At the start of every diamond and jewelry auction, every auction house releases a catalog of hundreds of pieces of jewelry and some loose stones which will be offered to the public, and which is always available for the world to see online. Statistically speaking, over 80% of items offered at auctions are sold on average. What happens to items that remained unsold? Even worse, what happens to the items that are sold at auctions, but remain unpaid for by the buyer? How are these items perceived by the industry and potential buyers?
Famous Pieces of Jewelry That Went Unsold
When items go unsold at auctions, they usually revert to their original owner, who will either try to sell them by other means or wait some time and offer them again at a future auction. Most pieces will go unnoticed and will sell. But in some cases, where the pieces that were not sold are so unique, or have special provenance, the owner may have difficulty relisting them at another auction. The piece may end up selling for less on the private market simply because they have been “exposed” and their value has been made public.
Some of the famous pieces that went unsold and have unique provenance include the Pink Star diamond, the Shirley Temple Blue diamond, the Lesedi La Rona rough diamond, and a 11.19 carat pink diamond from Sotheby’s auction back in May in Geneva, among others.
The Pink Star Diamond
The Pink Star diamond, in my opinion, is the most famous diamond that got sold, and was then unsold when the transaction broke down due to financial issues. That happened back in 2013. It was placed into Sotheby’s inventory for 3 years after Sotheby’s paid a guaranteed $60 million to the seller. In June 2016, Sotheby’s announced the partial sale of the diamond to two other very well-known companies within the diamond industry. Most people were certain that the Pink Star would end up selling privately, but to our surprise, it was announced that just a few weeks back it would be appearing at a Sotheby’s auction in Hong Kong on April 4, 2017. Why there? Why now? Why with such short notice to the public?
The beautiful and surprisingly large 59.60 carat Pink Star diamond Image credit: Sotheby’s
We hope that this time, Sotheby’s has secured some serious potential buyers. The unpublished reserve price is $60 million, which happens to be the sum that Sotheby’s paid to the old seller. We also hope that it will sell rather than become a major embarrassment to Sotheby’s, just like the Shirley Temple blue diamond, that was greatly promoted by Sotheby’s, yet failed to sell.
The Shirley Temple Blue
The Shirley Temple Blue diamond is also one of the most embarrassing unsold diamonds in recent history. The marketing behind the special and unique diamond did not go unnoticed. From articles in big publications to online marketing to mentions by major news outlets, the diamond was promoted at length. I always wondered what happened – where did things go wrong? Did Sotheby’s take on this diamond just to self-promote? But why? They are already well known, have a very strong brand name and are recognized globally. Normally, unique items like this do a global tour, and get relevant parties to show interest, and even get an idea of the price that they would be willing to pay. I am sure that after the failed sale at public auction, the ring ended up selling in a private transaction. Perhaps the seller wanted it to get global attention, only to sell it afterwards with an “added bonus” in the diamond’s story.
9.54 carat Fancy Deep Blue ‘Shirley Temple’ diamond Image credit: Sotheby’s
The Lesedi La Rona Rough Diamond
The second largest rough diamond ever to be found became global news when it was announced by Lucara Diamonds upon its discovery. It went viral globally, though by the time it went on the auction block it was promoted as a 1,109 carat rough diamond even though it was first introduced as a 1,111 carat rough. Sotheby’s was responsible for attracting bidders to its event in London, where they held an auction for a single item for the very first time. Again, Sotheby’s attracted attention to something that is considered once in a lifetime! Lucara went to great lengths to promote this rough when they launched a global naming competition for the rough diamond.
The highest bid was $61 million, although Lucara was under the impression it would sell well above $80 million. What went wrong? Perhaps it is because it was the first time such a rough diamond was put up for sale in such a manner. Normally, rough diamonds are sold to global players within the diamond industry. I think Lucara was under the impression they can “skip” this method and attract a private buyer who would either leave it as is and showcase in a museum, or attract a private investor, to whom it would sell for a higher price. I guess both Sotheby’s and Lucara underestimated the power of the industry. No industry player would be willing to pay such a hefty premium fee to an auction house when they can go to the industry’s normal auction method and buy it at less expensive price.
The new is out that the rough may go back to the auction block. I hope for Lucara that it will work, otherwise the value may drop.
The 1,109 carat Lesedi La Rona rough diamond Image credit: Lucara Diamond
A Pink Diamond Returns to Auction at Half Its Original Estimate
At the Sotheby’s Magnificent Jewels auction in Geneva in May, Lot #463 was a 11.19 carat Fancy Pink pear shaped diamond with an IF clarity. It was valued at a final sale price of $2.2 million to $4.2 million total, but ended up not selling at that auction.
11.19 carat Fancy Pink IF pear shaped diamond Image credit: Sotheby’s
When I reviewed the upcoming Sotheby’s New York auction this month, I came across an 11.19 carat pink diamond which obviously sounded very familiar. I went back to all my notes, and found it. It is the same diamond that went unsold in Geneva in May 2016, yet now, it is being offered with an estimated price $1 million to $2 million instead – exactly half the valuation. I also mentioned that the diamond seemed to have a weak color, which would explain the failed sale at the time. In fancy color diamond buying, the appeal is all about the color. Although this diamond’s certificate listed Fancy Pink, the color could be weak enough to also be considered a Fancy Light Pink, which would greatly affect the price. Hence the new, revised valuation.
The most interesting part is that when you go to Sotheby’s website and look up the original list of items from the Geneva auction, this item Lot #463 is no longer there – it was removed! Why? in fear that the diamond will lose its sale appeal. It is all about an illusion.
A snapshot of the May 2016 auction catalog – Lot #463 is missing. Image credit: Sotheby’s
Unsold diamonds always end up selling at subsequent auctions, or even privately after the auction. We don’t always know why a diamond does not sell. Remember, each diamond will end up with an emotional situation with investors.
In order to protect itself, the investor should use a professional to help make the decision on the acquisition, to ensure the right price is paid for a specific fancy color diamond which will eventually be resold. The whole objective is to create value for both buyers and sellers over the long run. Got any questions? Contact us or ask in the comments!
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