Investing in Natural Blue Diamonds

In the last 20 years, Fancy Color diamond investment has been imperative to the wealthy individual as part of asset allocation and diversification. We know that investing in fancy color diamonds must include rare colors, yet liquid enough to be considered an investment. Liquid meaning there is enough demand to be able to measure the financial performance. There are various hues (also known as depth of color) for blue diamonds; Light Blue, Fancy Light Blue, Fancy Blue, Fancy Intense Blue, Fancy Vivid Blue, Fancy Deep Blue. As the color depth becomes stronger so is the rarity and value of the diamond. Most of the blue diamonds are mined in the Cullinan mine by Petra Diamonds as well as from the Argyle mine in Australia.

 

Our research shows that the two depths of colors which have shown the highest rate of return as investments were both Fancy Intense Blue and Fancy Vivid Blue. I have divided my analysis into various groups by weight as well. It is inconceivable that a 1ct blue diamond would be worth as much as a 5ct blue diamond from the same depth of color. The bigger the diamond is, and the rarer it is.

In our breakdown by color and weight, we have seen Fancy Intense Blue diamonds in the 1-2ct in weight swing in value at the auction houses. Back on October 23, 1995, a 1.15ct size diamond sell for about $117,000 a carat, increasing steadily to $234,500 per carat for a 1.29ct diamond by May 18, 2006 to slowly coming down to $187,700 per carat by 2010 for a 1.25ct diamond. Does that mean that blue diamonds are not considered an investment? Not at all! It simply means that there were not enough blue diamonds of this kind sold at public auction in order to fully conclude this claim. The amount of blue diamonds sold at auction are minute compared to those sold in private transaction. I can assure you in 2015, there is no way of finding a Fancy Intense Blue diamond for $234,000.

From a recent search online, I have found the following Fancy Intense Blue Diamonds available:

The Above 1.04ct Fancy Intense Blue, Cushion shape, IF clarity was on sale for $552,000. It demonstrates an increase of almost 371% over almost a 20 year period. During this time span, the dow jones had increase by 247% including stock splits and dividends, the NASDAQ increased by 382% and the S&P did so by 239%. In this case we see that Fancy Intense Blue diamond have trailed NASDAQ, but did better than the DOW and the broader S&P 500.

 

If we now compared a Fancy Vivid Diamond to the same markets, the results will look differently. Back on February 21, 2002 a 1.01ct Fancy Vivid Diamond sold at auction for about $127,000 per carat, increased to $244,600 per carat by may 30, 2007 then to $532,400 per carat in September 24, 2013 for a 1.08ct diamond.

On May 29, 2015, a 1.18ct Fancy Vivid Blue, Radiant shape, VS1 clarity was being offered at $1.1 million per carat (see image above). In 13 years, this diamond has increase by a whopping 766%. In comparison, the Dow Jones has increase by 76%, the NASDAQ by 183% and the S&P by 87%. As you can see, here, the Fancy Vivid Blue diamond has really outperformed the major USA market indices by as much as 10 times.

 

If we now review some larger Blue diamonds, in the 5-10ct size, a Fancy Intense Blue diamond, 5.15ct sold for $197,500 per carat back on November 17, 1997, while on November 13, 2013 a 5.51ct Fancy Intense Blue diamond sold for $985,300 per carat, showing a 399% return over a 16 year period. In comparison, the DOW had an 89% return, the NASDAQ had shown a 130% return and the S&P showed 73% return. Quite a difference here! Also, just for the record, a Fancy Vivid Blue diamond of the same size range sold for $443,000 for a 7.96ct on November 18, 1999, while a 9.75ct size diamond sold for $3.35 million per carat on November 20, 2014, a 656% return over a 15 year period. During this time, the Dow had a 60% return performance, the NASDAQ had a modest 36% and the S&P had done slightly better at 46%.

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