of colorless diamonds. While the absence of color makes a better colorless diamond, the presence and intensity of the color in a Fancy Color Diamond is what makes it significantly superior. The GIA uses terms such as Faint, Very Light, Light, Fancy Light, Fancy, Fancy Dark, Fancy Intense, Fancy Deep and Fancy Vivid to describe the hue intensity of Fancy Color Diamonds, with Fancy Vivid being the most desirable. The value of a Fancy Color Diamond can be upgraded as much as 25% as the saturation goes up one level.
3) Pink diamonds in particular get more demand as conventional speculation rises that in about 8 years from now, there will be no more pinks to be mined from the Argyle Mine – the biggest rare pink diamond producer in the world today. To put this into perspective – it would take about ten years, after a mine is found and established, that one can finally have substantial production, and even then it is extremely rare to find pink diamonds in a mine (1: 1,000,000).
4) Since there is no new mine in sight at this very moment, there is little chance that we can expect a new diamond source in the next ten years. One can easily assume that in the next decade, the market will consist of only currently existing “at-hand” diamonds. That says quite a lot for how these diamonds will be valued, as demand is not slowing down despite the fact that supply is clearly decreasing. The following illustration displays this forecast:
Fancy Color Diamond Investment Forecast
The global economic difficulties have persuaded investors to find more concrete and clear assets for investment portfolio diversification. Fancy color diamonds are among those that are seen to have ample positive returns in the (longer) future. Even when compared to other tangible assets, such as gold or collectible wine, FCDs have been confirmed as to not be easily affected by economic turbulences or any world events such as how the Middle East turmoil affected gold prices, for example.
India and China have always had a great appreciation of FCDs as good luck charms and symbols of status. With continued emergence on the global market, these two countries have had increased demand for Fancy Color Diamonds, initiating an increase in price and value of the FCD, as well. “In 2007, there were perhaps a couple of pink diamonds circulating Chinese and Indian markets. Today about 20 percent of Argyle’s pink diamond distribution goes to these two countries” as Josephine Johnson, Rio Tinto’s spokesperson, confirmed to Bloomberg Businessweek. In 2011 alone, the U.S. – the earlier and traditional major market for diamonds – was credited with about 38 percent of the global diamond consumption. China followed with 11%, India 10% and Japan 10%. At the time, Antwerp World Diamond Center actually believed that China could replace the USA as the most consumptive diamond market by 2015 if this trend continued. Today we know that this is not the case yet, but according to Bain & Co. reports, this day is closer than ever.
With the above point established, an increasing demand for FCDs has been seen, making the prices of Fancy Color Diamonds rise, while supplies are still short and possibly soon coming to a halt entirely. This price increase is estimated to continue in the next decade, given that there is no new diamond source found so far. Some experts believe that Fancy Color Diamonds’ prices are likely to rise between 21% to 32% in the next five years. In 2012 alone there was about a 7% price increase. In 2011, a Fancy Vivid Blue diamond weighing 2.39 carat mounted in a platinum ring was released for USD 1.3 million. In 2012, a ring with a cushion-shaped Fancy Vivid Blue diamond weighing 2.05 carat was sold for HKD 11.8 million or USD 1.5 million (smaller diamond, a year later, more expensive!).
Some conclusions can be drawn as we gather those facts above. When one is thinking to invest in Fancy Color diamonds, it is likely profitable to do it when:
1) The stone is kept long enough. Diamonds’ prices only improve over time. Wear it and enjoy it in the meantime! Even pass it to the next generation if there is no financial necessity to resell the stone. As the selling price gets at least two-thirds greater than the original purchase price, its investment returns leave no doubt.
2) The FCD that is typically good for an investment is one that is larger in size and more intense in color. This type of stone is extremely rare to find and thus has better value and is able to retain this value in the years to come, regardless of the economic and political conditions.
3) The bigger the carat size, the better. Diamonds’ prices per carat change incrementally as the gemstone size increases. That is because most diamonds are found in small fractions, rather than big solid ones. So when you see a diamond weighing more than 10 carats, it can already be considered “rare”, regardless of its color. Remember, a 2 carat diamond costs more than two of 1 carat diamonds. So even if the budget constrains one’s purchase to light yellow or light pink (as opposed to vivid yellow or vivid pink), it can still be highly valuable when the carat weight is substantial.
4) Diamonds have attractive color(s). While a pure, single color is incredibly rare to find and thus more preferable and valuable, some diamonds with great color modifiers are also as pretty. Such modifications can contribute to its beauty and exclusiveness, and the diamond’s value increases with these unique color characteristics. For example, although a vivid pink diamond is extremely desirable and valuable, vivid purple pink is considered extremely desirable and valuable as well.
5) Many diamond enthusiasts are still debating about whether diamonds can be considered an investment. This is understandable since often it is much easier to buy a diamond than it is to resell it. There is a saying that once you leave a showroom with a diamond in your hand, there is no turning back without a big loss on the value of the very same diamond that you’ve just purchased. Nonetheless, an important exception applies when the subject is a rare diamond, be it of a considerable size or of a unique color. Then it is all a very different story.
The Benefits of Investing in Fancy Color Diamonds
Investing in FCD seems very reasonable in this zero percent interest environment. However, not all investors would agree with the idea. The concept of FCD as a commodity is still quite fresh in the mind of most investors, and it may not be easy to introduce, usually because they lack the information and education to truly understand the matter. There are positive and negative sides of investing in fancy color diamonds, as summarized below.
- FCDs have outperformed other assets by leaps and bounds, especially during economic uncertainty. Unlike stock exchanges, property, or gold, FCD prices were unaffected by yjr world’s major events. In fact, they fetched record-breaking prices even recently. The Bulgari Blue, a 10.95 Fancy Vivid Blue diamond, was sold at $15.7 million in 2010 at Christie’s. The same year also saw a rare 24.78 carat pink diamond called the Graff Pink fetching $46 million at Sotheby’s Geneva.
- FCDs are so rare that the appreciation of the stones has been overwhelming. With its present thinning supplies and the non-existence of a new mine to be found and developed any time soon, all that makes FCD even scarcer than ever, at least in the next ten years if not longer.
- Some investors might not be used to the idea of investing in diamonds since De Beers had been known to control two thirds of the world supply of diamonds since 1927. And who is comfortable to invest in something when one player is -always one step ahead? But the company just went private in 2011, and with that ended its monopolistic practice in diamond trading. As there is no more threat that the company might play with the prices, investing in a diamond is viewed to be even more reliable and stable than ever before.
- Since a diamond is a tangible asset, one can insure it against loss or damage, especially when the diamond in question is set in jewelry, which is a great comfort to investors. Intangible assets like stock will never have this insurance option!
- Diamonds offer huge privacy. One doesn’t need to report a diamond transaction to any government agency, nor do they need to inform anyone when they want to secure the stone in a bank vault. A diamond’s ownership could be anonymous if preferred, and up until this moment no paperwork is needed when one wants to open a diamond account.
- Fancy color diamonds are highly portable, given that their actual size is so small. An equivalent value in gold bars would be massive in comparison. This fact is incredible given that Fancy Color Diamonds have typical annual returns of 10%-30% on average.
- Lack of transparency in FCD prices. Indeed we have some track records of the selling prices of some diamonds auctioned at Christie’s or Sotheby’s. But there are also diamond trades done outside these auction houses, whose agreed upon prices we will never know about. For some, this could be a worrisome thing as the ability to assess the prices is quite limited. Without having a contact in the know, the typical person would have to rely on the prices that the diamonds earn at auction houses in order to give themselves a benchmark of the costs of acquiring one.
- It’s hard to define the prices of Fancy Color Diamonds since each color diamond is completely unique. Unlike white diamonds that have certain quality measurement with the famous 4 C’s, Fancy Colored Diamonds’ appreciation goes above and beyond that standard qualification method. The 4 C’s are taken into account on the value of a Fancy Color Diamond, but the character of the Color is worth significantly more than the Clarity, Cut or Carat weight in determining the final value. One can even compensate on the Carat weight with a better Color of a rare FCD stone in order to not lose value. For example, the famous Wittelsbach diamond that was bought by Laurence Graff in the 2008 was repolished with a loss of 4.45 carats to increase the diamond’s color to Fancy Deep Blue (and to upgrade the clarity to Internally Flawless). He did the same to the Graff Pink, which he polished from 24.78 carats to 23.88 carats to increase its color intensity from Intense Pink to Vivid Pink. Both repolishes significantly increased the diamond’s value.
- FCD investment is reserved for those who have enough capital to spend and are able to hold the stone without reselling it in at least 5 years’ time. The better turnaround is most likely rewarded to investors who buy a bigger stone with better, if not the best, color characteristics, and release it back to the market after holding it for a while. Is it easy to find this type of stone? No, it is not. But that is what makes it even more interesting. It is also significant to note that this fact is what saves FCD investment only for specific types of investors and isn’t for just anyone who is looking for alternative investments for their portfolio.
- Colorless Diamonds are highly volatile, making it a major issue as an “investment.” While gold’s quality is easily assessed based on its purity, fancy color diamond’s value assessment is way more complicated than that. Factors like the cutting craftsmanship or the setting assembly are part of what makes a diamond valuable. These abstract elements place diamonds in the same position as artworks, wine or classic cars as luxury investment routes. When an investor’s ability is clouded by uncertainty, it is understandable that it is hard to make the best decision to invest in a diamond. Just like the abovementioned assets, the choice in which FCD to invest has to be made very carefully.
The world has begun welcoming the idea of investing in diamonds, and there are numerous ways available to enable potential investors to enter into FCD investments. Price-reporting platforms such as Rapaport, IDEX online, et al. have been developed to ease the way of diamond connoisseurs and novices alike to assess the prices of diamonds and to enable them to make the right decision about buying certain diamonds.
It is reasonable to infer that buying and selling rare FCD is not an easy thing to do, especially when it is the first time one is doing it. There are three ways that investors get involved in this. Some play it safe by doing what is considered the normal diamond trade practice: i.e. hiring an experienced diamond trader to do the buying and/or selling for them and share some percentage with this expert from the trade. Some take it up as a challenge and do their own in-depth research on diamonds, their markets, their trends and which diamonds could be a winner in 10 years’ time, and enjoy the process of discovery. Another viable way is to join a Diamond Investment Fund, a company run by professionals of rare diamond trading who will manage one’s capital investment to produce high returns after a few years by acquiring and selling diamonds.
In the present era of an economically-challenged world, investing in a portable, tangible asset like rare Fancy Color Diamonds looks like a great move and a sensible option. With the positive history of FCD trades in the past and the optimistic forecast of FCD trades in the future, Fancy Color Diamond investment only makes sense to secure parts of one’s assets for a rainy day.
Nevertheless, the real question remains. How well can one do with investing in Fancy Color Diamond, compared to traditional types of investments such as oil, gold, or stocks?
It is clearly up to each individual investor to float the idea and decide. But the one message that is loud and clear that every diamond connoisseur would impart is: enjoy the diamond you buy and take the likely greater return as a bonus. Your enjoyment is undoubtedly the most important investment of all and we at DICE will be there to assist you in your choice.
The facts and forecasts are clear concerning investing in FCD. This will be an investment you will treasure for a lifetime. Make the investment that is rare, exquisite, timeless and financially sound.
Fancy Color Diamonds History and Basics
Diamonds started being valued for their beauty and grandeur a long, long time ago. These sparkling gemstones were once reserved for royalty and nobility to emphasize their opulence and majestic status. In some other parts of the world, the stones were appreciated in a more religious way as a gift from God. While in war battles, they were believed to be the powerful charm to shield the troop and to gain victory.
The attitude towards diamonds has changed over time. Diamonds found their way from the hands of the royals, the knights and the priests to the possession of pirates, greedy traders and then eventually to the regular populace who simply believe in true, everlasting love. As technology grew, the stones were even made useful in other kinds of applications, lending their supreme strength to industrial tools to enhance mankind’s quality of life.
All in all, no matter how progressively and how dynamically the world has changed, diamonds stay grandiose. They are still the symbol of beauty, power, wealth and eternity today like they were hundreds of years ago. Some are treasured more than others, well-kept in a highly guarded place. Some are made into lavish, stunning jewelry to accessorize only a few lucky select women in the world. Many others rest around the middle finger of married men and women for the rest of their lives.
Diamonds’ allure, in short, never dies. Not then. Not now. Not ever.
Rarity of Fancy Color Diamonds
Although diamonds were discovered in the 4th century BCE, there isn’t an abundance of them available as time has passed. In fact, diamonds are tremendously rare. As one of the precious gemstones that are short in supply, diamonds are admired, treasured and valued which is what keeps their price tag consistently high.
Let’s look at the statistics to better understand the reasoning behind the high price of diamonds.
First and foremost, we need to do the gem quality diamond shortlist. When diamonds are mined, there is only about one carat of quality diamond gemstone that can be found among one million others. This is because most of the diamonds mined – about 80% of them – qualify only for industrial purposes. The other 20% may belong to those that deserve to be called “gems”, but even then most are either not eye-clean or have less desirable colors, generally considered inferior and not offered for sale.
Out of the gem quality diamonds, Fancy Color Diamonds comprise the smallest percentage of all mined diamonds. Only about one carat of Fancy Color Diamond gemstone is found for every 10,000 carats of colorless ones. Fancy Color Diamonds that have intense color grading have even much lower percentage – merely one out of 25,000! Hence, it is only reasonable to find FCD with such high value, especially those of especially rare colors, and as the color intensity gets stronger.
The journey doesn’t stop there. The diamond pricing method is mostly based on an incremental per carat basis. This is due to the fact that in order to unearth a mere 2 carat diamond, 5 million other diamonds had to be mined in the process. Bigger carat weight in one single stone is also a rarity in itself! After all, since diamonds are formed naturally under the earth as a geological reaction when carbon atoms form a repeating geometric pattern in a kimberlite deposit, it is not a given that these formations will be so large. Therefore, 2 carat diamonds are more expensive than two 1 one carat diamonds. In the case of Fancy Color Diamonds, large sized stones are significantly rarer than the smaller ones and their prices reflect that reality as well.
There are additional costs that are figured into a diamond’s price. One of them is the mining process. To retrieve a one carat rough diamond, approximately 40 to 250 tons of gravel and sand had to be processed. Then the rough was brought to the cutter, where the stone undergoes about a 40% to 60% loss of its total carat weight in order to properly cut and polish it to bring out its sparkle.
Udachny diamond mine in Russia
With the thinning diamond deposit resources known today, experts believe that supplies of diamonds will be exhausted in at least 30 years of time if no new mines are discovered within this timeframe. Even if there is indeed a discovery of such new diamond mine in the near future, it is likely to take at least 10 years for the mine to be fully operational and productive, and even then the possibility of finding any Fancy Color Diamonds is very small, as explained above.
Considering the hard labor, the processing time, and the expertise needed in handling diamonds and getting them ready for consumption, plus the fact that diamonds are already rare to begin with, more and more investors are turning their interest to diamonds. Since Fancy Color Diamonds are the rarest of the rare, these investors seem to be forecasting a bright future in these fancy Color Diamonds.
To add to the investors’ confidence, the wholesale prices of FCD were never recorded to fall in the last 30 years. Gem-quality Fancy Color Diamonds have only ever experienced an elevation in price, with some on average doubling in just 4 or 5 years. With the exception of some economic bumpy times where diamond prices stayed the same, the prices of Fancy Color Diamonds are going only one way: upwards.
The trend described above shows that today Fancy Color Diamonds are appreciated not only for their beauty or their many symbolic ideas, but these breathtaking gemstones are also worth saving – and investing – for even greater returns. As they gain more popularity and recognition, the appreciation grows, the market expands and the value increases. This is exactly how Fancy Color Diamonds have that investment appeal.
Why Invest in Fancy Color Diamonds
There are at least 8 reasons why FCDs are worth the investment. First among those reasons is rarity. Just 1% of the world’s total “rough” diamond production is made up of Fancy Color Diamonds, making them the rarest of the rare.
Those valued highest are Fancy Color Diamonds with dominant hues of blue, pink, green, purple and red and as the intensity of these colors increase, so does the price. This is because the effort of finding high quality Fancy Color Diamonds in the existing mines is labor intensive, time consuming and often a matter of luck.
Experts predict that unless new mines are discovered, diamond production is projected to diminish over the next 30 years, making diamonds a rarer commodity than ever. This future prediction assures diamond investors and collectors that the diamonds they are investing in will experience an increase in value.
The record shows that the price of FCDs has not dropped in the past 37 years. Even with the world’s recent economic uncertainties, diamonds have not experienced a price setback. In fact, Fancy Color Diamonds have maintained their wholesale value throughout the fluctuations of this challenging economy, and in many cases, even increased.
While rarity is one of the best reasons to invest in Fancy Color Diamonds, it is only part of the equation. The truth is that without demand even the rarest of stones would not do well in the diamond market. Fortunately, thanks to collectors and strategic marketing by major diamond companies, Fancy Color Diamonds have become very desirable in the last decade, far beyond what any diamond dealers or alternative investors predicted.
Aside from FCDs’ rarity, ROI, market potential, and supply and demand, upon which we have already elaborated, there are quite a few other reasons why they make an excellent investment. Fancy Color Diamonds represent an incredible concentration of wealth compared to any other asset in the world. The amount of value that is packed into 1 gram of an investment grade FCD far outstrips that of other assets. Depending on the year and date, such expensive assets such as a bar of gold, a bar of platinum, or even an expensive work of art do not pack in as much value into one gram! For example, 1 gram of a Fancy Vivid Pink diamond has been worth $10 million, while a bar of gold on the same day was worth only $35! This also leads directly into the next benefit of FCDs as an investment – portability. If one wanted to move a large sum of wealth from one location to another, or to take a certain amount of money and change it to a portable, internationally recognized asset instead of tying that money up as stocks or shares, an investment grade FCD would be the way to do so. In this case, even if you live in a volatile economy, or would like to preserve your wealth in an easily transferable way, these small but valuable gems would be a brilliant option.
This benefit leads directly to the next two, that FCDs are a tangible asset and a multi-purpose asset. Unlike shares in a valuable company, bonds sold by a country, putting money in the stock market, and other intangible investments, a diamond is an asset that you can physically see, evaluate, and possess, and is not theoretical whatsoever. Once a diamond is in your possession, it is yours to own and experience up close, which is a quality that the majority of investments do not possess. For some, ‘seeing is believing’ is an important part of their investment making decisions and that is what helps guide their decisions between one asset and another. In the same vein, not only is a diamond a physical asset, it is also a multifunctional one! Not only is it earning you money the longer it sits in your possession, it is an asset that you can actually enjoy, and at no cost to the asset itself. The diamond that you buy looked exactly this way when it was mined from the earth, and the day it was set, and will look the same 1,000 years from now if someone takes it out to wear it. As diamonds are the strongest substance on earth, it is nearly impossible to destroy one and this indestructible nature is also a large part of why some investors feel the need to diversify their assets into a genre like this one. Shares and venture capital funds are ultimately run by humans or subject to the natural ebb and flow of the world economy – but a diamond is not. It will be there forever and can always be sold.
Fancy Color Diamonds as an Alternative Investment Route
During these difficult economic times, some successful and innovative investors have attempted to find alternative investment routes and diversify their assets. One such route that has recently been heavily explored has been that of investing in FCDs.
As discussed before, Fancy Color Diamonds have a proven history of maintaining their value and even making gains during times of recession. This fact provides great encouragement for investors to put their money into diamonds as an alternative investment.
Fancy Color Diamonds have come to represent a safe haven investment for the following reasons:
1. They do not adversely affect other traditional investment assets, such as stocks and bonds
2. They have lower volatility
3. They are not subject to the same market forces as traditional investments such as economic downturns or global crises
4. For an investor who can wait long term, FCD investments give much higher returns than any other investment
One piece of information that supports FCDs as an alternative investment route can be seen from the significant increase of FCD demand in the form of “Passion Funds” coming from China and Europe. Passion funds are long-term investments trusted to goods that appreciate over time. Passion fund goods include wine, collectible musical instruments and diamonds. China is experiencing a surge of new “young” millionaires (around 39 years old on average). These youthful and freshly wealthy businessmen are investing in “passion funds” as a way to protect part of their assets against unpredictable inflation or market fluctuations, such as recent events that China has experienced. Emerging middle classes in China and India mean that a significantly larger amount of attention from new players will take quite a few valuable FCDs off the market and into people’s long term investment portfolios.
Rare Fancy Colored Diamond Investment Returns
Fancy Color Diamonds are unearthed in various mines around the world. Primarily located in Africa, Canada, Russia and Australia, each mine has distinctive characteristics and exclusive Fancy Color Diamond which characterizes them. The mines in Africa are known for their blue and yellow diamonds, the mines in Russia are known mostly for colorless diamonds, and the mines in Australia are known for browns, pinks, red, and some violet diamonds. The Argyle mine in Australia is the most recently established mine and is also widely recognized for its production of extremely rare, high quality, pink and red diamonds. Recent estimates maintain that 90 to 95% of the world’s pink diamond supply comes from the Argyle mine. Although pink diamonds are considered one of the rarest, there is great reassurance for investors in knowing that the Argyle mine’s continued production of pink diamonds is rendering current prices more or less reasonable.
Scanning some facts about the Argyle mine we can see that in the fiscal year 2006-2007, Argyle produced 24.5 million carats of diamonds. In 2007-2008 it experienced a significant decrease of its total production, down to 16.5 million carats. The reduction is because the open pit mine is imminently running out, and Rio Tinto has had to defer to underground mining to keep up with production demands. Experts estimate that unless new deposits are found, the Argyle’s supply may reach its limit by 2020, which means that the prices of Argyle diamonds will increase exponentially as no new diamonds are introduced to the market. Most recently, the Argyle mine has hinted that their tender prices have tripled in the 2000-2015 timeline, and in both 2014 and 2015 they had a record bids for tender diamonds above a $1 million er carat.
The Argyle Mine in Kimberley, Western Australia
The next question investors may want to ask themselves is if there will be a buyer if I want to sell my Fancy Color Diamond 10 years from now?
Let us look to history for an answer. Twenty years ago, a one-carat pink diamond with Fancy Intense color and Internally Flawless clarity grade would have been auctioned at $70,000. At present, that diamond can reasonably be expected to sell for $350,000. With the diamond pricing system of per carat basis, that value is going to be even higher for a diamond of larger carat weight. For example, in November 2010 a 24.78 carat Fancy Intense Pink was sold for $46 million. That is $1.86 million per carat!
As Fancy Color Diamonds become rarer in the future, that investment demand is likely to increase despite expectations of extraordinary price hikes. A smart move would be to learn from history and collect diamonds of rare colors, high quality, and a good grade on clarity and carat weight. Keep them for an extended time until prices double, triple or possibly even quadruple. With equal doses of foresight, patience and investment capital, investing in Fancy Color Diamonds should make as much “dollars” as sense.
How to Invest in Fancy Color Diamonds
When one has decided to invest in FCDs, the one thing to remember is that it takes time to get the FCD to be profitable. If an investor is looking for fast money, the stock market is where he should go, not FCD. Fancy colored diamonds are best used for investment diversification, rather than as a one and only venture. As time goes by, FCDs gets more appreciation and increases in value, and that’s when the investor can enjoy the investment’s returns. The other thing that is also equally important to remember is that fancy color diamonds can’t be auctioned in a rush. If your stock assets fail and you decide to sell your FCD, you can’t expect it to be sold in just a day. Unless you already have a prospective buyer for the diamond, it will take time for the diamond to be sold for what they are really worth.
There are basically four ways to invest in FCD. Different investors may have different opinions about these directions, depending on the budget that they have and the reason behind the FCD investment. Some prefer collecting them individually to be admired once in a while, while some others may want to put them together in a piece of jewelry and wear them until they’re worth selling. You should decide which one fits you best.
Diamond Mining Companies
A method that investors would already be familiar with would be buying shares in diamond mining companies. Shares in the major diamond companies are traded on stock exchanges in various countries around the world where the companies are incorporated. The biggest companies involved in diamond explorations are: DeBeers, Alrosa, and Rio Tinto (the Argyle Mine), Dominion Diamonds, Petra Diamonds, Gem Diamonds, Lucara Diamonds, and Kimberley Diamonds combined (8 companies) which control the majority of explorations. This method of diamond investments is beneficial because the companies are obligated to maximize ROI for their investors. However, like all companies who sell shares, they may take quite some time to pay out to their shareholders, you are bound by their management’s competency, and the company is much more subject to market and industry forces.
Single Stone Investment
As the name suggest, this type of investment calls for a single Fancy Color Diamond. A diamond is chosen by the color rarity – the rarer the better – with good characteristics of hue, good clarity grade and good carat weight (larger than 0.5 carat). It is thought to be the safest investment choice, especially for beginner investors that are willing to wait longer.
Rare colors like red, green, blue, and pink have been recorded to realize a large price hike in the past few years, both in the general market and at auction. It has been a steady climb for these Fancy Color Diamonds and it is still expected to increase even more in value in the future. With the prediction that there may be much less Fancy Color Diamonds in the next 20 years, the prospect of these rare Fancy Color Diamonds become very appealing for investors.
However, to invest in rare FCD, you will need a substantial sum of money. Even with the prediction that the prices of these Fancy Color Diamonds are going to double in the future, at present they are still quite highly priced. If one’s budget is not enough to go f
or the absolute rarest FCDs, he can still opt to invest in the less rare ones, like yellow. Stick with the good color intensities, either Intense or Vivid, and most likely these single stones will make a sound investment. Always consult with a Fancy Color Diamond investment strategist to make sure that the diamond you chose is a sound investment! ( Feel free to contact us at email@example.com)
Insisting on getting rare Fancy Color Diamonds over less rare ones in a restricted budget situation is still possible. However, the investor needs to compromise on the carat weight to get the other rare qualities. For example, a nice light pink diamond that is less than half a carat in weight can be more or less the same price as a one carat yellow diamond. Again, consult with an experienced Fancy Color Diamond investment specialist before you purchase any diamonds for investment.
Ideally, every investor has to do thorough research before getting an FCD for investment. Analyze the history of the specific diamond group you are interested in, the market demands and the future predictions, and then synchronize these with the available funds. Take it easy while still watching the market grow, and get your most earned investment return at the right moment.
An investment quality pink diamond, the Argyle Seraphine
Multiple Stone Investment
Investors with more funds available have more choices in terms of the type of investment they want to make. Gathering a collection of stones is one of them, and they can be FCDs of the same hue but with different tones and saturation, a compilation of stones of different colors, or any combination of factors that you choose. Collecting Fancy Color Diamonds may take some time before the final set is reached, and may or may not be wise, depending on the criteria that you have chosen for your collection. It is extremely important to verify your investment plans with a diamond investment strategist before you go ahead and begin your collection.
It is important to bear in mind that each diamond color is valued differently due to rarity, pricing and market demand. For an instance, some colors were less desirable in the past – thus inexpensive – like brown and black. At the moment they are so fashionable that demands for these stones have increased immensely. Consequently, this affects their prices as well. If today you start collecting these “less desirable” color stones and are selective on the qualities (clarity, color intensity, etc.), they may be worth quite a lot more in the future. The diamond market keeps changing and the changes have always been positive, but only people who seriously track these changes are qualified to shed light on market trends for you.
A collection of various vivid colored diamonds
Unique Estate Jewelry
Unique estate jewelry is vintage jewelry that was made and previously owned in any era which represented certain jewelry fashion design belonging to that period. This type of jewelry is valued not only due to the beauty of the stones, but also as a form of art. Many believe that these unique pieces, just like other art forms such as paintings and sculptures, acquire a greater appreciation over time, making them a lot more valuable in the future than they were then or are now. You don’t have to look much farther than the estate sales of famous celebrities or wealthy individuals for proof. For example, the jewelry that belonged to Elizabeth Taylor became the most expensive jewelry collection of all time when it was sold at auction.
Estate jewelry containing Fancy Color Diamonds are naturally more expensive. Since there are limited jewelry collections that came from a specific epoch, estate jewelry consists of only the existing jewelry pieces from that time. If it is set with Fancy Color Diamonds set in, it adds an additional significant value factor to the equation. A good hunting effort is needed to get the right vintage estate jewelry that suits you as well as exhibiting worthwhile resale value, information that is carefully gleaned by diamond investment experts and professionals.
One should have excellent knowledge and understanding on the market of unique estate jewelry to be able to make a good sound investment. Consulting with a professional is the best move. If and when you find vintage Fancy Color Diamond jewelry that appeals to you and is a worthwhile investment, you will find that it could be one of the most profitable investments you’ll have ever made.
The market demand for estate jewelry is large and worldwide although supplies are generally not plentiful. Therefore, depending on the origin and characteristics of the pieces of jewelry in question, gains have ranged from modest to very impressive. The raise of popularity of vintage jewelry has a good part to do with it, for collectors of this category want these specific irreplaceable items and nothing else. Serious, well-educated collectors should be able to know where to find vintage real items offered under the market value. Once they succeed, they can resell them for much more.
Dealing with unique estate jewelry is not that simple. It takes time, passion and patience to fully understand the way it works so that you don’t get trapped in a bad investment gone wrong. Always check for the real deal and whether the jewelry art piece has the precious stones that its description claims. In some cases, the stones may be replaced with cheaper, less precious stones. Consult with the auction house or the seller for the originality of the piece.
A blue diamond from the estate of Mrs. Rachel ‘Bunny’ Mellon, which became the ‘Zoe’ diamond when it was sold at auction for a record price at that time
Investing Through a Rare Diamond Investment Fund
When an investor is new to rare Fancy Color Diamonds, it is most likely going to be tough for him to build the connections needed to later sell the FCD that he chose. Buying a rare Fancy Color Diamond is one thing, but reselling it is a whole different matter. If you are a more cautious type of investor, you may want to consider investing through a diamond investment fund. This is a fund that is managed by professionals who specialize in rare FCDs. They must have good FCD trading connections, which is key to the turnover of rare diamonds. The entrance fee of joining this investment fund normally involves an annual management fee as well as some sort of performance fee on gains made, but it is worth every penny in the future.
Whether you are already in the diamond business or you just want to invest in rare Fancy Color Diamonds as a passion investment, you should do a market investigation of the diamonds which interest you. Make sure that your budget fits the specific diamond you want to get and that it has best the gem qualities to ensure you the best resale value. Once you buy the item, sit back, relax, and watch its value grow over time. When it’s the right time to resell the stone, you can enjoy the investment return that you’ve awaited.
The Future of Investing in Fancy Color Diamonds
Since the financial crisis hurt the economy in the USA and some European countries, businessmen are reminded that they need to do something to protect part of their assets. There is always a chance that their stocks will fail, the banks will go bankrupt, or for the country to decide to do currency reforms. So if these investors don’t want to be completely broke by putting all of their eggs in one basket, they diversify into hard, physical assets.
The instability of the world’s finances has been an eye-opener for some investors to diversify their assets, one method of which is to allocate money toward passion investments. Fancy Color Diamond investment is one of these, with more and more investors seeming to cotton on to its benefits.
The confidence in Fancy Color Diamond investment has very good reasons. An investor that has done thorough research on FCDs sees several facts such as:
A. FCD prices have almost exclusively increased in the past 30 years. Even when the crisis hit, they maintained their prices only to go up again as the economy improved.
B. Some of the Fancy Color Diamonds enjoyed price increases than others due to what was fashionable at the time of the price increase. Some that were once underestimated, the less-desirable colors, experienced a surge of popularity as well as a price hike when there was good marketing being carried out.
C. As non-renewable precious minerals, the production of diamonds relies heavily on the existing diamond deposits, which today appear to be thinning. Experts estimate that within 20 years, world diamond production will drop significantly, and that will make the FCDs on hand even rarer than they are now. Some of today’s major diamond mines are expected to go underground soon, meaning that they have exhausted their open-pit production. Unless a new mine is discovered in the near future, diamond connoisseurs expect that whatever is on the market will be the entirety of what is available.
D. In research conducted by BMO Financial Group, the largest diamond production was achieved in 2006 with 160 Mcts (million carats) of production. Two years later, it became 150 Mcts and in 2009 it was 99 Mcts. The significant fall in 2009 was mostly due to the financial crisis, which led to a slight decrease of public demand. However, it is very unlikely that diamond production will ever reach more than 160 Mcts again, given the current worldwide mine situation.
E. The future of the worldwide diamond demand (consumption) shows an opposite graph compared to the lessening production. It is anticipated that by the year 2020, the demand for diamonds will be doubled. That means rough diamond prices are estimated to increase by about 5% annually, since supplies will be much shorter than the demands. The price hike of the diamond roughs will consequently affect the polished ones, contributing even more rise in value to them. Diamond owners who are buying their diamonds presently could possibly get a substantial amount of investment returns if this prediction prevails.
At the moment, the rarest color diamonds include red, green, blue and pink. The pink diamonds are still consistently produced by Australia’s Argyle mine, which supplies about 90% of the world’s pink diamonds production. However, experts believe that the mine will reach its end production in 4 years. This could potentially add to the rarity of pink diamonds, as well as the increase in demand and price.
A selection of Argyle diamonds – red, pink, and violet
Auction Results of Fancy Color Diamonds
Let’s look at some recent auction results to give investors an idea as to how fancy colored diamonds are priced today.
Yellow Diamonds at Auction
The yellow diamond is a good place to start. Although yellow diamonds are thought of as one of the most obtainable colored diamonds, thus less rare, the Fancy Vivid and Intense color grades of yellow diamonds are momentous finds.
In September 2011 at Christie’s New York, The Vivid Yellow – a giant, flaming, highly saturated fancy vivid yellow diamond of 32.77 ct was sold to an anonymous buyer for a whopping $6.6 million! The pear-shaped diamond has such an intense deep golden yellow hue that GIA described it as one of the rarest gemstones in its class. The selling price of $201,000 per carat put this Vivid Yellow in the same rank as the Golden Drop, a pear-shaped yellow diamond weighing at 18.49 carat, which was sold for $203,000 per carat at Christie’s London in June 1990.
One month later, an Internally Flawless, Fancy Intense Yellow diamond weighing at 43.51 carat was sold for $2,843,623 in Cleveland, USA. This rectangular, large yellow diamond – called The Golden Eye diamond – was seized in a drug sting in a Northern District of Ohio. It made the purchase not only worth its price for the precious stone, but also for the story behind it.
In November 2011, Sotheby’s Geneva sold the Cora Sun Drop Diamond – the South African 110.03 carat diamond and the largest pear-shaped Fancy Vivid yellow diamond– for $12.3 million. This sale broke the world’s yellow diamond price record. In December 2011, a cushion-shaped Fancy Vivid Yellow diamond of 43.36 carat was sold for $2,642,467.
Most recently, the Graff Vivid Yellow, a 100.09 carat Fancy Vivid Yellow diamond ring set by famous Fancy Color Diamond jeweler Laurence Graff, was put up for auction in May 2014. It sold for an astronomical $16.3 million, the highest amount of money ever paid for a yellow diamond. Since this occurred, new and impressive yellow diamonds have been introduced to the market but have yet to be sold, although we can expect that they will come down with a very impressive final hammer price.
The Graff Vivid Yellow
Pink diamond enthusiasts enjoy their supplies of fancy pink diamonds largely from the Argyle mine, which consistently produces rare pink diamonds.
In November 2010, Sotheby’s sold The Graff Pink, a 24.78 carat Potentially Flawless diamond for an astounding $46.2 million.
The “Martian Pink” diamond sold in May of 2012. It is a 12.04 carat round shaped Fancy Pink diamond that was sold for an amazing and unexpected $17,485,300
At the end of 2014, the 59.60 carat Pink Star, formerly known as the Steinmetz Pink, was sold at auction for $83 million and renamed the Pink Dream (at the end, the buyer defaulted and the pink dream was entered into Sotheby’s Inventory). The most recent significant pink diamond that was auctioned is the Sweet Josephine diamond, a 16.08 carat Fancy Vivid Pink diamond. It was bought in November 2015 for $28.5 million.
The Pink Dream diamond
The most notable blue diamond in recent history is the Blue Moon of Josephine, which was bought in November 2015 for $48.4 million, the highest price ever paid for a diamond. The 12+ carat Fancy Vivid Blue diamond underwent a very public marketing campaign from its discovery in the Petra mine to its polishing and finally its sale.
The year before, the now famous Zoe diamond had established a record for the most expensive blue diamond every sold. The 9.75 carat Fancy Vivid Blue diamond sold for $32.6 million dollars at Sotheby’s in Hong Kong in November 2014.
Earlier that same year, the Winston Blue diamond had achieved the world record price for a blue diamond when the 13.22 carat largest known flawless vivid blue diamond in the world sold for nearly $23.8 million in May.
The Winston Blue
Orange diamonds are rare and only a handful of them have made their way to the auction houses. The most famous orange diamond is the Pumpkin Diamond, a 5.54 carat Fancy Vivid Orange diamond mounted in a ring. Ronald Winston bought it on November 30th, 1997 at Sotheby’s auction for $1.3 million. At present, this orange diamond ring is valued for over $3 million.
The largest Fancy Vivid Orange diamond known to exist sold for $36 million at Christie’s in Geneva in November 2013. The diamond was nicknamed ‘The Orange’.
‘The Orange’ diamond
Red diamonds are the rarest diamond color of all. It is interesting to note about this diamond that none of them have ever been discovered to weigh more than 5.11 carat! The Moussaieff Red, the largest, most famous Fancy Red diamond in the world, is only 5.11 carat and has an estimated value of $20 million today. It currently holds the title for the largest red diamond in the world.
In November 2007, Christie’s Geneva sold a Fancy Purplish Red diamond weighing 2.26 carat for $2.7 million to famous jeweler Laurence Graff. It was the largest red diamond that ever made it to any auction house and it beat the world’s record for price per carat for red diamonds with its price of $1,180,340 per carat. The previous record was held by the Hancock Red, also one of the most famous red diamonds, with $926,316 per carat in 1987. The latest record belongs to the 2.09 carat Fancy Red, heart shape, diamond by Mousaieff. it is held at $2.44 million er carat.
The Moussaieff Red
The prices of FCD presented above show us the value of Fancy Color Diamonds in today’s market. Even the least rare stones, like the yellow diamonds, sell at amazing prices, so long they have great color characteristics.
With the right knowledge and help, investors can be sure that they are making the right decision in their Fancy Color Diamond investment choices. Despite what may or may not be occurring in the colorless diamond market, the Fancy Color Diamond market stands on its own with the proof of history as its witness. As Fancy Color Diamond prices have not decreased, and in fact show an incredible 10-15% average return per year, Fancy Color Diamond investments are actually some of the most lucrative investments that are available in the world today. For the savvy investor who is able to wait patiently, a long term strategy will see absolutely incredible returns, of course given that he chose an investment-level diamond for this purpose. Not many alternative investment professionals have spent enough time truly studying Fancy Color Diamond prices throughout the years and what they have to offer. However, for those who have, the astounding data has more than convinced them that this is a wise choice for the right audience.
Our next Article; Fancy Color Diamonds Investment Guide – Part 2 will concentrate on building specific Fancy Color Diamonds Investment Portfolios. to make it more exciting, we will review 3 portfolios. The first portfolio will involve a USD $1 million acquisition value. the second portfolio will involve a USD $5 million portfolio scenario. The third portfolio will involve a USD $25 million portfolio. We will discuss the various Fancy Color Diamonds in each one in terms of Color, Intensity, and weight. Due to price discrepancies we shall review the value in a range as to not confuse any potential investor. We will also review the various time line to consider for each portfolio.
Got any questions, or are wondering about anything that you have read? Contact Us!